Case note: ACCC v Pepe’s Ducks Ltd

By Emmanuel Giuffre, Voiceless Legal Counsel and Sara Gajic, Legal Intern

Citation: Australian Competition and Consumer Commission v Pepe’s Ducks Ltd [2013] FCA 570

Court – Federal Court of Australia
Judge – Bromberg J
Date of Judgement – 14 June 2013

In 2012, the Australian Competition and Consumer Commission (ACCC) brought an action pursuant to the Australian Consumer Law against Pepe’s Ducks Ltd, the leading supplier of duck meat in Australia.

The ACCC alleged that Pepe’s Ducks engaged in misleading or deceptive conduct, and made false or misleading representations, with respect to the welfare claims alleged in its product advertising and packaging material.

On 14 June 2013, the Federal Court of Australia (FCA) handed down its decision and ordered by consent that Pepe’s Ducks pay $375,000 in civil pecuniary penalties and $25,000 in costs. Significant for the animal protection movement, the FCA held that it would not tolerate meat producers deliberately misleading consumers as to welfare claims made on product advertising and packaging material and ordered Pepe’s Ducks to pay significant pecuniary penalties, amongst other orders. 

The ACCC’s claim

Pepe’s Ducks is a leading supplier of duck meat products with approximately 40% market share and supplying around 80,000 ducks per week in Australia in 2011.1

Between 2004 and 2012, Pepe’s Ducks made a number of representations on their product packaging, delivery vehicles and official website as to the conditions in which their ducks were kept, including that the ducks were “open range” and “grown nature’s way”. The marketing material also used pictorial representations of “happy ducks” roaming outdoors and next to a water source.2

In 2011, Animal Liberation and the Public Interest Law Clearing House lodged a complaint with the ACCC, alleging that Pepe’s labelling was in breach of the Australian Consumer Law because it would lead a reasonable member of the public to believe that the ducks were raised with access to surface water, when in fact they were bred and raised in closed sheds.

Further, in June 2012, a feature on ABC’s 7.30 provided photographic and video footage evidencing the true environment in which ducks were kept at a Pepe’s Ducks shed in New South Wales. The footage showed ducks barn raised, without access to the outdoors or to a water source. The evidence also revealed shocking scenes of ducks having their wings caught in grates, ducks lying on their backs unable to re-erect themselves or support their weight, and showing visible signs of distress.

In July 2012, the ACCC brought an action against Pepe’s Ducks for engaging in misleading or deceptive conduct, and making false or misleading representations, under sections 18 and 29(1)(a) of the Australian Consumer Law (Cth) respectively. The ACCC alleged that Pepe’s Ducks had deliberately misled consumers by suggesting, through their marketing campaigns, that their ducks were raised “free range” with access to water, when they were not.

Pepe’s Ducks conceded that its ducks were barn raised and not “free range” and that outdoor access was limited, despite their claims of “Open Range” and “Grown Nature’s Way”. Pepe’s Ducks also conceded that its ducks did not have access to a water source, despite marketing imagery that could suggest otherwise. Accordingly, Pepe’s Ducks admitted its conduct contravened the Australian Consumer Law and consented to the FCA making orders against it. Those orders included declarations, injunctions, corrective measures, a pecuniary penalty of $375,000 and ACCC costs of $25,000.3

The decision

On 14 June 2013, the FCA handed down its decision and ordered by consent that Pepe’s Ducks:

  • was prohibited from using the words “open range” or “grown nature’s way” on any product or marketing material;
  • ​was prohibited from displaying a picture of a duck outdoors on any product or marketing material, without the words “Barn Raised” prominently displayed in close proximity to the picture;
  • ​to establish a Trade Practices Compliance Program at their own expense and publish a notice on their website and at the front of each of their premises to clarify the source of its duck meat, for a period of 90 days; and
  • to pay a pecuniary penalty amounting to $375,000 and costs to the ACCC in the amount of $25,000.

In coming to this finding, the FCA held that the deliberate nature of the marketing campaign in deceiving ethical consumers over an extended period of time was a critical factor in determining pecuniary penalties.

Bomberg J also held that Pepe’s Ducks’ conduct was “very serious” given it held 40% of the market share of duck meat products in Australia. Bomberg J noted that many consumers were undoubtedly deliberately misled, competitors not engaging in unlawful conduct were disadvantaged, and the company established an ethical perception amongst consumers, which was false.

Bomberg J stated:

“The company would clearly have been aware of increasing concern among consumers regarding sources of food and the treatment of animals used to produce food products. Pepe’s Ducks would also have been aware that many consumers prefer products that are sustainably produced with reasonable concern for animal welfare and that many consumers are prepared to pay a premium for such products.”4

Bomberg J referred to the underlying goal of pecuniary penalties – namely, to deter the liable party and other members of the public from engaging in such conduct in the future. Notwithstanding the fact that Pepe’s Ducks had not previously engaged in unlawful, anti-competitive conduct, the significant penalty was necessary in order to ensure other large corporations, in which consumers have placed trust, do not attempt to mislead or deceive.