ACCC institutes proceedings against Coles for alleged false, misleading and deceptive bakery claims

12 June 2013

The Australian Competition and Consumer Commission has today instituted proceedings in the Federal Court against Coles Supermarkets Australia Pty Ltd (Coles).

The ACCC is alleging false, misleading and deceptive conduct in the supply of bread that was partially baked and frozen off site, transported to Coles stores and ‘finished’ in-store. The products were then promoted as ‘Baked Today, Sold Today’ and/or ‘Freshly Baked In-Store’ at Coles stores with in-house bakeries.

The legal action covers various ‘Cuisine Royale’ and ‘Coles Bakery’ branded bread products. The ACCC alleges that labels on these par baked products stating ‘Baked Today, Sold Today’ and in some cases ‘Freshly Baked In-Store’, and nearby prominent signs stating ‘Freshly Baked’ or ‘Baked Fresh’, were likely to mislead consumers into thinking that the bread was prepared from scratch in Coles’ in-house bakeries on the day it was offered for sale and that it was entirely baked on the day it was offered for sale.

Coles also uses these same representations to promote bread that has been made from scratch in Coles’ in-store bakeries. The ACCC is concerned that Coles’ lack of distinction in its promotional representations between bread products that are freshly prepared from scratch and par baked products is misleading to consumers and places competing bakeries that do freshly bake from scratch at a competitive disadvantage.

ACCC Chairman Rod Sims said, “There are two important issues at stake. First, consumers must be able to make informed purchasing decisions. Bread is an important grocery basket staple and customers need to be confident in claims made about food they buy.”

“We believe consumers are likely to have been misled by Coles that the entire baking process, including preparation, occurred in-store, when in fact the bakery products were prepared and partially baked off site, frozen, transported and then ‘finished’ in store. Indeed, the Cuisine Royale products were partially baked overseas.”

“Second and just as important, is the detrimental impact on the businesses of competitors. Misleading credence claims can undermine the level playing field and disadvantage other suppliers. In this case those suppliers are the smaller, often franchised bakeries that compete with Coles,” Mr Sims said.

In the past few years, Coles has heavily promoted its in-store bakeries and introduced a number of ‘rustic’ bread lines. Many of these ‘artisan-like’ breads have been par baked and frozen before being ‘finished off’ before sale, whereas many independent bakeries make their bread from scratch in the bakery on the day of sale.

Bringing this action is part of the ACCC’s publicly declared enforcement priority of investigating credence claims, particularly in the food industry, with the potential to significantly impact consumers and competitors.

The ACCC is seeking declarations, injunctions, pecuniary penalties, orders that Coles review its compliance program, orders that Coles publish corrective notices on its website and in Coles supermarkets that have in-store bakeries, and costs.

The matter has been filed in the Melbourne Federal Court's Fast Track List. The first Scheduling Conference is listed for 13 August 2013 at 9.30am.

Background

The ACCC’s Compliance and Enforcement Policy, released in February 2013, states that credence claims, particularly in the food industry, with the potential to have a significant impact on consumers or the competitive process, continues to be one of the ACCC’s enforcement priorities. Consumers are increasingly placing weight on premium claims and are likely to value the types of claims that directly affect the integrity of the product, such as where something was made, grown or produced and how it was made, grown or produced.

Recent outcomes in matters pursued by the ACCC include:

  • payment of two infringement notices in June 2013 by MOI International in respect of misleading olive oil claims
  • penalties of $375,000 ordered by the Federal Court in December 2012 against Pepe’s Ducks for false, misleading and deceptive conduct in relation to the promotion and supply of its duck meat products
  • penalties of $50,000 ordered by the Federal Court in September 2012 against Rosie’s Eggs, in relation to the substitution of cage eggs for free range eggs
  • penalties of $50,000 imposed by the Federal Court against Peninsula Bulk Meats in February 2012, after it admitted that it had engaged in misleading and deceptive conduct by falsely claiming that the meat it offered for sale was sourced from King Island
Release number: 
121/13
Media enquiries: 
Mr Duncan Harrod - (02) 6243 1108 or 0408 995 408

Tags

Audience