The Federal Court has found that King Island Meatworks and Cellars has swindled consumers by misleadingly referring to a geographic location in its name and advertising from which its products did not originate.
The case was brought by the Australian Competition and Consumer Commission against the business, which is based in the Melbourne suburb of Brighton and its manager and sole director Alexander Michael Mastromanno.
Justice Murphy found King Island Meatworks had made false or misleading representations concerning the place of origin of the meat it sold.
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Justice Murphy found the use of the words in the company name and in the company shop signage, newspaper advertisements, its logo, and domain name and website, conveyed the representation that the meat sold was from King Island.
The court found this was not the case and from July 2008 until February 2011 none of the meat it sold was sourced from King Island, and after that only very limited sales were made of meat that originated from King Island.
Justice Murphy found the audience being targeted would have been aware that King Island had a reputation for production of high-quality beef.
The court found King Island Meatworks and Cellars associated itself with that great reputation for high quality beef to position the business at the premium end of the market.
Sally Scott, partner at Hall & Wilcox, told SmartCompany a business cannot mislead in relation to origin of goods.
“The court looks at what representation is made and when doing so it takes into account the overall impression of the representation from the perspective of the target audience, so a representation made to bankers at a conference is a different target audience to a representation made to the public and would need to be viewed from a different perspective,” she says.
“This case looks at representation in relation to the name of a shop and the analysis is to consider what the public would read into that representation,” she says.
Scott says the case comes on the back of a focus on place of origin issues with terms such as ‘Champagne’, ‘Port’ and ‘Sherry’ which can now only be used by producers in certain region
She says there is enough awareness in the public of King Island meat as being from animals raised on King Island.
“It’s interesting that we are talking about a brand here that is well known and a brand that has a lot of value in it and it is not surprising that the businesses that produce King Island meats would want to protect the value of that brand and they would be concerned if others were profiting off that brand in a misleading way,” she says.
Scott says the King Island businesses would have grounds to issue proceedings but in this particular case the ACCC had issued proceedings in its role protecting the public from misleading and deceptive conduct.
“Some businesses think that if they are successful in registering a business name, company name, domain name or trade mark, they can just go ahead and use the name and they will be protected. But that is not the case. You can still get caught for misleading conduct even by using a name that has been registered by the business.”
Penalties can be up to $1.1m per offence for a company and $220k for an individual.
The ACCC declined to comment until the Federal Court made orders as to the penalty. However, earlier this year ACCC chair Rod Sims warned the consumer watchdog is on the lookout for businesses making “premium claims” to get a selling advantage.
“They might say the product is sourced from a place which carries some extra prestige or meets a standard of quality or was produced in a certain way,” he said.
Sims said if premium claims about products were not accurate and truthful, both consumers and other businesses lost out.
“What if the meat is not sourced from King Island? What if the eggs aren’t free range?” he said.