ESG Enforcement Tracker

Key facts:

In May 2019, in a case brought by the ACCC, the Federal Court of Australia found that Woolworths did not contravene sections 18, 29 or 33 of the Australian Consumer Law with respect to labelling on certain disposable dishes and cutlery. That labelling included the word “Eco”, featured a green colour scheme with graphics of grass and butterflies, and stated “Made from a renewable resource” and that the products were “bidegradeable and compostable”.

The ACCC’s case was that the “biodegradeable and compostable” statement was misleading, including as, due to the operation of section 4, it was a representation about ‘future matters’ and the business had no reasonable grounds to make it. The ACCC also argued that the statement was a representation that the products would “… biodegrade and compost within a reasonable period of time when disposed of (i) using domestic composting; or (ii) in circumstances ordinarily used for the disposal of such products, including conventional Australian landfill”.

The court found that, contrary to the ACCC case, Woolworths’ representations of being “biodegradeable and compostable” did not relate to future matters, but were describing inherent qualities or capacities of the products that merely represented to the ordinary consumer that they were capable of biodegrading and, separately, turning into compost, without making any representation about how long those processes may take. On this basis, the court was not prepared to read in an implication that this process would occur within a reasonable time.

The court also found that, if it was wrong and the representations were as to future matters and the representations were as the ACCC contended, then Woolworths did not have reasonable grounds for the statements, as no person to whom Woolworths’ state of mind could be attributed in fact formed any opinion or belief that there were such reasonable grounds (and there was evidence to the contrary in the form of Woolworths’ own Environmental Claims Policy and internal emails).

On the ACCC’s alternative case of breaches of sections 29 and 33, the court found that the ACCC did not prove that the products would not biodegrate/were compostable within a reasonable period of time (using domestic composting) and, moreover, on Woolworths’ evidence the opposite was in fact true (based on expert evidence trials).

The Full Federal Court subsequently dismissed the ACCC’s appeal on the basis that it found that the trial judge had not made an error when finding that the labelling referred to an inherent characteristic of the products as opposed to a future matter.