Coles ‘freshly baked’ claims false, rules Australia Federal Court

17-Jun-2014 - Last updated on 18-Jun-2014 at 10:07 GMT

ACCC vs Coles case: Federal court date will be set to determine the relief that Coles will be ordered to pay - the retail major could face fines of up to A$1.1m for each offence

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Australian retail major Coles misled consumers with false claims that its bakery products were ‘freshly baked’ in store when they were par-baked, the Federal Court of Australia has ruled.

Coles claimed its Cuisine Royale and Coles Bakery breads were ‘baked today, sold today’ and in some cases ‘freshly baked in-store’ - claims the court, today (Wednesday 18), concluded were “false, misleading and deceptive”.

The Court said Coles had breached three parts of Australian Consumer Law relating to misleading trade and false representation of the quality, characteristics and processing of the product.

Today’s ruling could see Coles fined up to A$1.1m per offence. A federal court hearing will be scheduled soon to determine the relief that will be ordered.

Credence claims are a priority for us, says ACCC

The Australian Competition and Consumer Commission (ACCC) initially launched proceedings against Coles last year over concerns its in-store bakery claims were misleading consumers.

“Today’s decision confirms that Coles misled consumers about the baking of these bread products. Consumers should be able to rely on the accuracy of credence claims made by businesses like Coles to promote their products, especially where those claims are used to compete with smaller businesses which are genuinely offering a differentiated product,” said Rod Sims, chairman of the ACCC.

The ACCC said credence claims - where premium of special characteristics of a product were difficult for consumers to test accurately – were an enforcement priority for the competition regulator.

“They are powerful marketing tools that can mislead consumers if improperly used and have the potential to adversely impact the competitive process and small businesses,” it said. “In particular, when larger businesses present their products as having a particular feature when they don’t, it can undermine the unique selling point that small businesses who do offer that feature depend upon to compete.”

Coles should make par-baked tolerably clear

Chief Justice James Allsop who filed the ruling, said in his judgement that Coles needed to re-think how it presented par-baked bread in its stores.

“It is not the place of the court to provide advice… as to how Coles might sell bread that has been par-baked from frozen product… A start would, however, be to make it tolerably clear to the public that the recent baking was the completion of a baking process that had taken place sometime before, off site, and that ‘freshly baked’ actually meant the completion of the baking process of frozen product prepared and frozen off site by suppliers,” he said.

Allsop said that, for many people, the phrases ‘baked today, sold today’ and ‘freshly baked today’ would convey the entire baking process, and not some heating or baking, had happened that day.

While he acknowledged that Coles baked from scratch in some of its in-store bakeries, he said the general signage of ‘freshly baked’ for the 637 Coles chains that had in-store bakeries could mislead consumers on the par-baked products. “The packaging and signage used in the Coles in-store baking area and bakery section of each Coles store do not differentiate between products made from scratch, from frozen dough and using the par-baked method,” he said.