Australian Competition and Consumer Commission v H.J. Heinz Company Australia Limited
[2018] FCA 360
•19 March 2018
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v H.J. Heinz Company Australia Limited [2018] FCA 360
File number: SAD 181 of 2016 Judge: WHITE J Date of judgment: 19 March 2018 Catchwords: CONSUMER LAW – H.J. Heinz Company Australia Ltd (Heinz) manufactures and supplies food products – Heinz supplied three “Shredz” products as appropriate for 1-3 year old children – whether the packaging of the products conveyed representations that they were of an equivalent nutritional value to the natural fruit and vegetables depicted on their packaging (the Nutritional Value Representations) – whether the packaging of the products conveyed representations that they were a nutritious food and beneficial to the health of children aged 1‑3 years (the Healthy Food Representation) and, if so, whether the representations were misleading or deceptive, or likely to mislead or deceive – whether the packaging conveyed representations that the products would encourage the development of healthy eating habits for children aged 1‑3 years (the Healthy Habits Representation) – whether Heinz knew or ought to have known that the representations were made and that they were misleading or deceptive.
Held:
1. Neither the Nutritional Value Representations nor the Healthy Habits Representations were conveyed by the packaging.
2. The Healthy Food Representations were conveyed and were misleading or deceptive insofar as they represented that the products are beneficial to the health of children aged 1‑3 years;
3. Heinz ought to have been aware that the Healthy Food Representations had been conveyed and that they were misleading or deceptive; and
4. Contraventions of s 18(1) and s 29(1)(g) of the Australian Consumer Law are established.
Legislation: Australian Consumer Law s 18, 29, 33, 224
Competition and Consumer Act 2010 (Cth) s 155
Evidence Act 1995 (Cth) s 140(2)
Trade Practices Act 1974 (Cth) s 53
Cases cited: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; (2015) 317 ALR 73
Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2014] HCA 54, (2013) 250 CLR 640
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12, (2000) 202 CLR 45
Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60, (2017) 122 IPR 395
CPA Australia Ltd v Dunn [2007] FCA 1966; (2007) 74 IPR 495
Gardam v George Wills & Co Ltd (No 1) (1988) 82 ALR 415
Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435
Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCAFC 181, (2008) 171 FCR 579
New South Wales Lotteries Corporation Pty Ltd v Kuzmanovski [2011] FCAFC 106, (2011) 195 FCR 234
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Peter Bodum A/S v DKSH Australia Pty Ltd [2011] FCAFC 98, (2011) 280 ALR 639
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1
Trade Practices Commission v J&R Enterprises Pty Ltd (1991) 99 ALR 325
Date of hearing: 24‑28 July 2017 Date of last submissions: 3 August 2017 Registry: South Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 318 Counsel for the Applicant: Mr TP Duggan SC with Ms KE Clark Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent: Ms R Orr QC with Mr N De Young Solicitor for the Respondent: Minter Ellison ORDERS
SAD 181 of 2016 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: H.J. HEINZ COMPANY AUSTRALIA LIMITED ACN 004 200 319
Respondent
JUDGE:
WHITE J
DATE OF ORDER:
19 march 2018
THE COURT ORDERS THAT:
1.The matter is adjourned for further submissions to a date to be fixed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
WHITE J:
Introduction
[1]
The products
[4]
The packaging
[7]
The pleaded representations
[23]
The statutory provisions and principles
[30]
The relevant class of purchasers
[48]
The witnesses in the trial
[52]
The Berries Product Nutritional Value Representation
[55]
The Berries Product Healthy Food Representation
[72]
Some general observations concerning the pleaded representation
[73]
Was the Healthy Foods Representation conveyed?
[79]
Was the Berries Product Healthy Food Representation false or misleading?
[105]
The ACCC pleaded case
[105]
Nutrition and health benefits: The expert witnesses
[116]
The process of manufacture
[132]
Is the Berries Product nutritious?
[140]
Is the Berries Product beneficial to the health of children aged 1-3 years?
[148]
The high level of sugar
[150]
Consumption of fresh fruit and vegetables and healthy eating habits
[178]
The low moisture content and high energy density
[184]
Low satiety values
[191]
The effect on dental health
[196]
Conclusion on whether the Berries Product is beneficial to the health of toddlers
[232]
The Shredz Berries Healthy Habits Representation
[247]
The Peach Product
[260]
The Fruit and Chia Product
[263]
Sections 29(1)(a), 29(1)(g) and 33 of the ACL
[271]
Heinz’s knowledge
[279]
Summary
[314]
Introduction
The respondent, H.J. Heinz Company Australia Limited (Heinz), is a well‑known manufacturer and supplier of food products. This judgment concern three products in the Heinz “Little Kids” range with the name Shredz which Heinz supplied as appropriate for children in the 1‑3 year age group.
The Australian Competition and Consumer Commission (the ACCC) alleges that the packaging of each product contravened ss 18, 29(1)(a), 29(1)(g) and 33 of the Australian Consumer Law (the ACL) (Sch 2 to the Competition and Consumer Act 2010 (Cth) (the CC Act)). It seeks declarations, injunctions, the imposition of civil penalties, publicity orders and compliance program orders in respect of the alleged contraventions.
Heinz denies each of the allegations. On the agreement of the parties, the Court ordered that the issues of liability be heard and determined before the issues concerning the relief (other than the declarations) claimed by the ACCC.
The products
The three products were “Heinz Little Kids fruit & veg SHREDZ berries apple & veg” (the Berries Product), “Heinz Little Kids fruit & veg SHREDZ peach apple & veg” (the Peach Product) and “Heinz Little Kids fruit & chia SHREDZ strawberry & apple with chia seeds” (the Fruit and Chia Product) (collectively, the Products). They were manufactured in New Zealand by a contractor to Heinz, Taura Natural Ingredients Ltd (Taura). Each Product was a homogenous blend of ingredients derived from fruit and vegetables (save that the Fruit and Chia Product included a small amount (3%) of chia seeds).
Heinz had commenced selling the Berries Product and the Peach Product in July 2013 but these proceedings are concerned with the packaging it used in the period between August 2013 and 18 May 2016. Heinz sold the Fruit and Chia Product between January 2016 and 18 May 2016. Heinz informed its customers on 19 May 2016 that there would no further sales of any of the Products and it seemed to be common ground that sales of them had then ceased.
Each of the Products was sold in a light cardboard box 145 mm high, 110 mm wide and 30 mm deep. Each box contained five individually wrapped 18 g packets, and each packet contained several sticks of the product (38 mm x 3 mm x 3 mm), which were said by one witness to be similar in texture and taste to confectionery jubes. Several of the witnesses spoke of the Products having a stickiness similar to that of dried fruit.
The packaging
The packaging for each Product was of a generally similar kind. It is convenient to describe first the box for the Berries Product. It had a large stylised picture of a tree on the front. Two stylised images of a smiling boy climbing a rope ladder were on the front and back and, in one case, the ladder was attached to one of the tree’s branches. The picture of the tree continued around the right hand side of the box and continued on the reverse side. At the base of the tree (and on its left) on the front of the box was a coloured photograph of an apple, a strawberry, a raspberry, two blackcurrants, some sweetcorn kernels, and two slices of pumpkin alongside four of the sticks of the Berries Product. The sticks of the Berries Product are at the rear of the photograph with the effect that the depicted fruit and vegetables are more prominent. To the upper left of this picture were the words “Heinz Little Kids™” and underneath that:
fruit & veg
SHREDZ™
berries apple & veg
The front of the box contained the words “99% fruit and veg” and above that the words “No preservatives” and “No artificial colours or flavours”. Finally, the front of the box stated prominently “1-3 years”, indicated the product’s weight (90 g net), and indicated that it was made up of five packs each of 18 g.
The reverse side of the box contained the following (in smaller fonts than used on the front):
Heinz
Little Kids™
5 packs inside
Made with 99% fruit and vegetable
juice and purees, these tasty treats
are a fun and convenient snack for
toddlers on the go.
Our range of snacks and meals
encourages your toddler to
independently discover the delicious
taste of nutritious food. With our
dedicated nutritionists who are
also mums, we aim to inspire a loveof nutritious food that lasts a life time.
Right portion size for little tummies
Right size and shape for little hands
Right texture to encourage chewing
The reverse side of the box also listed the ingredients of the Berries Product and provided some information in a panel under the heading “Nutrition Information”, to which I will return shortly. The lists of ingredients and of nutrients are required under the Food Standards Code. One side of the box included the following:
Heinz
Little Kids™
tasty food discoveries
Our wide range of snacks
and meals is packed with
the tasty goodness of vegetables, fruits, grains,
meat and pasta to
provide nutritious
options of your toddler.Range includes
·Wholegrain Cereal Bars
·Yoghurt Muesli Fingers
·Mini Corn Cakes
·Pasta Meals
·Casseroles
An unfolded copy of the packaging for the Berries Product is attached as Appendix A to these reasons.
The box for the Peach Product was essentially the same, save only that the fruit and vegetables pictured at the foot of the stylised tree on this box were an apple, a slice of peach, some sweetcorn kernels and two slices of pumpkin alongside the four sticks of the Peach Product. To the upper left of this fruit were the words:
fruit & veg
SHREDZ™
peach apple & veg
The packaging for the Fruit and Chia Product was in the same style but with some differences. On this box, the items pictured at the foot of the tree were an apple, two strawberries, some chia seeds and four sticks of the Fruit and Chia Product. Immediately to the left of these items was a panel with the heading “Just the Good Stuff …”. At the left hand side of the panel was a stylised icon with the words “No Nasties”, “Naturally Sweet” and “Fruit”. Next to the icon, were three entries:
ŸNo artificial colours, flavours or preservatives
Ÿ99% from fruit ingredients and chia seeds
ŸNaturally sweetened with fruit ingredients
The reverse side of the Fruit and Chia Product box also contained a stylised panel with the heading “Just the Good Stuff …”. This panel contained four icons opposite which were the following entries:
ŸNo artificial colours, flavours or preservatives
Ÿ99% from fruit ingredients and chia seeds
ŸNaturally sweetened with fruit ingredients
ŸFinger food for fine motor skill development
Unlike the boxes for the Berries Product and the Peach Product, the Fruit and Chia Product box did not contain on its front in free standing form the words “No preservatives” and “No artificial colours or flavours” but, as noted, the words “No artificial flavours or preservatives” comprised the first entry in the panel on the front of the box.
