The Federal Court has ruled that the encapsulation in Australia of imported fish oil and Vitamin D by Nature's Care Manufacture Pty Ltd (Nature’s Care) would not permit the capsules to be labelled ‘Made in Australia’ under the Australian Consumer Law’s (ACL) Country of Origin labelling provisions.
“The ACCC is pleased that the approach of the Federal Court is consistent with the guidance the ACCC has given industry about country of origin labelling,” ACCC Deputy Chair Mick Keogh said.
The ACCC’s guidance was released in response to new laws passed by the Parliament that changed the criteria for companies to claim ‘Made in Australia’ status.
Earlier this year, vitamin manufacturer Nature’s Care applied to renew its licence from the Australian Made Campaign Limited (AMCL) so it could continue to use the ‘Made in Australia’ kangaroo logo for its Fish Oil 1000 + Vitamin D3 soft gel capsule product.
The AMCL is the organisation responsible for licensing the ‘Made in Australia’ kangaroo logo.
The AMCL rejected Nature’s Care’s licence renewal application so it would accord with the views expressed by the ACCC in its industry guide on complementary healthcare products and Country of Origin labelling.
Nature’s Care instituted proceedings in the Federal Court for a declaration its Fish Oil 1000 + Vitamin D3 product was last ‘substantially transformed’ in Australia, which would have permitted it to be labelled ‘Made in Australia’ despite containing primarily imported ingredients.
“What constitutes ‘substantial transformation’ under the law will vary depending on the product. Because of this, the ‘substantial transformation’ test can be complex and, at times, technical to apply. We are pleased that the court has clarified this aspect of the law so that businesses can more confidently determine whether they can make country of origin claims about their products,” Mr Keogh said.
“Country of origin representations can be a powerful marketing tool for businesses, as many consumers are willing to pay extra for Australian made products. The ACCC will take action to maintain consumer confidence in labels claiming that products are Australian made.”
Nature’s Care’s Fish Oil 1000 + Vitamin D3 product is encapsulated in Australia using fish oil and Vitamin D imported from overseas. The product is sold under a ‘Made in Australia’ kangaroo logo licence, which expires on 31 December 2018.
While Nature’s Care’s action was against AMCL, the ACCC intervened in the case as a matter of public importance and to assist the Court by providing expert evidence.
The ACCC provided evidence to support its view that, consistent with its published guidance, encapsulation and the addition of a vitamin should not be considered a ‘substantial transformation’ of the imported ingredients. The Court accepted the ACCC’s position.
Complementary medicine products are not required by law to carry country of origin labelling. However, companies that choose to make country of origin claims must be aware of the laws against false, misleading or deceptive claims.
Under Australia’s new country of origin labelling framework, products that are manufactured in Australia using imported ingredients must be last ‘substantially transformed’ in Australia to have the benefit of the ACL’s ‘made in’ safe harbour defence. The safe harbour serves as an automatic defence from court action on the basis that the country of origin claim is false, misleading or deceptive.
In March 2018, the ACCC published a guide on how the Country of origin labelling laws applied to complementary healthcare products.
On 4 September 2018, Nature’s Care filed proceedings in the Federal Court against the ACCC. On 19 October 2018, the Court ordered by consent that AMCL be a party of the proceedings, with the ACCC being removed as a respondent. The ACCC was then granted leave to intervene in the proceeding between Nature’s Care and AMCL.
The ACCC publishes guides when new laws come into effect, designed to assist businesses and consumers to understand its enforcement approach.
The ACCC’s guides reflect the ACCC’s interpretation of new laws as passed by the Commonwealth Parliament and are not binding in and of itself. The interpretation of the law is ultimately a matter for the courts.
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