The Federal Court in Australia has ordered Coles supermarkets to pay penalties of A$2.5 million for making false representations and engaging in misleading conduct in relation to the promotion of its par-baked bread products in proceedings brought by the ACCC.
The products were promoted as ‘Baked Today, Sold Today’ and, in some cases, ‘Freshly Baked In-Store’, while they were partially baked and frozen off-site by a supplier, transported and ‘finished’ at Coles’ in-store bakeries.
Chief Justice Allsop said: “The contravening conduct in this case is substantial and serious. Notwithstanding the absence of any specific evidence as to loss or damage by a consumer or a competitor, it is clear that the significant potential to mislead or deceive and thus to damage competitors, the duration of the conduct, and the fact that the goods in relation to which the impugned phrases were used were ‘consumer staples’ indicate that the objective seriousness of the offending conduct was considerable.
“The evidence before the court showed that Coles had engaged in the campaign with the clear purpose of improving its market share vis-à-vis its competitors… It set out to do so by engaging in the conduct that, in fact, breached the Australian Consumer Law.”
ACCC Chairman Rod Sims said the penalty sends a strong message to companies that they should not use broad phrases in promotions that are deliberately chosen to sell products to consumers, but which are likely to be misleading.
“The ACCC took this action because it was concerned that Coles’ ‘Baked Today, Sold Today’ and ‘Freshly Baked In-Store’ claims about its par-baked bread were likely to mislead consumers,” he said. “The conduct also placed independently-owned and franchised bakeries that entirely bake bread from scratch each day at a competitive disadvantage.”
Coles’ nationwide campaign was promoted in more than 630 Coles supermarkets. ‘Baked Today, Sold Today’ was used extensively on packaging for par-baked products over a three-year period. During this time, Coles sold a significant number of par-baked products and generated substantial revenue from these sales.
Last September, the court declared that by using the phrase ‘Baked Today, Sold Today’, Coles represented to customers that certain bread products were entirely baked on the day on which they were offered for sale, when this was not the case, in contravention of Australian Consumer Law (ACL).
The court also declared that by using the phrases ‘Freshly Baked In-Store’, ‘Freshly Baked’ and ‘Baked Fresh’, Coles had represented that certain bread products were baked from fresh dough, entirely baked on the day on which they were offered for sale and had been entirely baked in the Coles in-store bakery, when this was not the case and in contravention of the ACL.