The reverse side of the Fruit and Chia Product box did not contain the two descriptive paragraphs under the subheading “5 packs inside” which are included on the boxes for the Berries Product and the Peach Product (see above at [9]).
There were some differences in the colours used in the three product boxes. I think it fair to describe the colours on each of the boxes as bright and attractive.
The ingredients of the Products listed on the reverse side of the boxes can be summarised as follows:
Ingredients Berries Product
%
Peach Product
%
Fruit & Chia Product
%
Apple paste 36 36 51 Apple juice concentrate 31 34 35 Berry purees 12 - - Sweetcorn puree 10 10 - Pumpkin puree 10 10 - Citrus fibre % not stated % not stated % not stated Gelling agent (fruit pectin) % not stated % not stated % not stated Natural flavour(s) % not stated % not stated % not stated Peach paste - 9 - Strawberry puree - - 7 Lemon juice concentrate - - % not stated Chia seeds - - 3 Natural colour extracts (carrot, blackcurrant) - - % not stated Total 99 99 97
As noted earlier, the boxes for each Product also contained a panel headed “Nutrition Information”. Each indicated that there were five “servings” per package and that the serving size was 18 g. The “nutrition information” in the panel for each Product can be summarised as follows:
Berries Product Peach Product Fruit & Chia Product Avg. Quantity per serving Avg. Quantity per 100g Avg. Quantity per serving Avg. Quantity per 100g Avg. Quantity per serving Avg. Quantity per 100g Energy 260kJ 1,450kJ 260kJ 1440kJ 260kJ 1430kJ Protein 0.4g 2.0g 0.4g 2.1g 0.4g 2.0g Fat
- Total
0.1g
0.8g
0.1g
0.8g
0.4g
2.1g
Fat
- saturated
0g
0.2g
0g
0.1g
0g
0.3g
Carbohydrate
- sugars
14.1g
12.4g
78.4g
68.7g
14.1g
12.4g
78.1g
69.1g
13.3g
12.2g
74.1g
67.6g
Dietary Fibre 1.1g 6.2g 1.2g 6.4g 1.4g 7.8g Sodium 7mg 35mg 7mg 35mg 6mg 30mg
The evidence from the expert nutritionists, to whom I will refer later, indicates that the required nutrients in food include proteins, fats, carbohydrates, dietary fibre, vitamin A, vitamin C, potassium and magnesium.
As can be seen, the nutrition panels indicated that approximately two‑thirds of each Product was sugar. However, an analysis carried out in March 2016 at the request of the ACCC solicitors indicated that the Products comprised, respectively, 62‑63%, 66% and 62% sugar.
The ingredients information and the nutrition information on the boxes were in a relatively small font and, in particular, in a font which was smaller than all the other printing on the front and rear of the boxes.
The pleaded representations
The ACCC pleads that the statements and images on the box of each Product conveyed representations to the effect that the Product:
(a)is of an equivalent nutritional value to the natural fruit and vegetables depicted on the packaging (the Nutritional Value Representation);
(b)is a nutritious food and is beneficial to the health of children aged 1‑3 years (the Healthy Food Representation); and/or
(c)encourages the development of healthy eating habits for children aged 1‑3 years (the Healthy Habits Representation).
There is one qualification to this summary of the alleged representations. That is that the pleaded Nutritional Value Representation in respect of the Fruit and Chia Product refers only to the natural fruit depicted on the packaging. It was not suggested that this slight difference in form was material to the determination of the issues in the trial.
The parties commonly used the term “toddlers” for children aged 1‑3 years, and in these reasons I will do likewise.
Each of the pleaded representations is alleged to contravene ss 18, 29(1)(a), 29(1)(g) and 33 of the ACL.
Intention is not an element of contraventions of ss 18, 29(1) and 33. It is not necessary for the ACCC to prove that a respondent intended to make false or misleading statements. However, the ACCC alleges that Heinz knew, or ought to have known, that each of the Products was not a nutritious food, nor equivalent to the nutritional value of the fruit and vegetables depicted on the boxes, and that each Product discouraged the development of healthy eating habits in toddlers. The ACCC also alleges that Heinz knew, or ought to have known, that the packaging conveyed the pleaded representations and that those representations were false or misleading. These are serious allegations, attracting in an obvious way, the application of s 140(2) of the Evidence Act 1995 (Cth). It was the subject of considerable evidence at the trial.
I will defer consideration of the ACCC submissions concerning the knowledge of Heinz until after I have made findings concerning the allegations that the pleaded representations were made and that they were false or misleading. In the view I take of the matter, it will not be necessary to make findings concerning some of the evidence bearing on this aspect of the matter.
It is pertinent to keep in mind that the issue for the Court’s determination is whether (a) the specific representations alleged by the ACCC were made and, if so, (b) whether they were misleading or deceptive or, in the case of s 33, liable to mislead in the manner pleaded. The Court is not required to determine some of the other issues canvassed in some of the submissions including whether the Products had an inappropriate amount of sugar per se, whether they should be purchased as part of a sensible purchasing decision, whether it would be sensible for a parent or carer to give the Products to their children as an alternative to fruit and vegetables, and whether Heinz could have done more to reduce the sugar content of the Products. Nor is the Court required to consider whether the packaging was misleading or deceptive in other ways which, at times, the ACCC evidence and submissions seemed to suggest, for example, that it was misleading or deceptive for Heinz to describe Products as “fruit and veg” and “99% fruit and veg” rather than “sugarised fruit and vegetables” or “sugary fruit and vegetables” or in some other way to indicate that the Products comprised fruit and vegetables with concentrated sweetness.
Further still, the issues in the trial concerning the alleged misleading or deceptive nature of the pleaded representations are not to be resolved by reference to the Healthy Star Rating system being implemented in Australia and New Zealand nor by reference to the Nutrition Profiling Scoring Criterion established under the Australia New Zealand Food Standards Code.
The statutory provisions and principles
Section 18 of the ACL provides (relevantly):
(1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 29(1) of the ACL provides (relevantly):
A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a)make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or
…
(g)make a false or misleading representation that goods or services has sponsorship, approval, performance characteristics, accessories, uses or benefits …
Section 33 of the ACL provides:
A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods.
The ACCC alleges that each of the pleaded representations was misleading or deceptive or liable to mislead or deceive in contravention of s 18(1) by reason of five features to which I will refer shortly.
The ACCC alleges that Heinz contravened s 29(1)(a) by making statements on the Products’ packaging which contained false or misleading representations that the Products were of a “particular … quality, value or composition”, and that it contravened subs 1(g) by making false or misleading representations that the Products had “uses and/or benefits”.
The ACCC alleges that Heinz contravened s 33 by making statements on the packages which were liable to mislead the public as to the “nature and/or “characteristics” of the Products and as to “the suitability for their purpose”.
By reason of s 224 of the ACL, contraventions of ss 29 and 33 attract a liability to pecuniary penalties.
The principles which the Court applies when considering alleged contraventions of s 29(1) and s 33 of the ACL are settled. Section 29 of the ACL is the counterpart to s 53 of the Trade Practices Act 1974 (Cth). It was common ground that the case law developed in relation to s 53 may be applied in relation to s 29. It was also common ground that, despite the slight differences in language between the terms “misleading or deceptive” and “mislead or deceive” used in s 18 of the ACL and the term “false or misleading” used in s 29(1), the terms have the same meaning: Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [14], cited with approval by Allsop CJ in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; (2015) 317 ALR 73 at [40]. It has, however, been held that conduct which is “liable to mislead” (being the term used in s 33) applies to a narrower range of conduct than does conduct which is “likely to mislead or deceive” (being the term used in s 18): Coles Supermarkets at [44] and the cases cited therein. Under s 33, what is required is that there be an actual probability that the public would be misled: Trade Practices Commission v J&R Enterprises Pty Ltd (1991) 99 ALR 325 at 339.
Provisions such as ss 18, 29 and 33 of the ACL are remedial in character and so should be construed so as to give the fullest relief which the fair meaning of their language would allow: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503; New South Wales Lotteries Corporation Pty Ltd v Kuzmanovski [2011] FCAFC 106, (2011) 195 FCR 234 at [105].
A representation will be false if it is contrary to the relevant fact and misleading if it has a tendency to lead into error. The causing of confusion or questioning is insufficient; it is necessary to establish that the ordinary or reasonable consumer is likely to be led into error: Coles Supermarkets at [39].
The question of whether conduct, including conduct by way of representations, contravenes ss 29 or 33 of the ACL is one of fact to be determined by an objective consideration in the light of all the relevant surrounding circumstances: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198‑9; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [109].
The application of ss 29 and 33 requires the Court to identify the conduct said to be false or misleading or liable to mislead and then to consider separately whether the conduct was false or misleading or liable to mislead: Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435 at [89].
Consideration of the conduct as a whole in its proper context may require consideration of the type of market, the manner in which the goods or services are sold, the habits and characteristics of purchasers in that market as well as of any relevant disclaimers or explanations: Coles Supermarkets at [41]. It also includes any relevant disclaimers, qualifications or explanations: Butcher v Lachlan Elder Realty at [49]. When the impugned conduct involves representations to the public at large or to a section of the public, such as prospective retail purchasers of a product or service, regard must be had to the effect of the representations on “ordinary” or “reasonable” members of the class of prospective purchasers. The range of persons in such a class may be quite broad and may include the intelligent as well as the less intelligent, and those who are well educated as well as those who are less literate.
In many cases, the words and images used in advertising or promotional material are capable of conveying different meanings. In such cases, the question is whether the meaning said to be false or misleading is reasonably open and may be drawn by a significant number of persons to whom the representation was addressed. Thus, in CPA Australia Ltd v Dunn [2007] FCA 1966; (2007) 74 IPR 495 at [28], Weinberg J said:
Statements that are capable of more than one meaning may be misleading or deceptive provided that the meaning for which the applicant contends is one that would be reasonably open, and might be drawn by a significant number of those to whom the representation is made. In the same way, a statement may contain a representation that is implied, rather than express. That is why a statement that is literally true can be misleading or deceptive.
(Citation omitted)
In Coles Supermarkets at [46], Allsop CJ quoted with approval the following statement by Hill J in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 50:
Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open. This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class, who can be expected to read it, into error …
Allsop CJ went on to say at [47], that “if any one or more of the reasonably available different meanings is misleading, the conduct may well be misleading or deceptive, or false and misleading”.
Generally speaking, however, the class will not include those who fail to take reasonable care for their own interests: Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12, (2000) 202 CLR 45 at [101]‑[103]; Coles Supermarkets at [43].
