April 2024
FOOD & BEVERAGE
New Zealand
The Commerce Commission have published a Statement of Issues on the proposed Foodstuffs merger
An application has been received from Foodstuff North Island Limited and Foodstuffs South Island Limited seeking a merger. In response, the Commerce Commission have issued a Statement of Issues which outlines the potential competition concerns with the proposed merger. Specifically, the Statement of Issues considers whether competition in upstream and downstream markets for supply of groceries will be substantially lessened by the proposed merger. The Statement of Issues does not mean the Commission intends to decline the merger, but instead invites submissions from Foodstuffs North Island, Foodstuffs South Island and any other interested parties. The Commission have delayed the decision and are scheduled to make a decision by 31 May 2024, with submissions closing 18 April 2024. You can read more about the submission process and find the Statement of Issues here.
The potential merger holds particular interest for those in the food sector, as having one national grocery entity has the potential to lessen competition in the food market in New Zealand.
New Zealand Bill Aiming to Remove GST from Food Defeated
On 20 March 2024, a Bill aiming to remove Goods and Service tax (GST) on food was defeated. The Bill aimed to remove GST from food in order to recognize the cost-of-living pressures and that food products are basic necessities of life that people should be able to access without taxation. The Bill was introduced by Rawiri Waititi from the Maori Party.
Kombucha Bros remove advertisements after complaint concerning children and alleged misleading health claim
Alcohol Healthwatch (an organization dedicated to reducing and preventing alcohol-related harm) took issue with two ads made by Kombucha Bros. The first was a website ad which showed the label for the Kombucha Bros Gin Kombucha claiming it was “good for you”. Alcohol Healthwatch complained that this was a misleading health claim as alcohol products are not good for you. The second Facebook ad showed a small child holding a berry in their hand and presenting it to the camera. The text said “Summer means family, sun, lush berries and sticky fingers …”. Alcohol Healthwatch were concerned as the ad featured children consuming the product, and it was unclear whether the child was drinking kombucha or alcoholic kombucha.
Upon receiving the complaint, Kombucha Bros removed the advertisements and so the complaint was settled. Even so, this is still an interesting case as it indicates that Alcohol Healthwatch are actively monitoring advertising.
Australia
Breach of ABAC by Tradie Beer – irresponsible marketing of alcohol
The finding was released on 2 January 2024 in relation to an Instagram advertisement for Tradie beer. The complaint relates to videos posted on the Tradie Brand and Tickford Racing Instagram pages. The complainant alleged that the advertisements had recreated a scene from the movie “The Hangover” and promoted misuse of alcohol and driving vehicles.
It was found that the advertisement on Tickford Racing’s Instagram did not fall under the ABAC code, but the Tradie Brands advertisement did. The advertisement was held to make implicit representations of normalizing excessive alcohol consumption through references to the behavior in “The Hangover”. Thus, Tradie Brands breached Part 3(a)(i) and (ii) of the ABAC Code. Part 3(a)(i) and (ii) of the Code state that alcohol marketing communication must not show, encourage, or treat as amusing, irresponsible alcohol consumption or consumption that is inconsistent with the Australian Guidelines to Reduce Health Risks from Drinking Alcohol.
This signifies the ABAC’s strict approach with ensuring responsible drinking and is an area alcohol advertisers should be cautious of.
Australian Medical Association Calls for Digital Black-out on Junk Food Ads
On 29 March 2024, the Australian Medical Association (AMA) published a call for a digital black-out on junk food ads. The AMA have submitted to the Department of Health and Aged Care that there are significant preventative health benefits of a digital black-out on junk food adverts coupled with heavy restrictions on television advertising, sponsorship, and new promotion and placement rules in the retail market.[1]
How could this impact you?
This may have an impact on stringent marketing restrictions which could be financially and logistically burdensome for industry and is something to watch.
Australian Public Health Leaders Call for Health Levy on Sugary Drinks
On 05 February 2024, members of the Rethink Sugary Drink alliance (including the AMA, Cancer Council Australia, the Australian Dental Association, Food for Health Alliance, and Heart Foundation) submitted a position statement calling for the introduction of a 20% health levy on sugary drink manufacturers. The statement is backed by new AMA research that found a 20% health levy on sugary drinks could raise around $1 billion each year, which could be used to fund crucial obesity prevention and other health initiatives.[2] Furthermore, the research suggests the policy could reduce the amount of sugar Australians consume every year by nearly 2.6 kilograms per person, which is approximately 650 teaspoons of sugar.
The Australian Beverage Council has responded, broadly deeming the proposed policy action as too simplistic to address the complex issue of obesity and misguided, lacking backing by credible scientific evidence.[3]
How could this impact you?
