Court finds egg packer substituted organic with conventional eggs

20 August 2007

An egg packer and supplier has been found to have substituted and sold non-organically produced eggs as organic eggs over a two year period.

Justice Gray of the Federal Court, Melbourne has made orders against G.O. Drew Pty Ltd and its manager and compliance officer, Mr Timothy Drew, over the substitution.

The action was taken by the Australian Competition and Consumer Commission.

"GO Drew did not produce organic eggs itself," ACCC Chairman, Mr Graeme Samuel said, today. "Instead it sourced eggs from a National Association for Sustainable Agriculture Australia certified producer.

"Between March 2003 and March 2005 under the direction of Mr Drew, GO Drew supplemented shortfalls in the supply of organic eggs with other eggs."

The court found that GO Drew had contravened sections 52, 53 (a) and 55 of the Trade Practices Act 1974, which deal with misleading representations, and that Mr Drew was knowingly concerned in the conduct.

In his judgment, Justice Gray said there: "can be no doubt that the conduct of the respondents was very serious. Although it arose because of frustration due to the inconsistent supply of organic eggs, the conduct was deliberate."

He noted that the conduct had occurred during the operation of an earlier undertaking provided to the ACCC to address labelling concerns of a different nature.

"This undertaking concerned a logo on two of the company's products which was similar to the National Heart Foundation's licensed 'tick'," Mr Samuel said. "Part of this undertaking was that the company would not represent that its eggs had approval from any organisation when this was not the case."

The court restrained GO Drew and Mr Drew for three years from supplying eggs in packaging which claimed the eggs were certified organic by NASAA, or produced by a NASAA-certified producer, when this was not so.

GO Drew was also ordered to pay the ACCC's costs fixed at $25,000.

Justice Gray acknowledged the difficulty faced by the ACCC, from the case's outset, given the absence of any recognised definition of the term 'organic' and the difficulty this presented in creating an enforceable injunction in broader terms to prevent misrepresentation of eggs as 'organic'.

GO Drew self-reported the substitution and took significant steps to redress the matter, including setting aside $270,000 to assist in the development of a national standard for organic and biodynamic produce and to enhance NASAA certification processes. This was noted by Justice Gray.

"Organic produce, attracting premium prices, is currently a booming industry both in Australia and the rest of the world," ACCC Chairman, Mr Graeme Samuel said. "Consumers of organic produce have every reason to expect that produce to be nothing but organic. Businesses succumbing to the temptations of passing up conventionally farmed produce as organic risked facing serious action by the ACCC.

"The contraventions were a costly lesson to GO Drew and its management," he said. "However, the $270,000 provides a timely source of funding to assist the organic industry in developing and implementing an Australian Standard and improved procedures for preventing similar conduct in the future."

GO Drew has now sold its egg supply business and Mr Drew has a limited consultant role in the industry.

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Release number: 
MR 221/07
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Mr Graeme Samuel - (03) 9290 1812
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