In cases in which the conduct and representations are to the public generally and concern simple advertising, the absence of individuals saying that they were misled will usually be of little significance. In such circumstances, the Court can carry out an objective assessment of the advertising and promotional material itself without evidence from individual witnesses: Coles Supermarkets at [45].
In assessing advertising material, the “dominant message” of the material will be of crucial importance: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2014] HCA 54, (2013) 250 CLR 640 at [45]; Coles Supermarkets at [47].
The relevant class of purchasers
In the present case, Heinz acknowledged that the relevant class of retail purchasers comprised the parents and carers of children aged 1‑3 years. It submitted, however, that the class should be confined to those parents and carers shopping for snack foods, as opposed to meals, for children aged 1‑3 years. In support of this submission, Heinz referred to the evidence indicating that many of its direct customers were the major retailers and to the evidence that these retailers displayed the Products in the sections of their stores containing children’s food. Ms Rigas (Heinz’s Scientific and Regulatory Affairs Specialist) said that these Heinz products were located in the supermarkets next to “other snacking options”.
Heinz submitted that understanding the class in this confined way meant that the “target audience” would understand the Products to be a processed snack product, as distinct from fresh fruit and vegetables. Its submissions did not elaborate the significance of that particular distinction. In my opinion, the “target audience” would have readily understood that the Products were not fresh fruit and vegetables, and instead a processed product.
I do not consider that it is realistic to confine the class of purchasers in the way for which Heinz contended. The ordinary reasonable purchaser in a supermarket does not usually undertake a shopping expedition for the purpose only of purchasing snacks. Such purchases are much more commonly made in the course of a more general shopping trip involving the purchase of a range of products and, in particular, foods of different kinds. There may be some stores in which the products are so different that it can be said that representations are made to purchasers of one kind of product only. An example may be a whitegoods store which sells both televisions and refrigerators. It may be natural to understand the “target audience” to which promotional material concerning these products is directed as being the prospective purchasers of each individual product. Such a distinction does not seem apt, however, in the context of a food product presented for sale in a supermarket. Accordingly, I accept the ACCC submission that the relevant class of persons comprises the parents or carers of toddlers who are shopping in a supermarket as part of their weekly or other periodic food shopping.
It is not necessary for the ACCC to establish that all persons in this class would have been misled or deceived. The relevant enquiry is whether a significant number or, as it is sometimes put, a “not insignificant number” may have been misled or deceived: Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCAFC 181, (2008) 171 FCR 579 at [46] (Tamberlin J); Peter Bodum A/S v DKSH Australia Pty Ltd [2011] FCAFC 98, (2011) 280 ALR 639 at [209] (Greenwood J, with whom Tracey J agreed).
The witnesses in the trial
The ACCC led expert evidence from two witnesses, Dr Stanton and Professor Manton. Heinz led expert evidence from three witnesses, Dr Barclay, Associate Professor Lucas and Mr Shrapnel. I will defer assessment of them as witnesses until later in these reasons.
Heinz led evidence from five of its employees who were involved to a greater or lesser extent in the development of the Products and the packaging, or at least in matters bearing upon the guidelines concerning the development of both. These were Ms Weaver, Ms Hodson, Ms Russell, Ms Tatt and Ms Rigas. All have qualifications in nutrition and/or dietetics.
As will be seen, in the view I take of the matter, issues of the credibility of these witnesses do not loom large in my decision. However, in case it becomes necessary, I indicate now that I considered Ms Tatt and Ms Rigas, and for the most part, Ms Russell, to be honest and reliable witnesses who had gone about their tasks within Heinz in a conscientious manner. I agree with the ACCC that the evidence of Ms Hodson and Ms Weaver was to an extent marked by defensiveness, and an unwillingness to make concessions which they perceived to be contrary to the interest of Heinz. While it is understandable that those who perceive their own performance to be in question in a trial will, to an extent, respond in such a way, I would, had it been necessary to do so, been cautious about accepting as reliable some aspects of their evidence.
The Berries Product Nutritional Value Representation
Although the evidence bearing on the ACCC representations in respect of the Products had much in common, it is convenient to consider first the Nutritional Value Representation with respect to the Berries Product.
The first issue is whether an ordinary and reasonable reader of the words and images on the packaging would have understood it to convey the nutritional value representation alleged by the ACCC, namely, that the Berries Product “is of an equivalent nutritional value to the natural fruit and vegetables depicted on the packaging”. At the heart of this pleaded representation is the term “equivalent nutritional value”.
As already noted, the ACCC does not (and could not) allege that the representation concerning nutritional value was conveyed expressly. It alleges that the representation was conveyed by implication. The ACCC said that the implication arose from the prominent photograph of the fruit and vegetables, the location of the depicted fruit and vegetables next to the picture of the Berries Product, and from the proximity of both to the words “99% fruit and veg”. The ACCC emphasised these words submitting that “if something is 99% of something else, it’s the same as – as good as”.
It is established, as noted above, that a representation may be conveyed by words and images. For this reason, the submission by Heinz that the term “nutritional value” does not appear on the box, let alone any term like “equivalent nutritional value”, while obviously correct, does not preclude the alleged representation having been conveyed.
Heinz also submitted that the ordinary and reasonable consumer may not even understand the concepts of nutritional value and equivalent nutritional value. Its submission was that an understanding of these concepts required a degree of technical knowledge which could not be expected of the ordinary consumer. This requires a finding as to the sense in which the ordinary and reasonable parents or carers of 1‑3 year olds would understand the term “nutrition” and its cognates.
It may readily be accepted that the majority of ordinary and reasonable purchasers of toddler foods do not have the same detailed knowledge of matters bearing on the nutrition of a food as do qualified dieticians and nutritionists who have undertaken tertiary study. They may not be able to list the nutrients which are necessary in a healthy diet to which reference was made earlier. However, the ordinary and reasonable consumer does not require the level of knowledge of a qualified nutritionist in order to have an understanding of the concepts of “nutrition”, “nutritional value” and equivalents. In my view, the consumers would understand the terms in a non‑technical way, that is, that “nutrition” and “nutritional value” refer to the extent to which a food is nourishing in the sense of being a source of the nutrients which sustain life. Such consumers will understand that some foods are more nutritious than others and many will have a general understanding of the constituents which make food nutritious. Many will be accustomed to making comparisons of different foods.
I consider that this submission of Heinz involved an underestimation by it of the capacity of the ordinary and reasonable consumers or potential consumers of its products. I reject its submission to the effect that, because the ordinary and reasonable consumer does not have an understanding of those concepts, the Berries Product packaging cannot be understood as conveying a representation about “nutritional value” or “comparative nutritional value”.
Heinz also emphasised that the packaging depicted different fruit and vegetables and, further, fruit and vegetables in different sizes. There were four fruits (apple, strawberry, raspberry and blackcurrant) and two vegetables (pumpkin and sweetcorn). The fruits were whole fruits but the pumpkin consisted of slices and the sweetcorn of some kernels. It pointed out that the depicted sweetcorn could be cooked or uncooked. Heinz submitted that this variety of fruit and vegetables, the differing sizes and the possible difference in the cooked state of the sweetcorn militated against the ordinary consumer having an understanding that it was representing that the Berries Product was of equivalent nutritional value to the depicted fruit and vegetables. The submission (which was seemingly inconsistent with Heinz’s first submission) was that the ordinary and reasonable consumer would understand that the varieties of fruit and vegetables and the difference in their quantities and qualities would, or may well have, differing nutritional values, making it unlikely that the consumer would understand that any representation regarding equivalence was being made in respect of the combination.
In part, this submission of Heinz may have been responsive to an ACCC submission that “feeding a packet of Shredz Products to a toddler is a nutritious option which provides the toddler with the equivalent nutritional benefit as portions of the fresh fruit and vegetables depicted on the packaging” (emphasis added).
However, I do not regard this Heinz submission as persuasive. It seemed to involve an overly literal view of the ACCC allegation and, in particular, seemed to assume that the ACCC is alleging a representation of exact equivalence. While that is one possible interpretation of the ACCC allegation, I do not regard it as the appropriate understanding. It is more natural to understand the ACCC to be alleging that a representation of generalised equivalence was made. The diversity of the fruit and vegetables and their quantities does not mean that consumers could not have understood Heinz to be making a representation about overall equivalence in a generalised way.
Nevertheless, I accept Heinz’s overall submission concerning the Berries Product Nutritional Value Representation. In my opinion, ordinary and reasonable purchasers, or potential purchasers, would not have understood the aspects of the packaging to which the ACCC referred to be conveying a statement about the nutritional value of the Berries Product compared with the nutritional value of the depicted fruit in its raw state, let alone that these values were equivalent. The consumers would, in my opinion, have readily understood that the Berries Product was a processed product and would have understood that a representation was being made that it was derived, at least principally, from the depicted ingredients. They would not have understood the Product to be in the form of fresh fruit and vegetables. The pictures of the sticks of the Berries Product would have confirmed that impression.
Contrary to the ACCC submission, the reference to “99% fruit and veg” is not a representation as to the product being a percentage of something else. In its ordinary meaning, it is a representation about the ingredients of the Product. Consumers well understand that the processing of multiple ingredients will change the ingredients. They would not expect that, despite the processing, nutritional equivalence would be preserved. Consumers would not expect Heinz to be making a representation to that effect.
Consumers are accustomed to seeing manufactured products promoted with images of wholesome ingredients, without this giving rise to an expectation that the products are equivalent in nutritional value to the depicted ingredients.
In these circumstances in particular, I consider it more likely that the ordinary and reasonable consumer would have understood the aspect of the packaging on which the ACCC relies to be conveying a representation that the Berries Product was a composite Product derived from the depicted fruit and vegetables, ie, that it was fruit based as distinct from having some other derivation, and that this gave it a “goodness” like that of the depicted fruit and vegetables. The words “99% fruit and veg” would have added to that understanding of the effect of the packaging. The ordinary and reasonable consumer may well have understood the package to convey a representation that the Product was nutritious in a way which was similar to the way in which fresh fruit and vegetables are nutritious and therefore good for toddlers. However, in my view, such a consumer would not have understood Heinz to be making a representation concerning the comparative nutritional value of the Berries Product, let alone a representation that its nutritional value was “equivalent” to that of the depicted fruit and vegetables.
I reach the same conclusion with respect to the packaging of the Peach Product which was, in the respects which are material for present purposes, identical to the packaging of the Berries Product. Although there are some differences in the packaging of the Fruit and Chia Product, the ACCC did not contend that these are material, and so the same conclusion applies in respect of that Product also.