This is something to keep an eye on as the introduction of a sweetened beverage tax in Australia would be financially burdensome for industry in Australia, particularly if an appropriate timeline is not provided to afford industry enough time to reformulate.
Australia and New Zealand
FSANZ update Work Plan
FSANZ updated their work plan on 12 February 2024, providing more detail of upcoming applications and proposals over the next 18 months. The Work Plan proposes develop standards and variations to standards for applications and proposals. It also provides visibility as to the progress of applications and proposals, with estimated timelines for consultation. For more information, see the complete Work Plan here: https://www.foodstandards.gov.au/sites/default/files/2024-03/Work%20Plan%20March%202024.pdf
FSANZ make changes to ‘no added sugar’ labelling
Food Standards Australia New Zealand (FSANZ) have recently amended requirements for ‘no added sugar’ labelling. The amendments create stricter requirements and more clarity for consumers. The revised standard in the Australia New Zealand Food Standards Code (Food Code) will not permit ‘no added sugar’ claims when a food:
· contains or is an ‘added sugar’ as defined under the Food Code; and
· does not contain ‘added sugars’ but contains more sugars than
o 10g per 100g for solid food; or
o 7.5g per 100ml for liquid food.
The amendment also includes a clear definition of ‘added sugars’ as including various sources such as honey, brown sugar and D-tagatose.
How could this impact you?
The amendments will have an impact on the industry as businesses with ‘no added sugar’ claims must ensure they meet the new requirements under the Food Code and it is possible that they may no longer be able to make these claims. The amendment was made on 13 December 2023 and provides a 4-year transition period where businesses will need to comply with the new requirements by 13 December 2027.
FSANZ new appointment
FSANZ has recently announced that Dr Matt O’Mullane will be replacing Mr Glen Neal as the FSANZ General Manager, Risk Management, and Intelligence (effective 8 April 2024). Matt previously looked after the Standards and Surveillance team at FSANZ and the Evaluation Branch within the Office of the Gene Technology Regulator. Glen Neal has joined the private sector as Partner at Agite Consultancy, a strategic advisory firm that combines reputation and risk management with project delivery experience. [4]
Current FSANZ Public Consultations
Current FSANZ call for comments include:
Application A1284 to permit the use of triacylglycerol lipase from a genetically modified strain of Trichoderma reesei to be used as a processing aid in baking and cereal-based processes. Submissions are due 6pm (AEDT) 17 April 2024.[5]
Application A1287 to permit the sale and use of food derived from corn line MON94804, genetically modified to have reduced overall plant height. Submissions are due 6pm (AEDT) 30 April 2024.[6]
Other Jurisdictions
Fatal anaphylactic reaction to peanuts highlights need for improvement
In July 2020, a 23-year-old with a peanut allergy passed away in the UK after consuming a takeaway pizza. The pizza was ordered from a local restaurant through a third-party food ordering platform. Although the customer did not specify the allergy in the order, the inquest revealed that in the allergen section of the restaurant’s food safety documents, there was no information about peanuts being present. The coroner concluded that she would write to authorities expressing support for a law change that would make it mandatory for restaurants to publish food ingredients on their main menu.
If changes occur overseas in strengthening allergen cautions, this could lead to the same trend in Australia and New Zealand.
The following extracts have been provided with permission (and thanks) from food law specialist Jessica Burt from UK law firm Mills & Reeve. See more information here: https://www.mills-reeve.com/people/jessica-burt
CMA – Infant Formula Market Study
The UK’s Competition and Markets Authority has launched a market study into the supply of infant formula in the UK after finding prices had soared by 25% over two years. The launch of a market study means the CMA will be able to use its compulsory information gathering powers, rather than rely on firms providing information voluntarily.
The CMA said it intends to conduct the market study as swiftly as possible and with the intent of publishing a final report in September 2024.
Vegan Labelling Campaign
The UK Food Standards Agency (FSA) has launched a campaign ‘Vegan Food and Allergens Campaign’ to support people who have an allergy to milk, eggs, fish and crustaceans or molluscs. The campaign encourages people with allergies, or who buy for someone who has, to always check for a precautionary allergen statement such as ‘may contain’, on products labelled 'Vegan' to decide on whether it’s safe to eat.
Vegan labels are used to support a dietary choice, and do not intentionally contain products of animal origin. Vegan food could still be prepared in areas alongside products such as egg, milk, fish, crustaceans or molluscs - whereas free-from foods are not.
To use a free-from label, food businesses must follow strict processes to eliminate risks of cross-contamination so that they do not contain any of the allergen that they claim to be free-from.
