Organic Panic: ACCC waters down organic claims

Published On 29/07/2013 | By Calantha Chan | Consumer protection, Enforcement

With the prospect of enforcement action from the Australian Competition and Consumer Commission (ACCC) for the use of misleading ‘credence’ claims, seven manufacturers in the bottled water industry have dropped claims that their product is ‘organic’, whilst another has removed its brand from sale.

The manufacturers had featured the claims in labelling and marketing material, including in many of the brand names.  A number of the manufacturers argued that the word ‘organic’ was not a representation but simply part of the brand name.  The ACCC rejected this argument on the basis that misleading claims cannot be hidden with brand names.  As a result, Active Organic, Lithgow Valley Springs Organic, Nature’s Best Organic, Organic Australia, Organic Falls, Organic Nature’s Best and Organic Springs have been renamed.

Credence claims such as ‘organic’ are a stated focus for the ACCC in 2013.  These are claims that give the impression that a product, or one of its attributes, has some kind of added benefit when compared to similar products and services but in actual fact, the veracity of the claim cannot be ascertained by the consumer.

Consumers are increasingly making their purchasing decisions based on the integrity and quality of a product.  As such, the ACCC is concerned by the potential for a misleading credence claim such as ‘organic’ to influence consumers and disadvantage competitors because it can be used to justify higher prices and create a competitive advantage for the user.

According to the ACCC, there is no support in Australian authority for water being organic. Furthermore, standards including the mandatory standard covering exports states that water cannot be organic. The word ‘organic’ in the context of food and drink refers to agricultural products which have been farmed according to certain practices – as water is not an agricultural product, it cannot be organic.  On this basis, the ACCC considered the use of the word ‘organic’ to be misleading.

Interestingly, the ACCC did not pursue enforcement against the manufacturers. Others have not been so lucky with the Federal Court recently finding Baiada to be misleading in labelling 15 chickens as “free to roam”, and each of Kingisland
and Hooker Meats for misleading claims that their respective meat was sourced from King Island.  In this case, the ACCC seems to have been happy to accept the proactive steps of the water companies to relabel their products and avoid enforcement action.

About The Author

Winter Clerk at King & Wood Mallesons

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