As I am not satisfied that the Nutritional Value Representations were made, it is not necessary to consider whether they were false or misleading or liable to mislead. I indicate, however, that had I regarded the Nutritional Value Representations as having been made, I would not have found that the ACCC had established that they were misleading or deceptive.
Accordingly, I conclude that the ACCC’s allegations concerning the Nutritional Value Representation fail with respect to all three Products.
The Berries Product Healthy Food Representation
The ACCC alleges that the packaging of the Berries Product conveyed a representation that it is a nutritious food and beneficial to the health of children aged 1‑3 years. Its case was that the representation was conveyed by the packaging as a whole and, in particular, by the repeated use of the word “nutritious” or its cognates.
Some general observations concerning the pleaded representation
As counsel for Heinz noted, the subject matter of this alleged representation is the intrinsic quality of the Berries Product, rather than its quality relative to other foods.
The Healthy Food Representation is a form of composite representation involving two distinct concepts: “nutritious food” and “beneficial to the health of children”. Heinz submitted that this meant that the ACCC had to establish that the packaging conveyed both of the pleaded limbs and that, if it failed to establish that either limb was conveyed, the allegation based on the Healthy Food Representation would fail altogether. I accept that submission and reject the ACCC submission that the ordinary reasonable consumer would have understood the two limbs of the pleaded representation as being conveyed disjunctively.
Initially, the ACCC submitted that there was very little difference between the concepts of “nutritious food” and “beneficial to the health of children”. There is an obvious overlap between the two concepts as it will commonly (but not always) be the case that a food which is nutritious will also be beneficial to the healthy growth and development in children. However, the ACCC also submitted that, if “nutritious food” is understood as limited to food containing nutrients, the term “beneficial to the health of children” would have a wider meaning.
Ultimately, the ACCC submission was that the representation conveyed was that the Berries Product was both nutritious and beneficial to the health of children and that, if the Court accepted that that was so, it would establish falsity by showing that one or other or both limbs was false. Heinz accepted that, if the Court was satisfied that the composite representation was conveyed, the ACCC case would succeed even if it could establish the falsity of only one of the two limbs.
Both limbs of the Healthy Food Representation are positive in nature. In particular, the representation that the Berries Product is “beneficial to the health of children aged 1 to 3 years” is not to be regarded as synonymous with “not detrimental to the health of children aged 1 to 3 years”. To make out falsity of the second limb, the ACCC need establish only that the Berries Product is not beneficial to the health of these children. It does not have to establish that it is in fact detrimental to their health.
A food may be beneficial to the health of those who consume it even if it has some disadvantages. The presence of some undesirable features may not, of itself, mean that the food is not beneficial to consumers’ health.
Was the Healthy Foods Representation conveyed?
Apart from the heading to the panel containing the nutrition information, the box of the Berries Product uses the word “nutritious” or a cognate four times. None of these usages is on the front of the packaging. The reverse side includes the following:
Our range of snacks and meals encourage your toddler to independently discover the delicious taste of nutritious food. With our dedicated nutritionists who are also mums, we aim to inspire a love of nutritious food that lasts a life time.
(Emphasis added)
One of the side panels states:
Our wide range of snacks and meals is packed with the tasty goodness of vegetables, fruits, grains, meat and pasta to provide nutritious options for your toddler.
(Emphasis added)
Heinz noted that each usage of the word “nutritious” or its cognate occurred with reference to the Little Kids range of snacks and meals and not with specific reference to the Berries Product.
Heinz submitted that ordinary and reasonable consumers can be expected to read at least the front and reverse sides of the box. I accept that most ordinary reasonable consumers would look at the prominent parts of both sides of the box, but consider it unlikely that this would extend in most cases to the Nutrients and Ingredients panels. That is especially so given that most consumers will be looking at the box in the press of a supermarket aisle. I will refer again to this aspect shortly.
Next, Heinz noted that the packaging contains express claims about the Berries Product such as “99% fruit and veg”, “No preservatives”, and “No artificial colours or flavours”. It submitted that ordinary and reasonable consumers would give the greatest weight to these statements, especially as they appear on the front of the packaging and concern the particular Product, in contrast to the statements on the back of the box about the Little Kids range more generally.
Thirdly, Heinz submitted that ordinary and reasonable consumers would understand that it intended the Berries Product to be consumed as a snack or as a treat. It relied for this submission on the statement on the front of the box that it contained five packs each of 18 g, the visual depiction of the Product sticks, and the description of the Product on the reverse side as “tasty treats” and “a fun and convenient snack for toddlers on the go”.
Fourthly, Heinz submitted that ordinary reasonable consumers would observe and take account of the contents of the Nutrition Information and Ingredients panels. By reading these panels, the ordinary reasonable consumer would understand that a serve of the Berries sticks contained on average 68.7% sugar, that it comprised primarily fruit paste, fruit and vegetable purees, and apple juice concentrate, and that it also contained dietary fibre, protein, fat, sodium and carbohydrates other than sugar.
Heinz submitted that, having regard to each of these four matters, the ordinary reasonable consumer would not have understood the word “nutritious” on the back and side of the box as conveying a representation that the Product was “nutritious food and beneficial to the health of children aged 1 to 3 years”. Heinz developed this submission by saying:
At most, to the extent that the ordinary or reasonable consumer understands the packaging as conveying anything about the nutritional attributes of the products, it would be no more than that the products were a nutritious snack for children aged 1 to 3, in the sense described on the front of the packaging, namely that:
(a)in relation to the Berries and Vegetables Sticks and Peach and Vegetables Sticks, they are made from 99% fruit and vegetable ingredients and do not contain any preservatives or any artificial colours or flavours, as expressly stated on the front of the packaging; and
(b)…
(Emphasis in the original)
In part, this submission seemed to draw a distinction between a representation that an item is a nutritious “food” and a representation that an item is a nutritious “snack”, and suggested that any representation conveyed by the packaging of the Berries Product was of the latter kind only. To the extent that Heinz did seek to make this distinction, I regard it as artificial in the present context. A snack is just one form by which food is consumed. The ordinary reasonable consumer does not regard a snack as being something other than food. Furthermore, it is common experience that many 1‑3 year olds consume food by “grazing” in a series of snacks rather than in regular meals. In the description of the Berries Product on the reverse side of the packaging of the Berries Product, Heinz itself did not distinguish between food and snacks. It said that its range of “snacks and meals” encourages toddlers to discover the delicious taste of nutritious “food”. It went onto to say that it sought to inspire a love of nutritious “food” which lasts a lifetime. Further, and in any event, the representation alleged by the ACCC can just as easily be understood as a representation that the Berries Product is a nutritious food, in the form of a snack, and beneficial to the health of toddlers.
Heinz also sought to show that the Health Food Representation was not conveyed by reference to the matters upon which the ACCC relies for its claim that the representation was false or misleading, namely, that the Berries Product:
(1)is high in sugar;
(2)has a low moisture content;
(3)has a low satiety value;
(4)is high in kilojoules per gram; and/or
(5)has a sticky texture and is therefore likely to increase the risk of poor dental health in children aged 1‑3 years.
It submitted that, because this was the ACCC case on falsity, the ACCC had to establish that the ordinary reasonable consumer would understand the packaging as conveying a representation that the Berries Product was a nutritious food and beneficial to the health of toddlers in the same sense, that is, as representing that it was high in sugar, had a low moisture content and so on. The Heinz submission was as follows:
[The ACCC] seeks to persuade the Court that the ordinary or reasonable consumer would give the terms “nutritious food” and “beneficial to health” a lay meaning, yet seeks to prove that the products were not “nutritious foods and beneficial to the health of children aged 1 to 3 years” by expert evidence (principally from an expert nutritionist), who does not apply a lay meaning of these terms but instead refers to issues such as the moisture content and satiety value of the products. There is an obvious difficulty for the ACCC in reconciling its asserted meaning of the terms “nutritious food” and “beneficial to the health of children aged 1 to 3 years” in the first stage of its case with the meaning that it assigns those words in the second stage of its case to attempt to demonstrate falsity.
…
The ACCC cannot do so, particularly in circumstances where the amount of sugar and kilojoules per 100 g in the products were listed on the packaging. The packaging said nothing about moisture content, satiety value or stickiness of the products, or about dental health. There is no plausible basis for a finding that the packaging of any of the products conveyed that the products were nutritious and beneficial to the health of children aged 1 to 3 in the sense pleaded by the ACCC.
In my opinion, this particular submission is without merit. The manner by which a representation may be proved to be false does not control the content or meaning of the representation. There is no reason in logic or principle why the ACCC cannot prove the falsity of a representation concerning the quality of a product by resort to expert evidence concerning features of the product about which the consumer may be unware or have overlooked. It is commonly the case that the features of a product which make representations about it misleading are revealed only by expert investigation or analysis.
In my opinion, Heinz’s present submission with reference to the Nutrition Information and Ingredients panels is similar to that which was rejected by the High Court in ACCC v TPG in respect of the less prominent qualification to the offer featured in TPG’s advertisement. The plurality noted, at [47], that there are circumstances in which prospective customers cannot be expected to pay the same close attention to an advertisement which can be expected of judges obliged to scrutinise them for the purposes of legal proceedings. In particular, there are circumstances in which persons absorb only “the general thrust” of the advertisement and that, while the attention given by the ordinary and reasonable person to an advertisement may be perfunctory, it is not to be equated with a failure on the part of the target audience to take reasonable care of the their own interests. Later, the plurality said:
[51][T]his is not a case where the tendency of TPG’s advertisements to lead consumers into error arose because the target audience might be disposed, independently of TPG’s conduct, to attend closely to some words of the advertisement and ignore the balance. The tendency of TPG’s advertisements to lead consumers into error arose because the advertisements themselves selected some words for emphasis and relegated the balance to relative obscurity. To acknowledge, as the Full Court did, that “many persons will only absorb the general thrust” is to recognise the effectiveness of the selective presentation of information by TPG. The Full Court erred in failing to appreciate the implication of that finding.
[52]It was common ground that when a court is concerned to ascertain the mental impression created by a number of representations conveyed by one communication, it is wrong to attempt to analyse the separate effect of each representation. But in this case, the advertisements were presented to accentuate the attractive aspect of TPG’s invitation relative to the conditions which were less attractive to potential customers. That consumers might absorb only the general thrust or dominant message was not a consequence of selective attention or an unexpected want of sceptical vigilance on their part; rather, it was an unremarkable consequence of TPG’s advertising strategy. In these circumstances, the primary judge was correct to attribute significance to the “dominant message” presented by TPG’s advertisements.
