ACCC cracks down, launches legal action against Free Range Egg Farms

By Karen Coombs and Cara Waters

The competition watchdog has another free range egg producer in its sights, announcing the launch of legal proceedings in the Federal Court today against Derodi and Holland Farms, which trade as Free Range Egg Farms.

The latest legal action follows the Australian Competition and Consumer Commission’s pursuit of Rosie’s Free Range Eggs and Pirovic Enterprises for fake free range egg claims.

Free Range Egg Farms supplies eggs under the label Ecoeggs and Free Range Eggs in New South Wales.

The ACCC claims Free Range Egg Farms use of the term ‘free range’ for its egg brands is false and misleading.

The ACCC also claims Free Range Egg Farms falsely labelled its egg cartons and made “deceptive representations” across social media and on its website claiming the hens were farmed in conditions where they were able to move about freely.

But the competition watchdog says the hens for Free Range Egg Farms were not able to do this because of farming practices and conditions which did not allow for the hens to roam freely on most days.

Read more: Uncertainty cracks the free range egg market

ACCC chairman Rod Sims said the ACCC considers free range means more than animals just having potential access to the outdoors.

“Consumers expect free range to mean animals genuinely can and do go outside on most days,” he said in a statement.

Melissa Monks, special counsel at law firm King & Wood Mallesons, told SmartCompany this latest action by the ACCC is part of its industry crackdown on misleading credence claims relating to egg and chicken products.

“The ACCC has been very transparent about its views, even sending egg suppliers a written notice last month to make it clear,” she says.

“This is not an unusual step by the ACCC when it considers there to be widespread practices within an industry that may breach the law, but it does signify that it takes the matter very seriously and likely to take action in efforts to bring industry change.”

Monks says we’ve seen this approach by the ACCC in many industries including telecommunications and the energy sector.

“The ACCC has the backing of the courts on this one, as they’ve clearly found that the term ‘free range’ means that hens can and do go outside freely on most days,” she says.

“If farming practices are not consistent with this, then claims that eggs are free range are likely to be misleading. The principle applies equally to any food business – if your labels and marketing claims such as free range, organic, halal, etc don’t reflect your production practices, you could be engaging in misleading conduct and come onto the ACCC’s food focussed radar.”

A spokesperson for Free Range Egg Farms told SmartCompany that as a “small family run farming business” it was disappointed to hear the ACCC was bringing proceedings against it n relation to alleged conduct that occurred some time ago.*  

“The ACCC’s allegations relate to a time when the egg industry was seeking a code and formal guidance on free range standards,” the spokesperson said.

The spokesperson said Free Range Egg Farms has more recently implemented various changes to its farming practices and has voluntarily implemented a robust compliance program.

“Free Range Egg Farms is confident that these measures will assist in ensuring that its farming operations meet the highest industry standards,” the spokesperson said.

The proceedings are set down for a directions hearing in Sydney on February 4, 2015.

*Story updated on 10 December 2014 to include a response from Free Range Egg Farms.

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