WA producer cops $750,000 Federal Court fine in ACCC's ‘free range’ egg crackdown

The Federal Court today ordered Snowdale Holdings pay penalties relating to ‘free range’ egg claims, as part of legal proceedings brought to trial by the Australian Competition and Consumer Commission (ACCC) as part of an ongoing crackdown on false claims.

ACCC Commissioner Mick Keogh said the $750,000 fine was the highest penalty a Court had ordered, in relation to misleading ‘free range’ egg claims.

Mr Keogh said the fine reflected the “seriousness” of Snowdale’s conduct and the importance of egg producers being truthful about marketing claims they make.

“Consumers pay a higher price for free range eggs, so when a ‘free range’ claim is made, it’s important that consumers are purchasing eggs laid by chickens in free range conditions,” he said.

“Farmers who have invested in changes to their farming practices so they can make valid credence claims such as ‘free range’ also need protection from others making false credence claims.”

In May 2016 the Federal Court found Snowdale’s labelling of its eggs as ‘free range’ between April 2011 and December 2013 was misleading or deceptive and amounted to false or misleading representations.

At the time, the company’s proprietor Barry Cocking indicated he would appeal the decision.

He has been contacted for comment on the court’s decision today but did not return calls, by deadline.

The Court found that most of the hens from Snowdale’s sheds did not go outside as the farming conditions significantly inhibited them from doing so.

The conditions included the number of pop holes, the number of birds per metre of pop hole, flock size inside the shed and shed size.

The Court also made an order preventing Snowdale from using the words ’free range’ in connection with its eggs unless the eggs are produced by hens that can go outside on ordinary days and most of which actually go outside on most days.

Snowdale was also ordered to implement a consumer law compliance program and pay a contribution towards the ACCC’s costs.

The company supplied eggs labelled as ‘free range’ in WA – to major retailers like Coles and Woolworths - under brands including Eggs by Ellah, Swan Valley Free Range and Wanneroo Free Range and promoted eggs as ‘free range’ on the Eggs by Ellah website from May 2013.

The ACCC’s broader work in the area of ‘free range’ claims includes Free Range Egg Farms being ordered to pay $300,000 penalty for false or misleading claims and a $250,000 penalty against Darling Downs Fresh Eggs for the same offence.

The Humane Society International (HSI) said it was pleased Snowdale had been ordered to pay more than $1 million via the $750,000 fine and an additional $300,000 in court costs.

It said the case was brought by the ACCC following a compliant made by the HSU and was “a major victory for Australian consumers” director Verna Simpson said.

She said it was also the highest penalty ever handed down in a case of this kind.

“This company had been charging a premium for eggs produced in anything but free range conditions for 14 years - consumers can be thankful that justice has been served and Snowdale Holdings have been held to account for their deception,” she said.

HSU said it submitted a formal complaint to the ACCC in 2012 after initial investigations revealed Snowdale may have been falsely labelling their eggs as 'free range'.

Ms Simpson said Snowdale was a major supplier to Coles and Woolworths but “How this massive deception was not uncovered by the supermarkets' own quality assurance schemes is a question that still needs to be answered”.

“If Coles and Woolworths had revealed this consumer fraud years ago then such a travesty would not have been allowed to continue for more than a decade,” she said.

"The current free range egg price wars are another example.

“You can be sure that if you are only paying $4 a dozen then the eggs are not genuine free range.

“At that price the producer would go broke.”

In March 2015, Mr Cocking gained support from federal Senators who wrote to the ACCC expressing concerns about the case going ahead, despite the lack of a formally recognised standard on free-range eggs and public statements by the competition watchdog Chair about free range standards.

“Mr Cocking firmly believes his operation does meet the definition of free-range eggs as his hens are able to roam freely outside,” said the letter to the ACCC, signed by several Senators and also sent to the Agriculture Minister Barnaby Joyce.

“On one hand the ACCC is prosecuting an egg producer for allegedly misleading consumers on the definition of free-range, yet you admit there is no such definition.

“The crux of the matter is that Mr Cocking faces a mammoth legal bill to prove his innocence for not following rules that don’t appear to exist.”

In April 2017, Commonwealth, State and Territory Consumer Affairs Ministers introduced a national information standard under the Australian Consumer Law.

The standard requires eggs labelled as ‘free range’ to have been laid by hens with meaningful and regular access to the outdoors and with a maximum outdoor stocking density of 10,000 hens.