As noted earlier, the information in the Nutrition Information and Ingredients panels is in a smaller font that that used for the other printing on the packaging. The other features to which I referred earlier are much more prominent and, in my opinion, more likely to create an impression in the consumer’s mind.
In any event, it is ordinary experience that information of this kind is not read or absorbed in any detail at the time of purchasing decision of products of this kind. Such decisions commonly have to be made in a supermarket aisle in the course of a larger shopping expedition and sometimes amidst the press of other children for whom the purchaser is responsible or of other customers. Having regard to these circumstances, it would not be realistic to suppose that the ordinary reasonable consumer reads, let alone absorbs, the information in the Nutrition and Ingredients panels with the level of detail which the Heinz submission supposed.
Many of the ordinary and reasonable purchasers of the Berries Product are likely to be similar to the ordinary and reasonable member of the class of prospective purchasers of bread in supermarkets to whom Allsop CJ referred in ACCC v Coles Supermarkets at [43]:
In a context such as the present, the purchasing of a staple such as bread in a supermarket, the ordinary or reasonable person may be intelligent or not, may be well educated or not, will not likely spend any time undertaking an intellectualised process of analysis, will often be shopping for many other items, and will be likely affected by an intuitive sense of attraction rather than by any process of analytical or logical choice.
The conclusion that a particular representation was conveyed may be more readily reached when it is made in terms apt to create the particular mental impression in the representee intended by the representor: ACCC v TPG at [55]; Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60, (2017) 122 IPR 395 at [240]. The ACCC submitted that this principle was applicable in the present case because it was apparent that Heinz had intended, by its packaging of the Berries Product, to create an impression that it was nutritious and healthy in the minds of its potential customers.
In support of this submission, the ACCC referred to a number of Heinz’s internal documents. The first was a presentation made to Heinz by The Nielsen Company on 15 June 2012 entitled “Playschool (Little Kids Snacks)”. The Nielsen Company provided the report at a time when Heinz was considering new initiatives under the Heinz Little Kids brand and was seeking to assess their viability. One of the products was “Fruit Chewies”, as the Shredz sticks were then known. At a later time they were given the name “Fruit Juicies”. The Neilsen Company had carried out market research including a survey of potential purchasers. It reported that there was “an opportunity to dial up on health/nutrition” as this was “an important driver for those interested in the range”. By itself, I regard this evidence as being of only slight evidentiary value as there is no express evidence that Heinz expressly adopted or endorsed the recommendation of The Neilsen Company.
Next, the ACCC noted that the packaging of the Products had changed following a project undertaken within Heinz entitled “Project Totes” in late 2012 and early 2013. Ms Weaver described Project Totes as a “brand refresh” which involved “looking at the attributes of products and what they represented”. Ms Weaver did not accept that the packaging had been changed so as to promote a message of nutrition and health, asserting that instead Heinz sought to have “fun and convenient and toddler‑appropriate packaging”. I regarded that evidence of Ms Weaver as unconvincing, and do not accept it. Heinz’s own document entitled “Project TOTES Update” indicated that part of the image it sought to create for the Little Kids range of products was that they were nutritious and healthy. With reference to the depictions used on the Products, the Project Totes Update identified the tree as symbolising “source of food, nature, healthy growth” and that the overall illustration “communicates essence of toddlerhood – Innocence, Energy, Joy”.
Thirdly, the ACCC referred to a Heinz document entitled “Heinz Infant FY14 comms briefing” dated 8 January 2013. This appears to be a Heinz internal briefing which, amongst other things, compared the messages conveyed by contemporaneous packages used for Little Kids Products with the proposed new packaging. It supports the conclusion that Heinz’s intention was to present its Little Kids range as both nutritious and healthy. In relation to the packaging then being used, the document reported under the heading “WHAT’S NOT WORKING”:
ŸBright colours dialling up artificiality, sugar and additives
ŸSmall ingredient visual failing to reinforce taste and naturalness
ŸGirl character lacking meaning, not transporting active, playful, independent essence of toddler life stage
ŸProduct appearance lacking appeal
ŸNutritional claims too small
(Emphasis in the original)
With respect to the new form of packaging (being of the same style used for the Products) the briefing stated under the heading “WHAT’S WORKING”:
ŸTree symbolising strong benefits; natural, health, slow growth, freshness, healthy outdoor lifestyle (aspiring to mums who are fighting to get their kids outside)
ŸEarthy colouring dialling up organic cues (natural)
ŸScene communicating essence of childhood: carefree, energetic, healthy, fun
ŸDrawing style perceived as sophisticated and warm (detail communicating love and care)
The new pack is emotionally engaging (telling a story) and strongly delivers on natural product benefits …
(Emphasis in the original)
In my view, the latter two documents support an inference that the general intention by Heinz with respect to the packaging of the Little Kids products was to promote them as both nutritious and healthy.
However, it is not necessary to rely upon Heinz own internal statements regarding the purpose of its packaging. Even a reasonably cursory examination of the packaging indicates that Heinz was promoting the Berries Product as being healthy and nutritious and that ordinary reasonable consumers would have understood that that was so. This is evident from the imagery and colours used as well as from the wording on the packaging.
In my opinion, there is no difficulty in concluding that the combination of imagery and words on the packaging conveyed to ordinary reasonable consumers both limbs in the Berries Product Healthy Food Representation. The imagery includes the depictions of an active healthy young boy engaged in tree climbing in conjunction with the prominent pictures of wholesome fresh fruit and vegetables. The tree itself conveys an image of natural and healthy growth. The prominent statements that the Product comprises 99% fruit and vegetables together with the pictures of the fruit and vegetables conjure up impressions of nutritiousness and health. The impression of naturalness and goodness is reinforced by the statement that the fruit and vegetables have not been adulterated by preservatives or artificial colours or flavours. The description of the Berries Product on the reverse side of the packaging under the heading “5 packs inside” reinforces the representation conveyed by the imagery and words on the front the packaging. The first sentence emphasises that the Berries Product comprises 99% fruit and vegetables and that it is appropriate for toddlers “on the go”. This suggests that the Product has the “goodness” needed for active healthy children. Any tendency which the word “treats” may have had to suggest that the Product was a sweet treat (like, say, confectionery) is negated by the reference which follows almost immediately to the Product being a “snack”. In the second sentence, Heinz placed the Product as part of its range of “snacks and meals”. This reinforces the implication that, by eating the Berries Product, toddlers will be consuming a nutritious food. The third sentence conveys Heinz’s aspiration to encourage a love of nutritious food with the implicit representation that the Berries Product is of that kind. The reference to Heinz’s “dedicated nutritionists who are also mums” conveys implicitly that those responsible for the Product know, by both training and practical experience as parents, that the Product is wholesome and nourishing. It lends credibility to the claim that the Product is both nutritious and healthy.
The information in the Nutrition Information and Ingredients panels does not detract from this overall impression. I accept that many ordinary reasonable consumers who are interested in providing their children with healthy food would have regard to these panels. But there would be many with the same interest who would respond in a more impressionistic way, especially in the press of the supermarket aisle. In many respects the Ingredients and Nutritional Information panels, especially given their smaller font, are in the nature of the “fine print”. In my view, the eye of ordinary reasonable consumers generally is likely to pass over them and to respond to the dominant message conveyed by the more prominent words and imagery.
It follows that I do not accept the submission of Heinz that the packaging conveyed no more than that the Berries Product was a nutritious snack for toddlers in the limited sense that it was derived from fruit and vegetables and did not include preservatives, artificial colours or flavours.
Although the view of Heinz’s own employees is not of course decisive, I note that Ms Weaver (Heinz’s Nutrition Specialist for Australia and New Zealand) said that she had thought that the packaging of the Berries Product and of the Peach Product represented that they were “a nutritious food … part of a healthy diet”. Ms Weaver had been involved in the assessment of the claims which could be made of the packaging. Ms Weaver’s evidence was close to an acknowledgement that the packaging contained both limbs of the ACCC’s pleaded Healthy Food Representation, but not exactly so. For completeness, I also note that earlier Ms Weaver had said that while she considered the Berries Product and the Peach Product to be nutritious, she “wouldn’t make the link that they were specifically beneficial to health”.
I am satisfied that the packaging of the Berries Product does convey a representation that it is a nutritious food and beneficial for the health of children aged 1‑3 years. A not insignificant number (at the least) of ordinary reasonable consumers would have understood it in this way. The ACCC has established both limbs of the composite representation it alleges.
Was the Berries Product Healthy Food Representation false or misleading?
The ACCC pleaded case
As already noted, the ACCC’s pleaded case is that the Berries Product Healthy Food Representation was false or misleading because it:
(a) is high in sugar;
(b) has a low moisture content;
(c) has a low satiety value;
(d) is high in kilojoules per gram; and/or
(e)has a sticky texture and is therefore likely to increase the risk of poor dental health in children aged 1‑3 years.
Satiety, to which (c) refers, is the feeling of being satisfied by the consumption of food after the initial feeling of fullness subsides. Some foods are rapidly digested and absorbed giving rise of a feeling of hunger relatively soon. Others, including fresh fruit and vegetables, give a feeling of substantial fullness for longer.
The kilojoule to which (d) refers is the metric unit of energy. All foods containing protein, fats and carbohydrates (including dietary fibre) contribute energy to the diet of humans. Water does not provide any energy. Energy density is the number of kilojoules per 100 g of a food. Foods with a high water/moisture content have a low energy density, and vice versa. In common parlance, the term “calorie” is often used as the unit of measurement of the energy value of a food. One calorie is equivalent approximately to four kilojoules.
The ACCC’s pleading as to falsity did not distinguish between the two limbs of the pleaded representation. The effect, as I understand it, was that the ACCC relied on all of the pleaded matters as a basis for the falsity of each limb. However, as the evidence emerged it became apparent that some matters did not bear on the nutrition of the Products (moisture content, satiety value and texture) whereas those matters did bear on whether the Products were beneficial to the health of toddlers.
The ACCC submissions as to falsity raised some matters which went beyond its pleaded case. In particular, it submitted that the Berries Product was an “unnecessary” part of a toddler’s diet because the nutrients it does provide are “amply provided by the fruits and vegetables recommended as essential foods for children – and without the concentration of sugars”. An allegation to that effect (if to be relied upon as a free standing matter) should have been pleaded with appropriate particulars. Such particularisation would have informed an assessment of the matters said to make the representation misleading or deceptive. I accept Heinz’s submission that it may also have led to further evidence had this been part of the ACCC’s pleaded case. That being so, I uphold the Heinz submission that the ACCC should not be able to depart from its pleaded case. Accordingly, I will not include a lack of necessity as a free standing matter supporting the falsity of the Healthy Food Representation.
