Heinz hit with $2.25m in penalties for misleading advertising claims

Heinz has been hit with $2.25 million in penalties by the Federal Court of Australia for making misleading advertising claims about the nature of its Little Kids Shredz products.

The Australian Competition and Consumer Commission (ACCC) initially took action against HJ Heinz Company Australia in June 2016, alleging the FMCG had made misleading health claims that its Little Kids Shredz products were beneficial for young children aged 1-3 years. This, however, was not the case, with the product containing approximately two-third sugar.

In March 2018, the Federal Court confirmed Heinz had breach Australian Consumer Law by making such claims. The ACCC had initially sought a $10 million penalty. On 24 August, the courts ordered Heinz to pay penalties totalling $2.5 million, as well as establish a consumer law compliance program and pay the ACCC’s costs.

The ACCC said it’s carefully considering the judgment, with chair, Rod Sims, saying the watchdog was keen to ensure penalties for breaches of the consumer law are “large enough to get the attention of financial markets, boards and senior management”.  

“The Heinz Group is one of the largest food companies in the world. We will continue to advocate for stronger penalties to deter large companies from engaging in serious contraventions of Australia’s consumer laws, particularly now that Parliament has passed legislation substantially increasing the maximum penalties for breaches of the ACL,” Sims said in a statement.

In its initial proceeding against Heinz, the ACCC alleged the company made false and misleading representations, and engaged in conduct liable to mislead the public in relation to the nature, characteristics and suitability of its Little Kids Shredz products. These included statements claiming the product was ‘99 per cent fruit and veg’ and that the food was ‘nutritious’.

At the time, the ACCC pointed out the products contained upwards of 60 per cent sugar, a far greater ratio than an apple, for example, which is about 10 per cent sugar. Its actions followed a complaint made by the Obesity Policy Coalition about food products for toddlers that made such claims when they in fact were predominantly made from fruit juice concentrate and pastes which had much higher sugar content that raw fruit and vegetables.

In making its judgment in March 2018, the Federal Court found Heinz had made a misleading health claim that the product range, which includes three varieties, were beneficial for young children.

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