Woolworths has triumphed in the Federal Court over the ACCC, which had instigated legal action alleging it had misled shoppers over its range of “biodegradable, compostable” disposable picnic products.
Early last year, the ACCC announced that it was taking the supermarket giant to court over its Select eco range of disposable plates, bowls and cutlery.
The regulator had alleged that claims the products were “biodegradable and compostable” were misleading.
“Customers paid a premium because they rightfully thought the environmental claims would have been substantiated,” ACCC commissioner Sarah Court said at the time proceedings were launched.
“The ACCC also alleges that Woolworths made these claims in circumstances where it was aware there was confusion among consumers and businesses about the meaning of biodegradable and compostable.
“One of the suppliers of the W Select eco line also had significant qualifications on its website about the biodegradability and compostability of its products.
“Despite all these matters, Woolworths made the representations without explanation or qualification.”
According to the ACCC, the plates and bowls in question are made of bagasse, which it described as “a fibrous matter that remains after sugarcane or sorghum stalks are crushed to extract their juice”.
Woolworths said the products were released to market in 2014, and that there was — and still is — no mandatory guidelines in Australia about how claims of biodegrability and compostability are to be made to consumers.
At the time, Woolworths had said that the products had been “voluntarily” withdrawn from sale while it reviewed the regulator’s concerns, and was considering how it would respond to the legal action.
The retailer subsequently defended the action, with the Federal Court ruling in its favour on Friday (5 July 2019).
“I consider the ACCC has not proven the allegations it has made, and the application should be dismissed,” the judge, Justice Mortimer, said in her findings.
“The ACCC has not proven that, by the labelling on the impugned products, Woolworths made the representations the ACCC alleged it to have made. The representations that were made did not relate to future matters, were as to the inherent qualities or capacities of the products, and were in any event accurate.”
However, the judge did find that Woolworths “did not have reasonable grounds for the representations which it alleges were made”.
The ACCC was ordered to pay Woolworths’ costs, which will be determined at a later date.
Woolworths ‘pleased’ with outcome
Responding to the court’s ruling, a spokesperson for the retailer was upbeat that its products had been vindicated.
“Woolworths is pleased with the outcome of the Federal Court judgment,” they said.
“The court found that Woolworths did not make false or misleading representations.”
The spokesperson added: “We have always treated our obligations under the Australian Consumer Law very seriously, and understand how important it is that our customers can trust the environmental claims we make.”
ACCC ‘carefully considering judgment’
For its part, the ACCC said it will “carefully” consider the court’s ruling, potentially leaving open the option of launching an appeal.
“We are carefully considering the court’s judgment,” ACCC chair Rod Sims said following the verdict.
“We argued that Woolworths’ claims meant a consumer could reasonably expect the disposable products would decompose in landfills or domestic composting within a reasonable time.
“We took this case because we believed the representations were false or misleading and Woolworths did not have a reasonable basis to make these claims.”
Mr Sims added: “We will continue to take cases against businesses that we believe are making misleading environmental claims about their products.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.