However, that does not mean that the issue of necessity is of no relevance at all. I accept the ACCC submission that it is relevant to consideration of the Heinz submission that the Products are beneficial to the health of toddlers because they are a source of some essential nutrients. The evaluation of that submission involves implicitly consideration of whether the Products provide a source of nutrients which would otherwise be lacking in a child’s diet. To that limited extent, the evidence and submissions bearing on the issue of necessity are relevant.
The ACCC also relied on other matters which Heinz submitted were beyond its pleading, namely, the high energy density of the Product and its resemblance to confectionery. I accept the Heinz submission concerning the latter but not the former. As already noted, the energy density of a food is usually expressed as the number of kilojoules per 100 g. It correlates with its fat and water content. The greater the amount of fat the higher the energy density. The lower the water content, the higher the energy density. The ACCC did plead that the Products were high in kilojoules per gram. This was an express pleading concerning energy density. I also observe in this respect that Heinz requested both Dr Barclay and Mr Shrapnel to address the issue of energy density.
As will be seen later, I also consider that the ACCC submissions concerning the effect of consumption of the Products on the development of healthy eating habits and, in particular, on consumption of fresh fruit and vegetables, do not relate to matters within its pleaded case of falsity of the Healthy Foods Representation.
A particular focus of the ACCC case was on the high sugar content and the lack of dietary fibre. Heinz submitted that concentrated sweetness, to which the ACCC’s expert witness Dr Stanton referred, was not part of the ACCC’s pleaded case. In my view, that submission involves an unduly narrow view of the ACCC plea that the Berries Product is “high in sugar”.
The ACCC had not pleaded specifically that the Berries Product lacked or was low in dietary fibre. It submitted, however, that this was a corollary of the high level of sugar. Dr Barclay, to whom I will refer shortly, confirmed the correlation between these elements when he said of the Berries Product, that “overall, the nutrient profile clearly reflects the use of apple juice concentrate in the ingredients, increasing the free sugars content and decreasing the fibre content”. Dr Barclay also explained that the dietary fibre is removed during the processing of concentrating the juice. Accordingly, I consider it appropriate to take account of the low dietary fibre in the sense that it is a corollary of the high sugar but not otherwise.
Some of Heinz’s submissions were to the effect that the ACCC case, insofar as it concerned the effect on dental health, was confined to the sticky texture of the Products. In my opinion, that submission also involves an unduly narrow view of the ACCC’s pleading and I do not accept it. There is no reason to suppose that the effect on dental health was not one of the matters to which the issue of high sugar content related.
Nutrition and health benefits: The expert witnesses
In relation to the nutritional value and health benefits of the Products, the ACCC led expert evidence from Dr Rosemary Stanton. Dr Stanton is a well‑qualified nutritionist with considerable experience. In addition, she has published extensively in the area of nutrition, including authoring a textbook concerning food for children. Between 2008 and 2012, Dr Stanton was a member of the working party established by the National Health and Medical Research Council (NHMRC) to develop the Dietary Guidelines for Australians. She was also a member of the working party of the NHMRC which developed the “Infant Feeding Guidelines for Health Workers”. It is obvious that Dr Stanton is able to speak with authority in the area of diet and nutrition, including the diet and nutrition of children.
I considered that Dr Stanton gave her evidence in an appropriate manner. She was careful to expose in her first report a matter which could possibly impact on the Court’s assessment of her independence. I am satisfied that generally I can act on Dr Stanton’s opinions and conclusions.
Heinz led evidence from Dr Alan Barclay and Mr Bill Shrapnel. Dr Barclay is a Consultant Dietician. He too is well‑qualified and has considerable experience, although not as extensive as that of Dr Stanton. I accept that he has the expertise to express the opinions which he has in the trial.
However, for reasons which I will elaborate below, I have less confidence in Dr Barclay’s opinions than I do in Dr Stanton’s. At the general level, I thought that there was a certain amount of argumentativeness in Dr Barclay’s evidence and that at times he had a tendency to shape his evidence so as to favour the position of Heinz as the party calling him.
I will refer shortly to assumptions which Dr Barclay made concerning the extent of free sugars in the Products which I consider to be unsound and which seem to have resulted in an underestimation by him of these amounts. Another matter giving rise to my reservations about his evidence appears in the opinion which he expressed concerning the relationship between the intake of free sugars and body weight:
Finally, it is worth noting that the WHO determined that the evidence about the relationship between free sugars intake and body weight is based on “low and moderate quality evidence” (9) and that the systematic review and meta‑analysis that underpinned the 2015 Guideline “Sugars intake for adults and children” determined that “Trials in children, which involved recommendations to reduce intake of sugar sweetened foods and beverages, had low participant compliance to dietary advice; these trials showed no overall change in body weight.” (25). In other words, despite popular perception, there is little evidence to support a link between free sugars consumption and body weight in children.
(Emphasis added)
The reference (25) given by Dr Barclay in this passage is to Morenga, Mallard and Mann (2013) “Dietary sugars and body weight: Systematic review and meta-analyses of randomised controlled trials and cohort studies” BMJ 346:e7492.
The passage from that article quoted by Dr Barclay is incomplete. When read in full, a different conclusion emerges. Immediately after the passage quoted by Dr Barclay, the article continued:
However, in relation to intakes of sugar sweetened beverages after one year follow‑up in prospective studies, the odds ratio for being overweight or obese increased was 1.55 (1.32 to 1.82) among groups with the highest intake compared with those with the lowest intake. Despite significant heterogeneity in one meta‑analysis and potential bias in some trials, sensitivity analyses showed that the trends were consistent and associations remained after these studies were excluded.
(Emphasis added)
In the very next paragraph of the article, the authors expressed the following conclusion:
Among free living people involving ad libitum diets, intake of free sugars or sugars sweetened beverages is a determinant of body weight.
(Emphasis added)
Later, the authors said, at 7:
The extent to which population based advice to reduce sugars might reduce risk of obesity cannot be extrapolated from the present findings, because few data from the studies lasted longer than ten weeks. However, when considering the rapid weight gain that occurs after an increased intake of sugars, it seems reasonable to conclude that advice relating to sugars intake is a relevant component of a strategy to reduce the high risk of overweight and obesity in most countries.
(Emphasis added)
Given these conclusions in the very same article to which Dr Barclay had referred, his statement that “there is little evidence to support a link between free sugars consumption and body weight in children” does not seem appropriate. Dr Barclay’s selective quotation from the article in question was one of the matters which undermined my confidence in his opinions generally.
Mr Shrapnel does not have the same academic qualifications as do Dr Stanton and Dr Barclay but he does have extensive experience as consultant nutritionist. It emerged during Mr Shrapnel’s cross‑examination that he has a continuing association with the sugar industry in Australia. Mr Shrapnel is a consultant nutritionist providing assistance to the Sugar Research Advisory Service (SRAS) which is funded by Sugar Australia. One of the functions of the SRAS is promoting the dissemination of information about sugars to health professionals, including dieticians. Sugar Australia is an industry body with Australia’s leading sugar refineries as its members. I think it fair to infer that Sugar Australia has an interest in the promotion of sugar consumption or at least avoidance of a decline in consumption. Mr Shrapnel did not disclose these involvements in his written report.
These matters gave rise to concerns as to the extent to which Mr Shrapnel was truly independent.
These concerns were increased by other matters. In the past, Mr Shrapnel maintained a website with the name “Sceptical Nutritionist”. He was the “Sceptical Nutritionist”. The website contained the following explanation of its purpose:
The Sceptical Nutritionist is my response to the dogma that has found its way into advice about healthy eating. Even well respected scientific organisations and nutritionists now weave ideological view points into advice that is supposed to be evidence‑based nutrition.
Mr Shrapnel acknowledged that he holds “fairly conservative scientific views” and that he is often seen as a “contrarian”. It seems that Mr Shrapnel insists on rigorous proof before accepting that a cause and effect relationship may exist and that he had a tendency to be sceptical of evidence which, although pointing to the existence of such a relationship, fell short of the standard he considered appropriate.
Mr Shrapnel’s general view is that sugar of itself has not been shown to be harmful: it is only when it is taken in excess that it may be so.
The mere fact that Mr Shrapnel may hold opinions which are unpopular in the field of nutrition does not of course mean that his views are of no weight. However, I consider that caution is appropriate before acting on Mr Shrapnel’s opinions. He is to an extent a participant in the activities of the sugar industry, which it can be inferred is concerned with the promotion, or at least the defence, of the consumption of sugar. Further, the premises upon which his opinions are based seem to involve questioning of at least some commonly accepted matters.
The process of manufacture
In order to provide a setting for some of the findings which follow, it is necessary to make some findings concerning the process of manufacture of the Berries Product. For this purpose, I rely principally on the material supplied by Heinz in response to a notice issued by the ACCC under s 155 of the CC Act and on a Product Information Form (PIF) dated 17 October 2012.
Each of the Products was manufactured for Heinz in New Zealand by Taura. It supplied the PIF to Heinz.
In its response to the s 155 notice, Heinz identified the raw materials used by Taura for the Berries Product as apple paste, apple juice concentrate, berry purees, raspberry puree, sweetcorn puree, pumpkin puree and natural flavours. The Heinz response did not specify the means by which the apple juice concentrate was obtained but it is reasonable to infer, and I do, that it resulted from a process of dehydration of natural apple juice. The raspberry puree and some of the strawberry puree (being two of the berry purees identified) were described in the Heinz response as “concentrated” and again I infer that these were obtained by a process which included dehydration. The pumpkin and some of the sweet corn purees were described as “UHT” which is the commonly used acronym for “Ultra Heat Treatment”. This suggests that they too had been subject to a process of dehydration.
Mr Shrapnel regarded as “purely speculative” the suggestion that the Products were likely to inhibit the development of healthy eating habits or encourage a child to become accustomed to, and develop a preference for, sweet tastes.
Given this evidence, I would not be satisfied that, even if the Berries Product Healthy Habits Representation was conveyed, the ACCC has established that it was false or misleading. Accordingly, this aspect of the ACCC case in respect of the Berries Product fails.
