Australian Competition and Consumer Commission v Nudie Foods Australia Pty Ltd [2008] FCA 943

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Nudie Foods Australia Pty Ltd [2008] FCA 943

TRADE PRACTICES –misleading or deceptive conduct – sale of fruit juices – labels and promotional materials – representations as to content – representations that drinks comprise cranberry juice and cranberry juice with blueberries – drinks largely comprised of apple juice – contraventions admitted – declarations, injunctive relief and other orders by consent

Trade Practices Act 1974 (Cth) Australian Competition and Consumer Commission v Real Estate Institute of WA Inc (1999) 161 ALR 79 cited AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v NUDIE FOODS AUSTRALIA PTY LTD

WAD 32 of 2008

FRENCH J

19 JUNE 2008

PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 32 of 2008

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND: NUDIE FOODS AUSTRALIA PTY LTD

Respondent

JUDGE: FRENCH J

DATE OF ORDER: 19 JUNE 2008

WHERE MADE: PERTH

THE COURT DECLARES THAT: 1. Between 1 July 2007 and 30 January 2008, by supplying to retailers for sale to consumers fruit juice called "Rosie Ruby": 1.1 in a transparent plastic screw top bottle of 1.25 litre capacity, approximately 28cm high, with packaging which included the following characteristics: (i) a wrap-around label with the name "Rosie Ruby" in large and prominent font on the front and rear of the label; (ii) the front and rear of the label describingthe product as "cranberry cloudy juice"; (iii) on the front of the label,below the name described in paragraph 1.1(i) and adjacent to the description in paragraph 1.1(ii), a prominent picture of a cranberry on a white background; (v) nopictorial representation on the labelof any other type of fruit; (vi) the visible contents of the bottle being ofsubstantially the same colour as the fruit pictured on the label and referred to in paragraph1.1(iii), the Respondent ("Nudie") represented to consumers that: 1.2 the juice in Rosie Ruby consisted solely of cranberry juice; 1.3 any constituent fruit juice in Rosie Ruby other than cranberry juice was insubstantial, which representations were misleading and deceptive by reason of the fact that: 1.4 the proportion of cranberry juice in Rosie Ruby is 20%; 1.5 the proportion of apple juice in Rosie Ruby is 80%, and thereby, in trade and commerce: 1.6 engaged in conduct that was likely to mislead and deceive those members of the public who purchase fruit juice in contravention of section 52(1) of the Trade Practices Act 1974 (the Act); and 1.7 engaged in conduct that was liable to mislead those members of the public who purchase fruit juice as to the nature or characteristics of the product in contravention of section 55 of the Act. 2. Between 1 July 2007 and 30 January 2008, by supplying to retailers for sale to consumers, fruit juice called "Rosie Blue": 2.1 in a transparent plastic screw top bottle of 1.25 litre capacity approximately 28cm high with packaging which included the following characteristics: (i) a wrap-around label with the name "Rosie Blue" in large and prominent font on the front and rear of the label; (ii) the front and rear of the label describing the product as "cranberry blueberry juice"; (iii) on the front of the label,below the name described in paragraph 2.1(i) and adjacent to the description in paragraph 2.1(ii), a prominent picture of a cranberry and a blueberry on a white background; (iv) nopictorial representation on the labelof any other fruit on the label; (v) on the front of the label,beneath the picture referred to in paragraph 2.1(iiii) above, at the bottom and rear of the label, the words, "no preservatives, additives, added sugar or guilt", Nudie represented to consumers that: 2.2 the juice in Rosie Blue consisted solely of cranberry juice and blueberry juice; 2.3 any constituent fruit juice in Rosie Blue other than cranberry and blueberry juice was insubstantial, which representations were misleading and deceptive by reason of the fact that: 2.4 the proportion of apple juice in Rosie Ruby is 78%; 2.5 the proportion of cranberry juice is 15%; and 2.6 the proportion of blueberry juice is 7%, and thereby, in trade and commerce: 2.7 engaged in conduct that was likely to mislead and deceive those members of the public who purchase fruit juice in contravention of section 52(1) of the Act; and 2.8 engaged in conduct that was liable to mislead those members of the public who purchase fruit juice as to the nature or characteristics of the product in contravention of section 55 of the Act. 3. Between 20 August 2007 and 16 September 2007, by procuring placement of signboards on buses, and trams, and street posterswhich: 3.1 describedRosie Ruby as "cranberry cloudy juice"; 3.2 describedRosie Blue as "cranberry blueberry juice"; 3.3 stated "NOTHING ADDED, NOTHING GAINED (PHEW)" in conjunction with describing the product as being "Chilled cranberry juice with no added sugar. And no guilt", Nudie represented to consumers that: 3.4 Rosie Ruby consisted solely of cranberry juice; 3.5 Rosie Blue consisted solely of cranberry juice and blueberry juice, which representations were false, misleading and deceptive to those members of the public who buy fruit juice by reason of the fact that: 3.6 the proportion of apple juice in Rosie Ruby is 80%; 3.7 the proportion of cranberry juice in Rosie Ruby is 20%; 3.8 the proportion of apple juice in Rosie Blue is 78%; 3.9 the