On 24 August 2018, a pecuniary penalty of $2.25m was ordered against Heinz Australia for contraventions of the Australian Consumer Law by the making of false or misleading representation.
The ACCC brought the proceeding against Heinz in relation to a snack product marketed for toddlers. The court also ordered the company to set up a consumer protection compliance program.
On 19 March 2018, White J of the Federal Court found that Heinz had engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law (ACL) (which is Sch 2 to the Competition and Consumer Act 2010 (Cth), and had made false or misleading representations to consumers in contravention of s 29(1)(g) of the ACL.
The conduct comprised representations on the packets in which Heinz sold three products, which were three flavours of "Little Kids fruit & veg SHREDZ". The representations were that the Products were a nutritious food and were beneficial to the health of children aged 1-3 years (“toddlers”). The representations were not express but had been conveyed by the words and imagery on the packets. By reason of the high sugar content and sticky texture of the products, this was not the case. A declaration to this effect was made on 10 April 2018. On 24 August 2018 White J published his decision and reasons in relation to the amount of the pecuniary penalty to be imposed on Heinz.
White J considered the following aspects in determining the pecuniary penalty to be imposed:
The aggregate of the penalties imposed was $2.25 million. This was much more than the figure of $400,000 for which Heinz contended, but much less than the penalties totalling $10 million, for which the ACCC contended.
The court considered that it would not be appropriate to fix the aggregate of penalties at an amount which does no more than negate the profit Heinz derived from the sale of the products, which would not reflect the purposes for which the penalties are imposed.
Corrective publication orders were not considered to be appropriate in this case, given the long period which had elapsed since Heinz ceased making the products, and the fact that the litigation had been the subject of publicity.
A compliance and training program for Heinz was also sought by the ACCC, was not opposed, and was ordered.