Woolworths escapes liability in Federal Court decision for biodegradability claim

Posted by AFN Staff Writers on 10th July 2019

The Federal court of Australia has dismissed the case brought by the Australian Competition and Consumer Commission (ACCC) against supermarket giant Woolworths for alleged false or misleading claims about the biodegradability of its ‘Select Eco’ disposable plates, bowls and cutlery.

In a judgement handed down on Friday 5 July 2019, Federal Court Justice Debra Mortimer raised important concerns as to whether a conflict exists between the Australian Consumer Law legal test determining whether a claim is misleading or deceptive, as against referring to an industry standard as a benchmark for defining the claim.

The ACCC initiated the action against Woolworths over its disposable crockery and cutlery in 2018, alleging the supermarket had failed to make reasonable or adequate efforts to substantiate the biodegradability and composability claims it made.

The Woolworths’ ‘select eco’ bowls and plates were made of bagasse, a fibrous matter that remains after sugarcane or sorghum stalks are crushed to extract their juice. The cutlery was made of Crystallised Polylactic Acid (CPLA), which consists of a combination of fermented corn starch, chalk and other additives.

The judgement noted some of those substances are not referred to by the Australian Standard AS 5810.

The ACCC alleged that Woolworths had breached their own environmental claims policy by not applying the Australian Standard on biodegradability and composability to the products in question. Justice Mortimer found that the packaging and advertising made no reference to compliance with an Australian Standard.

The Woolworths policy for suppliers made express reference to the Australian Standards in relation to verification, certification and endorsement of environmental claims. Woolworths did not make reference to the Australian Standards in the claim itself.

The judge found that even though the biodegradability and composability claim lacked a reasonable basis, she said the ACCC had failed to identify a person responsible for the compliance decision making within Woolworths corporate structure.

Both sides relied on testimony from expert witnesses, but the judge was critical of the ACCC’s evidence and said that the regulator had not conducted its own tests into whether the products degraded when composted, whereas Woolworths relied on its trading company in Hong Kong to supply the relevant compliance testing evidence.

The ACCC argued that Woolworths’ claims meant a consumer could reasonably expect the disposable products would decompose in landfills or domestic composting within a reasonable time. The judge found that consumers were unlikely to consider how long disposable cutlery or plates would take to break down, only that they were different to other similar plastic products.

The ACCC expert relied on the Australian Standard for comparable product composition materials, stating that the products would take about six months to turn into usable compost in well-managed compost and more than two years in less ideal conditions, which the ACCC claimed was unreasonable.

However, the judge did not agree with the ACCC experts’ estimation, and said:

“ I find the consumer would have understood [the phrase] as meaning no more than that the products were capable of biodegrading, and were capable of being composted – in the same way the consumer would have understood the use of the description ‘recyclable’ to refer to the capacity of a product to be recycled.”

The court also found Woolworths had made no claims about the period of time it would take for the products to decompose, instead, the judge said the claims about biodegradability were representations of ‘present fact’ that the products being bought were made of biodegradable materials and would break down in compost.

According to Foodlegal lawyer and legal commentator Joe Lederman, the case underlines the importance of clear and accurate communication about sustainability credentials when making product packaging claims.

“Any claims must be in line with current consumer expectations and the community values of the ‘reasonable consumer’ for the particular product,” Mr Lederman said.