The Peach Product
Earlier in these reasons, I set out tables containing the ingredients of each Product and the nutrition information for each Product. The differences between the Berries Product and the Peach Product are minor, with the latter comprised of 3% more apple juice concentrate, no berry purees and 9% of peach paste. The nutrient information for each was also very similar, although the average quantity of sugars in the Peach Product was 0.4 g more than that in the Berries Product. Apart from these differences and some differences in the colouring, the packaging for the two Products was, for material purposes, the same.
The evidence and submissions bearing upon the representations alleged by the ACCC with respect to the Peach Product did not differ in any material respects from those concerning the Berries Product.
In these circumstances, the reasoning and conclusions set out earlier with respect to the Berries Product apply with equal force in relation to the Peach Product. This means that the ACCC case with respect to the Peach Product Nutritional Value Representation and the Peach Product Healthy Habits Representation fails, but it succeeds with respect to the second limb of the Peach Product Healthy Food Representation. That representation was misleading or deceptive and contravened s 18(1) of the ACL.
The Fruit and Chia Product
Again, the differences in the composition of the Fruit and Chia Product and the differences in its packaging have been set out earlier in these reasons.
The nutrition information on the Fruit and Chia box indicated that on average, each 100 g of the Product contained 67.6 g. The ingredients of the Fruit and Chia Product also differed from the Berries Product in a much more significant way than did the Peach Product.
I have already found that the packaging of the Fruit and Chia Product did not convey the Nutritional Value Representation alleged by the ACCC.
The Healthy Foods Representation requires separate consideration. Unlike the packaging for the Berries and Peach Products, the Fruit and Chia box does not contain multiple uses of the word nutrition or its cognates. In fact, the word nutrition or a cognate appears only twice. The first is in the heading “Nutrition Information” to the panel on the reserve side of the box. For the reasons already given, I consider that the eye of the ordinary and reasonable consumer may easily pass over that usage. The second is on the side of the box containing the same claim with respect to the Heinz Little Kids range as was made on the boxes for the Berries and Peach Products, namely:
Our wide range of snacks and meals is packed with the tasty goodness of vegetables, fruits, grains, meat and pasta to provide nutritious options for your toddler.
(Emphasis added)
This usage is not prominent.
However, in my view, the two entries “Just The Good Stuff” do convey a representation that the Product is nutritious. This is confirmed by the words “No Nasties” and the emphasis given to the fruit ingredients of the Product. The ordinary reasonable consumer would, in my view, understand those references as making a claim that the Product is nutritious.
I also consider that the ordinary reasonable consumer would have understood the packaging as conveying a representation that the Product is beneficial to the health of children aged 1‑3 years. The images on the Product are relevantly the same as those on the Berries and Peach Products and my reasoning with respect to those Products applies with equal force in the present instance. In addition, the twice repeated entry “Just the Good Stuff” conveys that the Product is good for little children. That impression is reinforced by statements indicating that the Product has not been adulterated with artificial colours, flavours or preservatives, that 99% of it is derived from fruit ingredients and chia seeds, and that such sweeting as it has is natural, being derived from the fruit ingredients.
However, I am not satisfied, for the same reasons as given with respect to the Berries Product that the Fruit and Chia Product conveys the Healthy Habits Representation. Accordingly, the ACCC case with respect to the Fruit and Chia Healthy Habits Representation fails.
The matters upon which the ACCC relies for the falsity of the Fruit and Chia Healthy Food Representation are the same as those on which it relies for the falsity of the Berries Product Representation. The considerations addressed with respect to the Berries Product Healthy Food Representation apply with equal force in the case of the Fruit and Chia Product. For those reasons, I consider that the ACCC has not established that the representation that the Fruit and Chia Product is a nutritious food is misleading or deceptive. However, it has established that the claim that it is beneficial to the health of children aged 1‑3 years is misleading or deceptive in contravention of s 18(1) of the ACL.
Sections 29(1)(a), 29(1)(g) and 33 of the ACL
Although both the ACCC’s opening and closing submissions indicated that it pursued its allegations of contraventions of ss 29(1)(a), 29(1)(g) and 33 and its closing submissions identified in an distinct way the elements of contraventions of those provisions, it did not address any submissions relating the evidence in this case to those elements or seek to show how those contraventions were established. Its position seemed to be that the contraventions would be established by the same matters indicating that Heinz’s conduct was misleading or deceptive.
In her final submissions, senior counsel for Heinz drew attention to the absence of particulars and to the absence of submissions by the ACCC as to these contraventions and submitted that Heinz had some difficulty in responding to the allegations in that circumstance.
In these circumstances, I consider that it is appropriate to be especially circumspect in relation to these aspects of the ACCC case. That is particularly so given that penalties may be imposed for contravention of these provisions.
The allegations concerning s 29(1)(a) can be disposed of shortly. Consideration of the alleged contraventions of that provision would require assessment of the “particular” quality, value or composition said to have been represented taking into account judicial elaborations of that term, including Gardam v George Wills & Co Ltd (No 1) (1988) 82 ALR 415 at 422‑3. Further, it is not clear how the terms “quality, value or composition” are to be related to the circumstances of this case. The Court should not have to speculate about the ACCC case in these respects, and there would be some unfairness to Heinz in doing so. That being so, I am not satisfied that contraventions of s 29(1)(a) have been established.
The allegations concerning s 29(1)(g) are that the Healthy Food Representations were false or misleading representations that the Products had “uses or benefits”. Given that the ACCC has not particularised the term “uses”, I am not willing to find those allegations established. However, my finding that the representations in the Healthy Food Representations that the Products were beneficial to the health of 1‑3 year old children were misleading or deceptive is sufficient to establish the second limb of this allegation in relation to each Product.
The alleged contraventions of s 33 are that the Healthy Food Representations were “liable to mislead” the public as to the “nature” and/or “characteristics” of the Products, or as to their “suitability” for their purpose. In the absence of submissions, I am not prepared to find these allegations established, as there is some uncertainty about the application of these concepts in the present context.
As noted earlier, the term “liable to mislead” in s 33 requires an actual probability that the public would be misled: ACCC v Coles Supermarkets at [44]. It is not sufficient that the Healthy Food Representations be “likely to mislead or deceive”. However, on my findings, it is probable that the public would be misled. Had I been satisfied that the other elements of s 33 contraventions were present, I would have found these contraventions to be established.
In summary, in the absence of submissions from the ACCC, I find that it has established only contraventions of s 29(1)(g) of the ACL. I do not think that conclusion involves unfairness to Heinz as the elements of the contraventions are the same as those it knew it had to confront in relation to s 18.
Heinz’s knowledge
As noted at the commencement of these reasons, the ACCC sought findings that Heinz knew, or ought to have known, that it had made each of the pleaded representations and that each of those representations was false or misleading. Having regard to my findings, this claim need be considered only in relation to the three Healthy Food Representations.
The ACCC’s Amended Statement of Claim does not include any plea that Heinz knew, or ought to have known, that it had made the pleaded representations concerning the Berries Products. However, no point was taken about this at the trial and it was conducted on the basis that the ACCC allegations related to the pleaded representations with respect to all three Products. Heinz adduced evidence and made submissions on the basis that the ACCC allegations are that it knew, or ought to have known, that the packaging of each of the Products made each of the pleaded representations and that each was false or misleading.
There is another awkwardness in the ACCC’s pleading because, while it pleads that Heinz knew or ought to have known that each Product was not a nutritious food, not equivalent to the nutritional value of the depicted fruit and vegetables and that it discouraged the development of healthy eating habits for children aged 1‑3 years, it does not plead positively that Heinz ought to have known that the Products were not beneficial to the health of children. Its only plea, so far as it concerned this particular representation, was the broader plea that Heinz knew or ought to have known that the representation was false or misleading. Again, Heinz did not take any point about this feature in the pleading.
In its plea of knowledge with respect to the Berries Product and the Peach Product, the ACCC pleaded the knowledge of Heinz’s employed nutritionists and regulatory affairs specialists, the knowledge which Heinz had of the sugar, kilojoule and moisture product of each of the three Products, and two internal documents of Heinz, being the “Heinz Global Toddler Snacking Guidelines” dated May 2011 and the “The New Product Development Guidelines Little Kids (1‑3)” dated October 2008.
The plea concerning the knowledge of Heinz with respect to the Fruit and Chia Product was separate from the pleas concerning the Berries Product and the Peach Product. The plea of knowledge with respect to the Fruit and Chia Product raised the same three matters relied on in relation to the Berries Product and the Peach Product and then three further matters. The first two additional matters were “Heinz Wattie’s Infant and Toddler Nutrition Guidelines” dated November 2014 and the “Heinz Wattie’s Infant and Toddler Nutrition Guidelines” dated May 2015. These two documents were adduced into evidence but the ACCC did not refer to them in relation to the issue of Heinz knowledge in either its opening or closing submissions. The third additional matter was said to be correspondence which Heinz had received from the ACCC outlining its concerns in relation to the Berries Product and the Peach Product. However, the ACCC did not identify the correspondence on which it relied in this respect and it is not clear that it was even in evidence. Accordingly this part of its case can be ignored.
As already seen, the WHO Guidelines were at the heart of the ACCC case on the falsity of the Healthy Food Representations which I have found established. Those Guidelines were issued in March 2015, well after August 2013 when Heinz had commenced selling the Berries Product and the Peach Product using the packaging which is the subject of this litigation. Perhaps because of this, the ACCC did not rely on knowledge of the WHO Guidelines for any part of its claim concerning the actual or constructive knowledge of Heinz. Although Heinz did not commence selling the Fruit and Chia Product until January 2016, the ACCC did not rely on knowledge derived from the WHO Guidelines for the knowledge of Heinz it alleged in relation to that Product.
The submissions on both sides concerning Heinz’s actual or constructive knowledge were relatively brief.
The ACCC claim that Heinz had actual knowledge that it had made the Healthy Food Representations in relation to each of the three Products can be disposed of quite shortly. The Healthy Food Representation is not alleged to have been express but instead to have been conveyed to the ordinary reasonable consumer by a combination of the words and imagery used on the packaging. The ACCC allegation therefore is that Heinz had actual knowledge that the Healthy Food Representation was conveyed in this way by the packaging.
Subject to one qualification, the evidence does not establish that foundational proposition. First, there is nothing in Heinz’s own internal documentation which indicates an awareness on the part of any of its employees that a representation in terms of the Healthy Food Representation was being made. Secondly, none of the five Heinz employees who were witnesses in the trial said in her evidence in chief (contained in affidavit form) that she had been aware that a representation in terms of the Healthy Food Representation was being made. Thirdly, with one exception, none of the five Heinz employee witnesses was cross‑examined on this topic.
