Court fines Pepe’s Ducks $400,000, quacks down on free range claims

Pepe’s Ducks has been ordered to pay $400,000 in penalties and costs by the Federal Court after claiming its ducks were ‘open range’ and ‘grown nature’s way’.

Pepe’s Ducks is a supplier of duck meat products and in 2011 it supplied around 80,000 ducks per week in Australia.

The court found the ducks grown by Pepe’s Ducks were actually raised in barns and were not allowed to spend any of their time outdoors.

The phrases “open range” and “grown nature’s way” were used on Pepe’s Ducks product packaging, website, delivery vehicles, signs, stationery and merchandise, often alongside a picture of a duck in the outdoors walking on grass against a background of a lake with hills behind.

Australian Competition and Consumer Commission commissioner Sarah Court said the ACCC brought the case as consumers must be able to trust that what is on the label is true and accurate.

“This penalty is a warning to businesses to make sure they are not misleading consumers into paying a premium for products that don’t match the claims made on the label,” she said.

“Traders who abuse the trust of Australian consumers in this way expose themselves to enforcement action.”

The court has restrained Pepe’s Ducks from using the phrases “open range” or “grown nature’s way” along with the picture of the duck and lake on its product packaging, website, delivery vehicles, signage, stationery and merchandise for three years.

The duck supplier must also implement a trade practices compliance program for three years and provide corrective notices to its customers and on its website and business premises.

John Houston, chief executive of Pepe’s Ducks, said in a statement that the labelling on all Pepe’s Ducks products now clearly states the ducks are barn raised.

“In line with farming practices that changed in response to the global outbreak of avian flu, we chose to raise our ducks in barns to ensure the health, comfort and welfare of our ducks is maintained,” he said.

“We would like to reassure our customers that we did not intentionally set out to deceive them.”

Bob Baxt, partner at law firm Herbert Smith Freehills and former chair of the Trade Practices Commission, told SmartCompany changes in the law over the last two years allowed the ACCC to now seek significant financial penalties in cases of misleading and deceptive conduct.

“The issue is asserting that a product has a particular characteristic about it that it obviously did not,” he says.

Baxt says the Pepe’s Ducks case is one of a range of cases the consumer watchdog is successfully running in this area which focus on protecting consumers from misleading statements regarding food production methods.

Last year, the Federal Court made orders against Turi Foods over misleading representations that its chickens were raised and grown in barns in which the chickens were able to roam around freely, as well as against a producer who wrongly claimed her eggs were free range.

“It is another important message for the community that business people should not mislead the public,” Baxt says.

Sally Scott, partner at law firm Hall and Wilcox, says when considering proposed labelling and promotional material, businesses must turn their mind to what is represented and whether it is misleading.

“They need to take into account not just the specific words used, but also any implications from pictures,” she says.

“Pictures of trees and green pastures can convey an implication that products are ‘environmentally friendly’ or ‘free range’. If they are not, then the pictures can be misleading. “

Scott says there is an ever increasing demand for free range, organic and environmentally-friendly products and businesses recognise the benefit in promoting such benefits.

“However, businesses need to ensure that their products do in fact have the benefits that they promote,” she warns.