One of WA’s biggest egg producers has been slugged more than $1 million after it deceived shoppers by falsely labelling some of its products free range, and consumer class action may follow.
The Australian Competition and Consumer Commission brought the action against Snowdale Holdings over its farms in Carabooda and the Swan Valley in Perth’s north, where the company produced brands including Eggs by Ellah.
The farms have since been closed but Snowdale still produces eggs at a large Gingin operation, where it claims hens are stocked at no more than 1500 per hectare.
At the former Perth operations, the barns were overstocked and had only one exit, which was too small, so half of the hens probably never got outside.
Chickens had to compete with up to 17,000 others before they could exit the steel sheds.
According to Humane Society International, which alerted the ACCC to a neighbour’s claims about the company, some of the sheds held up to 14 chickens per square metre.
Snowdale was fined $750,000 in the Federal Court in Perth on Tuesday and must also pay $300,000 in court costs.
Humane Society International said the highest penalty previously handed down for such a case was $300,000.
Snowdale, a major supplier to Coles and Woolworths, has also been ordered to undergo a consumer law compliance program and publish a corrective notice.
Justice Antony Siopis said the conduct was deliberate and “particularly serious”.
“This is because the contravening conduct comprised the making of misleading statements about a staple food product purchased by a very large number of consumers,” he said.
“The fact that during the relevant period, Snowdale sold more than 60 million eggs as ‘free range’ eggs is testimony to the extent to which Snowdale’s contravening conduct affected consumers.
“Consumers in Western Australia, during the relevant period, paid a premium of between $5 million to $8.5 million for a product which they did not receive.”
Not all of that went to Snowdale, however, with Justice Siopis estimating the company itself gained between $1.7 million and $1.9 million in extra revenue “and probably even more”.
Outside court, Humane Society International’s Dinny Laurence said the penalty was a major win.
“We think that this is a great result,” Ms Laurence told reporters.
“More than the pecuniary penalty, I think that the sanctions that have been imposed on Snowdale are incredibly important..
“There is a monitoring program, which is a wonderful thing. To have a penalty for the past is one thing but to restrain future transgressions of this kind are another.”
Ms Laurence said a class action was “a very real possibility”.