proportion of cranberry juice in Rosie Blue is 15%; 3.10 the proportion of blueberry juice in Rosie Blue is 7%, and thereby: 3.11 engaged in conduct that was likely to mislead and deceive those members of the public that purchase fruit juice in contravention of section 52(1) of the Act; 3.12 in connection with the supply or promotion of Rosie Ruby and Rosie Blue, falsely represented that the products were of a particular composition in contravention of section 53(a) of the Act; and 3.13 engaged in conduct that was liable to mislead those members of the public that purchase fruit juice as to the nature or characteristics of the product in contravention of section 55 of the Act. 4. Between 3 September 2007 and 16 September 2007 by procuring placement ofsignboards on buses, and trams, which: 4.1 describedRosie Ruby as "cranberry cloudy juice"; 4.2 described Rosie Blue as "cranberry blueberry juice"; 4.3 stated "IT'S WHAT WE DON'T PUT IN THAT YOU DON'T PUT ON" in conjunction with use of the words "Chilled cranberry juice with no added sugar. And no guilt", Nudie represented to consumers that: 4.4 Rosie Ruby consisted solely of cranberry juice; 4.5 Rosie Blue consisted solely of cranberry juice and blueberry juice, which representations were false, misleading and deceptive by reason of the fact that: 4.6 the proportion of apple juice in Rosie Ruby is 80%; 4.7 the proportion of cranberry juice in Rosie Ruby is 20%; 4.8 the proportion of apple juice in Rosie Blue is 78%; 4.9 the proportion of cranberry juice in Rosie Blue is 15%; 4.10 the proportion of blueberry juice in Rosie Blue is 7%, and thereby: 4.11 engaged in conduct that was likely to mislead and deceive those members of the public that purchase fruit juice in contravention of section 52(1) of the Act; 4.12 in connection with the supply or promotion of Rosie Ruby and Rosie Blue, falsely represented that the products were of a particular composition in contravention of section 53(a) of the Act; and 4.13 engaged in conduct that was liable to mislead those members of the public that purchase fruit juice as to the nature or characteristics of the product in contravention of section 55 of the Act. 5. Between 3 September 2007 and 16 September 2007 by procuring placement of street posters which: 5.1 described Rosie Ruby as "cranberry cloudy juice"'; 5.2 described Rosie Blue as "cranberry blueberry juice"; 5.3 stated "NOTHING ADDED NOTHING GAINED (PHEW)" in conjunction with use of the words "Chilled cranberry juice with no added sugar. And no guilt", Nudie represented to consumers that: 5.4 Rosie Ruby consisted solely of cranberry juice; 5.5 Rosie Blue consisted solely of cranberry juice and blueberry juice, which representations were false, misleading and deceptive by reason of the fact that: 5.6 the proportion of apple juice in Rosie Ruby is 80%; 5.7 the proportion of apple juice in Rosie Blue is 78%; 5.8 the proportion of cranberry juice in Rosie Ruby is 20%; 5.9 the proportion of cranberry juice in Rosie Blue is 15%; 5.10 the proportion of blueberry juice in Rosie Blue is 7% of the product, and thereby: 5.11 engaged in conduct that was likely to mislead and deceive those members of the public that purchase fruit juice in contravention of section 52(1) of the Act; 5.12 in connection with the supply or promotion of Rosie Ruby and Rosie Blue, falsely represented that the products were of a particular composition in contravention of section 53(a) of the Act; and 5.13 engaged in conduct that was liable to mislead those members of the public that purchase fruit juice as to the nature or characteristics of the Rosie Ruby product and the Rosie Blue product in contravention of section 55 of the Act. 6. Between 16 January 2008 and 30 January 2008 by circulatingpostcard promotional flyers which: 6.1 described Rosie Ruby as "cranberry cloudy juice"; 6.2 described Rosie Blue as "cranberry blueberry juice"; 6.3 stated on one side that, "At Rosie we can't help but look at the fun side of life. With no added sugar or preservatives, you can enjoy the refreshing taste of real cranberries whenever (or however) you like and feel great about it" together with a pictorial representation of the packing and labelling of Rosie Ruby and Rosie Blue; and 6.4 on their reverse side featured a pictorial representation of a single cranberry and blueberry together with the words "Chilled cranberry juice with no added sugar. And no guilt", Nudie represented to consumers that the products: 6.5 Rosie Ruby consisted solely of cranberry juice; 6.6 Rosie Blue consisted solely of cranberry juice and blueberry juice, which representations were false, misleading and deceptive by reason of the fact that: 6.7 the proportion of apple juice in Rosie Ruby is 80%; 6.8 the proportion of apple juice in Rosie Blue is 78%; 6.9 the proportion of cranberry juice in Rosie Ruby is 20%; 6.10 the proportion of cranberry juice in Rosie Blue is 15%; 6.11 the proportion of blueberry juice in Rosie Blue is 7%, and thereby: 6.12 engaged in conduct that was likely to mislead and deceive those members of the public that purchase fruit juice in contravention of section 52(1) of the Act; 6.13 in connection with the supply or promotion of the Rosie Ruby and Rosie Blue fruit juice falsely represented that the products were of a particular composition in contravention of section 53(a) of the Act; and 6.14 engaged in conduct that was liable to mislead those members of the public that purchase fruit juice as to the nature or