The FSA recently updated its food labelling technical guidance for food businesses and industry.[7] The update advises businesses to use a Precautionary Allergen Label (PAL) alongside a vegan label, if cross-contamination can’t be ruled out.
GCA investigation
The Groceries Code Adjudicator (GCA) is investigating whether intermediaries are being used in the fresh supply chain by retailers to circumvent the Groceries Supply Code of Practice, The Grocer reported in February.[8] The move follows concerns raised by suppliers and politicians of all stripes that producers are falling outside the usual scope of GSCOP due to the employment of middlemen.
The GCA’s office has confirmed to the Grocer magazine it was “gathering information” on the issue.
HFSS Promotions consultation – Scotland
The food and drink industry in Scotland is facing restrictions on promotions of HFSS foods. The new consultation restricting promotions of food and drink high in fat, sugar or salt (HFSS) proposes banning all promotions of HFSS products. These would include bans on temporary price reductions and meal deals – measures Westminster moved away from due to the cost-of-living crisis.
Elsewhere the ban echoes the scrapping of HFSS promotions in prominent locations in England, but gives business 12 months to phase out the promotions of multibuy deals. The Scottish government said it would use the same nutrient profiling model definition as that being used in England to define the products in scope.
Scottish ministers blamed the “poor response” from industry to voluntary measures to make food healthier for going ahead with the proposals, with the plans due to come into force in 2025. The consultation closes on 21 May 2024.[9]
Blanket restrictions on direct marketing of high in fat, salt or sugar (HFSS) foods to under 16s
A recent Advertising Standards Authority (ASA) adjudication on Burger King ads looked at the requirements on marketers not to promote HFSS to under 16s.[10] It found that practical steps to actively exclude those who were under 16 were necessary, over and above simply stating the offer was not open to them, when it came to the creation of a mailing list for direct marketing.
The take home for marketers of HFSS products in the UK is:
· to require the completion of date of birth for targeted audience lists; and
· an active removal of those under 16 irrespective of how small a percentage of the audience they may be.
Claims “rustic”, “traditional” and “authentic” examined by ASA
The ASA ruled on advertising from Hovis Ltd t/a Hovis that complaints should not be upheld concerning internet and social media content (own content and site) on 28 February 2024.[11]
Three webpages and an Instagram post were held not to have misleadingly used the terms “rustic”, “authentic”, “traditional”, “artisanal-inspired bread” and “no artificial preservatives”. The ruling highlighted the importance of context and specifying what part of the product or process the claim may relate to. The ASA maintained their position that a consumer would have broad understanding of industrial mass production. Also, the importance for producers to have substantiated all the claims they use in advertising.
The Real Bread Campaign (Sustain), who understood the bread was produced using automated industrial techniques, and that it included artificial preservatives, challenged whether the following claims were misleading and could be substantiated:
· “rustic”, “authentic” and “traditional”;
· “artisanal-inspired bread”; and
· “no artificial preservatives”.
The ASA considered that because the Hovis brand was well known, the ads appeared on their own website and Instagram page, and the products were shown in plastic packaging, consumers would understand that the products had been produced on an industrial scale. As such, it was probable that they contained some additional ingredients and processes to those used in handmade breads. This position underlined that the mere use of these terms would not be persuasive in themselves to inform the entirety of the processes the product would have been subject to and what the consumer would infer from them.
All claims were held not to be misleading.
SUSTAINABILITY
Australia
First draft of AANA’S Environmental Claims Code released
The Australian Association of National Advertisers (AANA) released an exposure draft of the new Environmental Claims Code on 18 January 2024. The Code has been adopted to ensure advertisers and marketers develop and maintain rigorous standards when making environmental claims. The Code will increase consumer confidence, and in turn, benefit the environment, consumers, and the industry itself. The Code is accompanied by a Practice Note which provides guidance to advertisers and complainants and must be followed by the AANA in making decisions. If a final version of the Code is adopted, the Code will form part of the AANA Codes of Practice that apply to product advertisements and marketing.
The introduction of this Code highlights the growing need for regulation of greenwashing claims. Public submissions have closed for the exposure draft, so it will be an area to keep a close watch on.
Steps towards implementing new packaging regulation
In November 2023, Australian Environment Ministers agreed on the specifics of a new packaging regulation. This follows the promise to reform packaging regulations by 2025. The Environment Ministers have agreed:
that the Commonwealth Government will be the regulator and will mandate how packaging is designed, set minimum recycled content requirements, and prohibit harmful chemicals, and
that design requirements for packaging will be finalised, by the end of 2024
The public will have the opportunity to provide views on the proposed regulation in mid-2024. The mandatory design requirements will be introduced by the end of 2025 under the new regulatory scheme that will be implemented.
