ACCC issues Luv-a-Duck $360,000 fine for misleading claims

A Melbourne-based duck meat business has been fined $360,000 for a range of misleading claims including that its ducks were “range reared and grain fed”.

The fine is the second major penalty achieved by the Australia Competition and Consumer Commission for misleading claims in the past week.

The Luv-a-Duck slogans appeared on the company’s packaging, website, brochures and in a promotion it ran at the Adelaide Good Food and Wine Show in 2012.

Luv-a-Duck has a market share of 40% of duck meat products sold in Australia, selling approximately 80,000 ducks per week.

The company also claimed its ducks were “grown and grain fed in the spacious Victorian Wimmera Wheatlands”.

The ACCC argued the slogans suggested the ducks spent a substantial amount of time outdoors, were raised in a spacious environment and were of a different quality than duck meat products processed from barn-raised ducks.

In reality this was not the case. Luv-a-Duck’s ducks had not spent any time outside of a barn.

In judgment of the case, Justice Davies found by using these phrases Luv-a-Duck would have gained a competitive advantage in the industry.

Speaking to SmartCompany when the ACCC launched legal action against Luv-a-Duck, Hall and Wilcox partner Sally Scott said businesses can “fall into the trap” of making these types of claims to justify higher prices.

“As pressures continue to mount in the retail space, we are likely to see businesses making claims aimed at enabling them to charge higher prices or aimed at increasing demand,” she says.

“Businesses must realise while a certain amount of puffery is permitted when promoting a product, once a claim steps over the line and is misleading, businesses are at risk of ACCC action for misleading conduct.”

ACCC Commissioner Sarah Court said in a statement this judgment serves as a further warning to the poultry industry.

“Traders who use and abuse the trust of Australian consumers may also find themselves exposed to similar enforcement action,” she says.

“Credence claims which represent that a product possesses a premium attribute are a priority area for the ACCC, particularly those in the food and beverage industry with the potential to influence consumers and disadvantage competitors.”

Last week Baiada Poultry and Bartter Enterprises were fined a total of $400,000 for misleading claims stating their chickens had been “free to roam”.

Companies face a maximum fine of $1.1 million for misleading credence claims, while individuals can incur a penalty of up to $220,000 per offence.

Luv-a-Duck has also been ordered to pay $15,000 to go toward the ACCC’s costs and it has been restricted from using the slogans and any variations containing a similar sentiment.

Luv-a-Duck has also had to publish a corrective notice on its website and business premises, send out a corrective notice to customers and implement a trade practices compliance program for the next three years.