characteristics of the product in contravention of section 55 of the Act. THE COURT ORDERS THAT: Injunction 7. Nudie is restrained, for a period of 3 years from the date of these Orders, in relation to the Nudie Products (as defined in paragraph 8 below) whether by its directors, employees or otherwise from: 7.1 supplying or marketing or causing to be supplied or marketed, any Nudie Products bearing labels or packaging that use a product name or description that includes the name of a fruit but does not in the product name or description either: (i) identify all of the fruits used in making the Nudie Product; or (ii) alert the consumer to the fact that fruit or fruits other than those identified in the product name or description were used in making the Nudie Product; 7.2 supplying or marketing or causing to be supplied or marketed, any Nudie Products bearing labels or packaging that display a picture or graphic representation of one or more of the fruits used in making the Nudie Product without including a picture or graphic representation of every fruit, which contributes (by way of liquids and suspended solids) used in making the Nudie Product that comprises more than 5% of the Nudie Product by volume; and 7.3 publishing or otherwise disseminating, or causing to be published or otherwise disseminated, any advertising or promotional material that represents that the juice in a Nudie Product consists solely of the juice of a particular fruit or particular fruits when the Nudie Product contains the juice of other fruits. 8. For the purpose of paragraph 7, "Nudie Products" means any juice product produced, manufactured or marketed by Nudie where Nudie has control over the form and content of the labels and packaging in relation to the product name or description used for the product including, for example, the Rosie Ruby and Rosie Blue products and the following Nudie branded products; "nudie squishies"; "nudie smoothies"; "nudie crushies"; "nudie juicies"; and "fire fighter nudies". For the avoidance of doubt, Nudie shall not be taken to have control over the form and content of the labels and packaging where its control goes only to the treatment of Nudie's brand and logo. Corrective Advertisement 9. Within 7 days of the date of this order Nudie, at its own expense, is to cause to be published a corrective notice in the form of Annexure A to these orders on its website www.nudie.com.au and www.lifeisrosie.com.au which shall be: 9.1 viewable immediately on-screen after the www.lifeisrosie.com.au website is opened; and 9.2 viewable by clicking a link on the www.nudie.com.au website. That link is to be no smaller than 10cm wide by 3cm high, as viewed on a standard 21" computer monitor, and titled "Important Corrective Information about Rosie Products", and 9.3 displayed on the www.nudie.com.au and www.lifeisrosie.com.au websites for a period of not less than 60 days from first publication. 10. Within 7 days of the date of this order Nudie is to send by prepaid post to each and every retailer to whom it supplied Rosie Ruby or Rosie Blue products during the relevant period a letter in the form of Annexure B to these orders. Trade Practices compliance program 11. Nudie: 11.1 within two months of the date of this order, is to establish an education training and trade practices compliance program designed: (i) to minimise its risk of future breaches of Part V of the Act and to ensure that all directors, officers and employees of Nudie, whose direct duties could result in them being concerned with the conduct of Nudie that may contravene Part V of the Act, have an awareness of their responsibilities and obligations in relation to the requirements of sections 52, 53(a) and 55 of the Act ("Compliance Program"); (ii) to provide for regular (at least once a year) and practical trade practices training for the persons referred to in paragraph 11.1(i) above. The training is to be conducted by either the Compliance Officer (as defined in paragraph 11.3 below), or by a suitably qualified compliance professional or legal practitioner with expertise in trade practices law; (iii) to ensure that the Compliance Officer approves the content of labels and promotional material relating to juice products prior to use of that material by Nudie; (iv) to include a Trade Practices Complaint Handling system to record, store and respond to trade practices complaints; and (v) subject to the Compliance Program being tailored to Nudie's circumstances, to be consistent with Australian Standard on Compliance Programs AS3806. 11.2 is to administer and maintain the Compliance Program for a period of three years from the date it is established; 11.3 within one month of the date of these Orders is to appoint a Director or a Senior Manager with suitable qualifications, training or experience in corporate compliance as Compliance Officer (the Compliance Officer) with responsibility for ensuring the Compliance Program is effectively designed, implemented and maintained; 11.4 within three months of the date of this Order is to provide a written report to the Applicant on the implementation and content of the Compliance Program; and 11.5 is to provide a further report to the Applicant on the implementation and administration of the Compliance Program at the conclusion of each period of 12 months during which the program is being implemented and administered. Costs 12. Nudie pay the Applicant's costs to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.