APCO introduce new label for soft plastics
The Australian Packaging Covenant Organization (APCO) released a new label for soft plastics. The new Australian Recycling Label (ARL) was launched in July last year and consists of a ‘Check Locally’ logo. The logo aims to increase consumer awareness and provide accurate recycling information, where consumers will be directed to the ARL website and provided information on kerbside and drop-off services. The logo can be used for soft plastics and any other material where significant kerbside or drop off collections exist but are not yet available to 80% of the Australian population.
Brands have until 1 July 2025 to complete their on-pack updates, when it will become an ACCC expectation. Brands should start reviewing their work now.
New Zealand
Chair settles complaint about misleading environmental claims from the Christchurch Airport
A greenwashing complaint was made to the ASA regarding the text “climate positive” on the Airport’s websites and documents. The complainant claimed that this text implies the company has a positive impact on the environment. The complaint was settled due to the Christchurch Airport’s cooperation and self-regulation, also defending their claim with proof of independent certification. This complaint shows the increased focus on combatting greenwashing claims.
CONSUMER LAW
Australia
ACCC compliance and enforcement priorities in 2024/25
The ACCC have released the list of priorities and enduring priorities for compliance and enforcement in 2024 and 2025.
The priorities include:
· Environmental claims and sustainability
· Supermarket sector – food and groceries
· Essential services: telecommunications, electricity, gas, energy, and financial services
· Aviation
· Digital economy
· Unfair contract terms
· Consumer guarantees
· Consumer product safety issues for young children
· National Disability Insurance Scheme (NDIS) providers
The enduring priorities which the ACCC consider as detrimental enough to regard as long-term priorities include:
· Cartel conduct
· Anti-competition conduct
· Product safety
· Consumers experiencing vulnerability or disadvantage
· Conduct impacting First Nations Australians
· Small businesses
· Scams
Providers should be cautious of these priorities which could lead to changes in the various sectors and increased enforcement risk. For more information, see the full compliance and enforcement policy and priorities list here: https://www.accc.gov.au/system/files/compliance-enforcement-policy-priority-2024_0.pdf
Online florist to pay $1 million for false and misleading representations
The Federal Court in Australia has ordered Bloomex to pay AUD $1 million in penalties for misleading online star ratings and price representations. The Canadian online florist and gift retailer admitted it had breached Australian Consumer Law when it published misleading star ratings for its products, advertised products at a discount when they were not sold for the original higher price it claimed, and did not sufficiently disclose added surcharges.
In addition to ordering Bloomex to pay the AUD $1 million in penalties, the Court also imposed injunctions, and ordered that Bloomex establish a compliance program and pay the ACCC’s costs. The penalty and various other orders signify the severeness of misleading consumers over a long period of time and is something businesses should be extremely cautious of.
The key takeaways here are:
ensure with ‘strikethrough’ and ‘X% off’ pricing claims that the products have previously been sold at the higher price displayed (and for a reasonable period before the sale;
disclose added fees and surcharges upfront rather than dripping throughout the online checkout process; and
ensure your online reviews and product ratings are accurate and current. This is particularly important as fake online reviews and misleading representations in the digital economy is an area of ongoing interest for the ACCC.
ACCC takes proceedings against Mosaic Brands for false or misleading delivery times
On 4 March 2024, proceedings commenced in the Federal Court against Mosaic Brands, the owner of online clothing cites Noni B, Rivers and Katies, for allegedly breaching the Australian Consumer Law. The potential breach consists of allegedly failing to deliver several hundred thousand products to customers within the delivery time frame advertised on its website. The alleged advertisements stated that items would be delivered between two and seventeen days from purchase. The ACCC claims that 26% of deliveries were outside of this period, and thus made false or misleading representations to consumers. Additionally, the ACCC also alleged that Mosaic Brands wrongfully accepted payment for goods when it failed to deliver orders within the advertised (or reasonable) timeframes or failed to deliver at all.
This case will be one to watch and acts as a reminder for all businesses to meet claims for delivery and other services.
Proposed law to direct market complaints to ACCC
The Competition and Consumer (Fair Go for Consumers and Small Businesses) Amendment Bill (the Bill) was introduced into Parliament on 15 February 2024. The Bill proposes to enable certain consumer advocacy and small business groups to make designated complaints to the ACCC. The ACCC will then be required to assess the designated complaint and publicly respond within 90 days. The ACCC’s response must state what further action, if any, will be taken in response to the complaint. The ACCC have supported the Bill. Similar schemes operate in the United Kingdom and Canada.