The exception is Ms Weaver to whom I referred earlier. The effect of her cross‑examination was that she had not considered that a representation that the Products were “specifically beneficial to health” was being made. She had thought only that a representation that the Products were a nutritious food and part of a healthy diet was being made.
I also observe that Ms Weaver had not been involved in the development of the Fruit and Chia Product or of its packaging.
The only documents to which the ACCC referred in its closing submissions in seeking the finding that Heinz knew that the Healthy Food Representations were being made were the same three documents to which I referred when addressing the question of whether the Healthy Food Representation had been conveyed, namely, the Nielsen Presentation dated 15 June 2012, the Project Totes Update and the presentation entitled “Heinz Infant FY 14 comms Briefing”. I indicated earlier my satisfaction that the latter two documents did support an inference that the general intention of Heinz with respect to the packaging of the Little Kids Products had been to promote them as nutritious and healthy. If there had been other evidence supporting a conclusion that Heinz’s employees were aware that the packaging conveyed a representation in terms of the pleaded Healthy Food Representation, that general intention of Heinz may have enabled that conclusion to be drawn more readily. However, evidence of that kind is lacking.
In these circumstances, I am not satisfied that the ACCC has established the premise for its case of actual knowledge, because it has not established that any Heinz employee had been aware that a representation in terms of the Healthy Food Representation was being made. That conclusion makes it unnecessary to address the significance of the circumstance that, in its closing submission on the topic of actual knowledge, the ACCC did not refer to any of the Heinz internal documents it had pleaded.
I turn then to the claim of constructive knowledge. Given my finding that ordinary reasonable consumers would have understood the Healthy Food Representation to be made, there is no difficulty in concluding that Heinz ought to have been aware that it was making such a representation.
The critical question therefore is whether Heinz should have known that the second limb of the Healthy Food Representation was false.
The ACCC’s submissions as to the basis upon which the Court should find constructive knowledge by Heinz were brief. Its closing submissions said only:
Heinz knew or ought to have known that the products were not nutritious, of equivalent nutritional value to fresh fruit and vegetables, nor a product that would encourage healthy eating habits. It also knew or ought to have known that this was not the case.
The ACCC’s opening submissions indicated that it relied on the “Heinz Global Toddler Snacking Guidelines” (the Toddler Snacking Guidelines) and the “New Product Development Guidelines Little Kids (1‑3)” (the NPD Guidelines).
The Toddler Snacking Guidelines were issued by Heinz Global in May 2011. It is apparent that they were of application to Heinz’s worldwide operations and not just to its operations in Australia. The Toddler Snacking Guidelines stated their purpose as follows:
The purpose of [the Guidelines] is to provide our business with best practice guidelines based on nutritional targets to support product development in developing toddler snacks that are nutritionally superior to the competitors. This will enable Heinz to continue the lead in bringing healthy toddler snacks to market that meet the public health recommendations, mums’ desires and are foods that little kids will eat.
The [Toddler Guidelines] are based on 4 principles:
1.consideration was given to the specific nutritional issues that impact toddlers from a public health perspective
2.consideration was given to the concerns of health care professional[s] regarding toddler nutrition
3.consideration was given to parents’ insights, attitudes and desires for toddler snacks
4.consideration was given to recommended servings and relevant reference values specific to toddlers.
The Toddler Snacking Guidelines also noted the following:
Toddlers diet [sic] usually consists of several smaller meals throughout the day or the traditional three meals supplemented with healthy, fun snack foods. 2‑3 small snacks per day is sufficient for most healthy toddlers. The smaller meals timed with healthy snacks set the pattern for a lifetime. Research suggests that early experiences with food can have an influence on the future food habits.
(Emphasis added and citations omitted)
The Toddler Snacking Guidelines noted that sodium and sugar are a public health concern and said that “their intake is recommended to be limited”. The specific recommendation in the guidelines with respect to sugars are set out earlier in these reasons but for convenience will repeat them:
Sugars are naturally present in foods such as fruit, dried fruit, milk and yoghurt. These foods are healthy foods which we do not want to limit the supply based on sugar content. Our aim is to use the minimum amount of added sugars needed for product acceptability.
Guidance from the Committee on Medical Aspects of Food and Nutrition Policy (COMA) in the UK has suggested that the contribution from non‑milk extrinsic sugars (similar to added sugars and sugars from fruit purée and juice) should contribute < 10% of energy.
As a guide we aim for < 5% of added sugars for savoury snacks and < 30% of total sugars for a sweet snack, this taking into consideration sugars that may come from fruit juice and fruit pastes for the development of fruit based snacks. The use of a percentage of sugar was selected rather than a percentage of energy to make it easier to calculate as labels often do not distinguish between intrinsic and added sugars.
(Emphasis added and citation omitted)
The NPD Guidelines were issued on 16 October 2008. The guidelines commenced with the statement that they had been developed “in consultation with and reviewed by paediatric nutrition professionals”.
They noted that dietary guidelines recommend that toddlers “[c]onsume only moderate amounts of sugars and foods containing sugars”.
Under the heading “Qualitative Aims”, the NPD Guidelines stated:
The nutritional quality of children’s diet can be improved by increasing content of vegetables, legumes, fruits and wholegrains, as per the dietary guidelines. At the same time, reducing intake of foods high in saturated fat, salt and sugars.
(Emphasis added)
With respect to the development of sweet snacks, the NPD Guidelines recommended that total sugars should comprise less than 30% of the aggregate nutrients in a product. It was common ground that the Products are within the description of “sweet snacks”.
Finally, the NPD Guidelines stated that “[l]imiting added sugar content is aimed at delaying the development of taste preferences for high sugar foods”.
Plainly, the sugar level in each of the Products exceeded the level recommended in both the Toddler Snacking Guidelines and in the NPD Guidelines. It is also plain that Heinz nutritionists were aware of the levels of sugar in the Products.
Some of the Heinz employees (for example, Ms Hodson and Ms Weaver) gave evidence that the Toddler Snacking Guidelines had not been prepared with foods like the Products in mind and/or that they did not regard them as being relevant to the Products. I had the strong impression that the evidence to this effect was in the nature of retrospective rationalisation given the realisation that the Products well exceeded the recommended maximum of 30% sugar. Their evidence indicates, however, that they were aware at relevant times of the recommendations in the Toddler Snacking Guidelines.
Each of the Heinz employee witnesses, with the exception of Ms Rigas, also said that she was aware of the document bearing the title “Heinz Little Kids Promise – Technical Criteria” issued on 14 December 2012. I accept that Ms Russell’s knowledge of the document was limited. Ms Weaver was in fact the author of the Technical Criteria document. In preparing the document, she had had regard to the draft Australian Dietary Guidelines incorporating the Australian Guide to Healthy Eating issued by the NHMRC in December 2011. The latter document included the following statement:
Fruit should mostly be eaten fresh and raw because of the low fibre content of fruit juice and the high energy density and “stickiness” (which may have implications for dental caries) of dried fruit … Some processed fruits and vegetables are nutritious alternatives as long as they are produced without added salt, sugar (including concentrated fruit juice) or fat.
(Citation omitted and emphasis added)
In the Technical Criteria document, Ms Weaver described the document as being Heinz’s:
Internal supporting document outlining the background technical criteria to the Little Kids Promise … which will be used in external communications. The Criteria and Promise applies to Heinz Australia and New Zealand Little Kids Products for 1‑3 years including snacks, meals and beverages.
I set out earlier in these reasons, the Heinz Little Kids Promise to which reference was made in this passage.
With respect to fruit and vegetable products, the Technical Criteria stated:
Aim to use fresh, frozen, single strength purees and juices
Aim to limit and avoid use of concentrated fruit juices and pastes
(Emphasis added)
The Technical Criteria also required “restricted use of refined sugar” and defined “added sugar” to include “concentrated fruit juice, deionised fruit juice”.
Each of the Products involved a departure from that part of the Technical Criteria if only because apple juice concentrate comprised approximately one‑third of each Product and therefore involved the inclusion of a form of added sugar. Further, as Ms Weaver accepted, the effect of added sugar and of sugar naturally occurring “in terms of the actual sugar structure and the energy content per gram” is the same.
I am satisfied that each of the Heinz nutritionists ought to have known that a representation that a product containing approximately two‑thirds sugar was beneficial to the health of children aged 1‑3 years was misleading. Each ought to have known that consumption of a product with that level of sugar may have the effects which underpin the WHO Guidelines. This is a natural inference arising from their training and experience as nutritionists. Accordingly, I am satisfied that this aspect of the ACCC case is established, namely, that Heinz ought to have known that the representation that the Products were beneficial to the health of children aged 1‑3 years was false or misleading.
I indicate, however, my satisfaction that each of the Heinz witnesses had endeavoured to carry out their roles in the development of the Products and of their packaging in a conscientious and diligent way. In particular, those responsible for the development of the packaging had endeavoured to avoid the making of any statements, express or implied, which may be misleading or deceptive and, for that purpose, had adopted a generally conservative approach to the claims which should be made.
Summary
For the reasons given above, I reject the ACCC claims with respect to the Nutritional Value and Healthy Habits Representations. I uphold the ACCC claim with respect to the second limb of the Healthy Foods Representations and find that the ACCC has established that Heinz ought to have known that it was making the Healthy Food Representation in relation to each Product and that that representation was false or misleading.
I will in due course make declarations of the following kinds:
(a)Heinz, in trade or commerce, in connection with the manufacture and supply of the Products, represented that each of the Berries Product, the Peach Product and the Fruit and Chia Product was beneficial to the health of children aged 1‑3 years when by reason of their high sugar content and sticky texture, the Products were not beneficial to the health of children aged 1‑3 years and Heinz thereby:
(i)engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL; and
(ii)made a false or misleading representation to consumers in contravention of s 29(1)(g) of the ACL.
(b)Heinz ought to have known that the representations referred to in the first declaration had been made and ought to have known that representations to that effect were false.
However, before making the formal declarations, I will give the parties the opportunity to be heard concerning them.
The remaining claims of the ACCC are dismissed.
I will also hear from the parties as to the orders which are appropriate to give effect to these conclusions and as to the conduct of the remaining parts of the trial.
I certify that the preceding three hundred and eighteen (318) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate:
Dated: 19 March 2018
APPENDIX A
An unfolded copy of the packaging for the Berries Product
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