Decision on proposed $10m Heinz fine deferred

Heinz KidsThe Federal Court has reserved a decision on a penalty for food giant Heinz over misleading consumers by claiming one of its snacks, marketed for toddlers, was beneficial for young children.

The Australian Competition and Consumer Commission (ACCC) has called for a $10 million fine to act as a suitable deterrent, but Heinz has proposed a figure around $400,000 as more appropriate.

The ACCC also wants the company to be forced to publish advertisements in relation to its breach of consumer laws, something Heinz said isn’t necessary.

Justice Richard White will hand down his decision on penalty, corrective advertising and costs on a date to be fixed. In his judgment in March, Justice White ruled the prominent statements on the packaging, that the Little Kids Shredz snacks comprised 99 per cent fruit and vegetables together with the pictures of the fruit and vegetables, conjured impressions of nutritiousness and health.

“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 one to three years was misleading,” he said.

In submissions on penalty on Wednesday, counsel for the ACCC Tom Duggan argued that the company’s conduct was “egregious” because of the potential implications for the diet and oral health of young children. He said the penalty imposed on Heinz had to be sufficient to act as a deterrent against similar conduct by the company and others operating in the food industry.

“If it’s not big enough in the end it simply doesn’t represent a sufficient deterrent,” Duggan told the court.

Duggan argued that the company’s conduct involved both “willful blindness” and “recklessness”and said it was very serious because of the potential implications for the diet and oral health of young children.

Michael O’Brien, for Heinz, said there were no facts to support the company’s conduct being egregious and the court had ruled that while it made an error, it did not intend to mislead. The Shredz products were a dehydrated snack made from 99 per cent fruit, vegetable and chia seed ingredients and did not contain any preservatives, artificial colours or flavours. They have not been sold in Australia since May 2016. At the time Heinz said it was disappointed with the ruling but respected the court’s decision.

“Heinz is committed to providing high quality food products and to communicating clearly and transparently with consumers on its packaging,” it said in a statement.

The ACCC case centred on claims that Heinz made representations on its packaging that suggested the snack had the same nutritional value as fresh fruit, it was a nutritious food for young children and it would encourage healthy eating habits.

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