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100% New Zealand made? Product of Australia?

November 03, 2016

Advertising Consumer law

In 2016 country of origin claims were a hot topic for New Zealand and Australian consumers and regulators. We summarise the key developments in both countries.

Country of origin claims: why they matter

Country of origin claims are statements made by businesses that products are manufactured, grown or otherwise produced in a certain country.

Consumers and businesses are often prepared to pay a premium for goods from a certain country in the expectation that those goods will be superior. A consumer cannot be reasonably expected to verify a country of origin claim.

If the claims aren't true consumers are being cheated on the premium they pay, consumer confidence in such claims will be eroded, and the responsible businesses who are living up to the claim will suffer too.

For these reasons regulators in New Zealand and Australia have been particularly interested in businesses who are making false or misleading country of origin claims.

New Zealand developments

In New Zealand a country of origin claim must be accurate and capable of being substantiated, otherwise the businesses making the claim will breach the Fair Trading Act 1986 (FTA).

The New Zealand courts have considered two significant country of origin cases this year:

  • Misleading claims about origin of dietary supplements

The Commerce Commission successfully prosecuted a nutrition company that claimed its tablets were "100% New Zealand made". Although the tablet ingredients were blended in New Zealand the key ingredient, goats' milk powder, was imported from overseas.

The judge found the country of origin claim to be misleading because a reasonable person on reading the claim would think that the product was made from New Zealand goats' milk. The judge said it was unrealistic to suggest that consumers reading the "100% New Zealand made" claim would expect or understand that the product was only blended and packaged in New Zealand and that the goats’ milk might have come from overseas.

Declarations were issued recognising the business' breach of various sections of the FTA. Read more about this decision in the Commerce Commission's media release.

  • False claims about origin of alpaca duvets

An Auckland duvet and rug business was convicted for falsely claiming that its duvets were made of alpaca wool and made in New Zealand, when in fact the duvets were sheep wool and made in China.

The claims were made on the duvet labelling, packaging and invoices, as well as in conversation with Commerce Commission investigators.

The company was fined $91,000 and the business owner $18,200. Read more about this decision in the Commerce Commission's media release.

Australian developments

In Australia, a country of origin claim must not be false or misleading, otherwise it will breach the Australian Consumer Law. While country of origin claims are largely voluntary, Australia has recently introduced compulsory country of origin labelling for food.

  • Misleading representation of Sheepskin footwear origin

An Australian footwear company paid a penalty of $10,800 following the issue of an infringement notice by the Australian Competition and Consumer Commission (ACCC).

The ACCC claimed that the statements and images on the company's website represented that the footwear was made in Australia, when it was actually made in China. The representations included attaching the Australian Made logo to the footwear, together with statements that the footwear was "truly Australian made" in Canberra. The ACCC noted that the value attached to a country of origin claim is a key driver in ensuring that businesses are held to high standards when claiming goods are Australian made.

Read more about the ACCC's investigation in its media release.

  • Legislative developments in the food space

The Australian government has introduced a number of new measures to help protect consumers from misleading country of origin claims in the food space.

From July a reform of country of origin labelling for food in Australia was instigated, with the intention of clarifying claims like "made in" and "product of". Many foods are now required to display a logo that demonstrates the proportion of Australian ingredients used. New labels will need to be applied to products to show whether they are:

  • grown, produced or made in Australia;
  • packaged in Australia;
  • grown, produced or made in another country; or
  • packaged in another country.

Businesses have two years to transition to the new arrangements with current stock in trade being allowed to see out its use-by-date. You can read more about these Australian food labelling reforms here.

What does this mean for you?

The Commerce Commission and the ACCC have both said they will continue to focus on country of origin claims.

Accordingly, if you want to make country of origin claims, you should carefully consider:

  • what proportion of your product is produced, manufactured or processed in the relevant country; and
  • if any part of the product is sourced/produced/prepared overseas, whether a country of origin claim will mislead a consumer about the product's characteristics or manufacturing history.

If you're concerned about your advertising claims or have any questions about your obligations - give us a call. We're always happy to help.