Legal

“Hardly satisfactory”: Judge questions Woolies’ biodegradable claim after ACCC loses key court case

Matthew Elmas /

The ACCC has warned it will be keeping a close eye on claims made about biodegradable products after last week losing a Federal Court bid to prosecute Woolworths over alleged consumer law breaches.

Last Friday the Federal Court moved to dismiss allegations Woolworths made false or misleading claims about the biodegradability of its “Select eco” disposable plates, bowls and cutlery.

The ruling has shed new light on how the court views claims made about supposed environmentally friendly products as the consumer watchdog looks to crackdown on dodgy activity amid a rise in sustainability-focused marketing.

The ACCC took action against Woolworths over the disposable crockery and cutlery last year, alleging the supermarket had “failed to make reasonable or adequate efforts” to substantiate the “biodegradability and composability” claims it made.

However, in a case where both sides relied on testimony from expert witnesses, justice Mortimer was critical of the ACCC’s evidence, noting the regulator had not conducted its own tests into whether the products degraded when composted.

Instead, the ACCC relied on evidence from other non-specific trials and tests and discrediting testing which Woolworths submitted in its defence.

Saying the lack of its own test was “hardly satisfactory” in discharging its duty to prove Woolworths made false or misleading claims, Mortimer said

“If the ACCC had conducted its own testing, perhaps (although it seems unlikely) there would have been some conflicting evidence,” Mortimer said.

“We will never know.”

Woolworths

The plates in question. Source: ACCC.

How the court considered eco-friendly claims

Woolworths relied on compost testing of the products conducted by a subject matter expert, and while the ACCC questioned the independence of the witness, justice Mortimer found the test did show the products compost in a reasonable period of time.

The test cited by Woolworths’ found the products would break down within six weeks, although interestingly the court accepted a six-month window is also not an “unreasonable” period of time.

Crucially, the court also found Woolworths had made no claims about the period of time it would take the products to decompose, instead, Mortimer said the claims about biodegradability were representations of “present fact” – that the products being bought were made of biodegradable materials and would break down in compost.

ACCC chair Rod Sims said in a statement the regulator is “carefully considering the court’s judgement”.

“We will continue to take cases against businesses that we believe are making misleading environmental claims about their products,” Sims said.

Woolworths has escaped an adverse finding, but the court did note it likely contravened its own environmental claims policy.

The ACCC argued Woolworths was aware the claims it was making were “problematic”, citing correspondence between the supermarket giant and its supplier, as well as the fact Woolworths did not conduct and testing before putting the products on shelves.

“There was an obvious failure in the circumstances to follow Woolworths’ own policy concerning the making of environmental claims,” Mortimer said.

Can’t justify it? Don’t stand by it

The case underlines the importance of clear and accurate communication about the sustainability credentials of supposedly biodegradable products.

As consumer demand for environmentally friendly alternatives increases, businesses have been advised to ensure the claims they’re making about products can be backed up.

Julie Mathers, founder of eco-friendly retailer Flora & Fauna, says the term “biodegradable” is overused and under-justified.

“The term biodegradable is used too frequently without justification or testing,” she tells SmartCompany.

“I speak regularly to suppliers when they make claims a product is biodegradable and when I ask for test results they don’t have them and often they don’t actually know what that term means.”

What does biodegradable even mean?

Mathers explains biodegradable, degradable and compostable are all different terms, and the court agrees.

In his ruling, Mortimer made several explicit findings on the way the court considers these terms in the context of Australian Consumer Law.

Biodegradable, he said, is understood by a reasonable consumer to be a product “able to be broken down, because of what the products were made of”.

The term compost, he said, refers to “organic materials, and that compost can be made by placing organic materials together in a pile, a container or a bin, and that the kinds of materials which are put into compost are often food scraps but also other materials such as paper and plant material”.

Meanwhile, the term “compostable” is “likely to be understood by the reasonable consumer as referring to something that was a useful product for the garden, and for healthy soil”.

Mathers says business owners should do their own research.

“If you can’t stand behind a claim don’t make it,” she says.

Retailer responsibility

“When you sell anything you need to be able to justify your claims so whether that is certified organic, anti-ageing or is biodegradable.”

Either way, its the retailer, not the supplier, which is most likely to find itself in hot water.

“It’s the retailer’s responsibility to know consumer law and what claims can be made, legally and ethically,” Mathers says.
Richard Prangell, director of Viridian Lawyers, says businesses should look through their supplier agreements carefully.
“I would encourage retailers to look at their supplier agreements to be sure that they are reimbursed for any misleading claims that are outside of their control,” he says.
Prangell says anyone selling sustainable products should consider what “sustainable” means to shoppers.
“In business, there is always a temptation to look at what is “technically accurate” as opposed to what a reasonable consumer might perceive having regards to the “whole picture” presented to the consumer,” he says.

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Matthew Elmas

Matthew is the news editor at SmartCompany. You can contact him at [email protected].

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