This may result in increased enforcement action by the ACCC due to matters referred to it from consumer and small business advocacy groups, and any decisions by the ACCC regarding these complaints, being made public (which could result in negative publicity and brand damage).
New Zealand
NZ Court of Appeal confirms that offshore manufacturers are liable under Consumer Guarantees Act
On 15 December 2023, the Court of Appeal in Body Corporate Number DPS 91535 & Ors v 3A Composites GmbH confirmed that overseas manufacturers are subject to the New Zealand Consumer Guarantees Act 1993 regardless of whether they have a place of business in New Zealand. Thus, both the supplier and overseas manufacturer have a legal obligation to provide safe and quality goods in New Zealand, and can be held liable if they fail to meet warranties under the Act. This gives consumers rights against overseas manufacturers in regard to breaches of guarantees, ensuring higher quality and accountability from providers.
MEDICINES & COSMETICS
Australia
TGA fines Liquefy Health for unlawful importation and advertising of unapproved complementary medicines
The TGA has issued 4 infringement notices totaling $75,120 against Liquefy Health for importing and marketing 2 ‘shot’ wellness drinks. The TGA alleges that these wellness drinks are unapproved complementary medicines that are required to be registered on the Australian Register of Therapeutic Goods (ARTG). As the complementary medicines were not registered on the ARTG at the time of the importation and advertising, this is an offence under the Australian therapeutic goods laws.
This decision can act as a reminder to providers on the importance of registering complementary medicines, even for products such as wellness ‘shots’ that do not appear to be medicines on face value.
TGA issues safety advisory statement for Ashwagandha
On 22 February 2024 the TGA published a safety notice regarding medicines containing Withania somnifera (Ashwaghanda). The TGA highlighted the serious side effects that can occur in some people when consuming the widely used and accessible Ashwaghanda. The safety notice specifically discusses the potential effects of gastrointestinal symptoms and in very rare occasions, liver injury.
Currently, listed medicines under the ARTG containing over a certain amount of Ashwaghanda are required to include a warning statement. No further action is required, where the safety notice intends to act as a general warning to consumers, health professionals and sponsors.
The Environmental Protection Authority of New Zealand has announced it will ban PFAS in cosmetics
The Authority have announced that PFAS (perfluoroalkyl and polyfluoroalkyl substances) or also known as ‘forever chemicals’, will be banned in cosmetic products in New Zealand. This is following growing concerns and evidence surrounding the environmental and health effects of PFAS. PFAS is used in products to resist water, heat, oil, and stains, and are subsequently used in various cosmetic products. The strong bonds mean the chemical does not break down easily, which can cause build up in our bodies and potentially be toxic.
The announcement means that from 31st December 2026, the import or manufacturing or cosmetics containing PFAS will be prohibited in New Zealand. Additionally, by 31st December 2027, selling or supplying cosmetics containing PFAS in New Zealand will be banned, and by 30th June 2028, all PFAS-containing cosmetic products will need to be disposed of.
Although the ban may not affect many New Zealand cosmetic companies due to its limited use in New Zealand cosmetics, overseas providers will require higher regulation of PFAS. The decision indicates positive change and is one of the many updates that have been made to the Cosmetic Products Group Standard, ensuring cosmetic products are safe and strengthen regulations to keep up with international developments.
Footnotes:
[1] https://www.ama.com.au/ama-rounds/29-march-2024/articles/ama-calls-digital-black-out-junk-food-ads
[2] https://www.rethinksugarydrink.org.au/media/call-for-health-levy-on-sugary-drinks.html
[3] https://www.australianbeverages.org/calls-for-a-tax-on-soft-drinks-misguided/
[4] https://www.agite.nz/
[5] https://www.foodstandards.gov.au/food-standards-code/applications/a1284-triacylglycerol-lipase-gm-trichoderma-reesei-processing-aid
[6] https://www.foodstandards.gov.au/food-standards-code/applications/a1287-food-derived-short-stature-corn-line-mon94804
[7] https://www.food.gov.uk/business-guidance/food-allergen-labelling-and-information-requirements-technical-guidance-general-background-on-allergens
[8] https://www.thegrocer.co.uk/supply-chain/gca-examining-impact-of-code-circumventing-middlemen/688090.article
[9] https://consult.gov.scot/population-health/restriction-promotion-of-food-and-drink-proposed/
[10] https://www.asa.org.uk/rulings/bkuk-group-ltd-a23-1210912-bkuk-group-ltd.html
[11] https://www.asa.org.uk/rulings/hovis-ltd-a23-1217043-hovis-ltd.html
The content in this article does not constitute legal advice and should not be relied on as such. Essence may change the content described on the site at any time without prior notice.