The Federal Court has made consent orders against a Japanese company, Ixon Japan KK and its Australian affiliate, Ikuson Trading Company Pty Ltd, for mislabelling a Chinese honey drink as a 'Product of Australia'.
In November 2003, the Australian Competition and Consumer Commission took court action following allegations the companies were promoting the 'Ixon Club Propolis Drink' to Japanese Ixon Club members as a 'Product of Australia', when the product was manufactured and bottled in China, from mostly Chinese honey. The drink only contained about 2 per cent Australian honey.
By consent of both parties, the Court declared the companies had breached the Trade Practices Act 1974 by representing the honey drink:
- contained 39 per cent Leatherwood honey – when it contained only about 2 per cent Leatherwood honey, and about 38 per cent Chinese honey
- contained 28 per cent Leatherwood propolis – when it contained none
- had its main ingredients from Tasmania – when the main ingredients were from China, and
- was manufactured and bottled in Australia – when manufacturing and bottling took place in China.
The Court declared the conduct contravened Section 52 of the Act, which provides a general prohibition against misleading or deceptive conduct, and also contravened Sections 53(a) and 53(eb) which prohibit false representations concerning the quality, composition and country of origin of goods.
Consent injunctions were granted restraining the companies from representing that any Ixon Club product is from Australia unless the product is wholly or substantially produced or manufactured in Australia and comprises wholly or substantially Australian ingredients.
Ixon has also agreed to inform current customers of the Ixon Club, who were members between August 2000 and September 2002, of the declarations and injunctions ordered by the Court.
The ACCC relied on the extra-territorial operation of the Trade Practices Act 1974 to catch the conduct of the Japanese company, Ixon. Section 5 of the Act gives jurisdiction over a foreign company 'carrying on business' in Australia, either by itself or through the conduct of its servants and agents, including the Australian company, Ikuson, and its employees.
ACCC Chairman, Mr Graeme Samuel, said the decision will make foreign companies think twice about labelling non-Australian products as 'Product of Australia' to boost sales.
"The ACCC is keen to protect the reputation and trade of developing export industries, and in this case the good name and integrity of Australian honey".
Australian honey, particularly Tasmanian Leatherwood honey, is prized for its quality. Chinese honey generally does not enjoy the same reputation because of international reports of its contamination with antibiotics. The Australian honey industry has long been concerned about a backlash from overseas markets if Chinese honey is mixed with local honey and relabelled as a 'Product of Australia'. It could tarnish the image of high-quality Australian honey and so risk its premium honey markets overseas.
"The Court action shows that the Trade Practices Act has a strong role to play in the ever-expanding global marketplace – protecting not only Australian exporters but also international customers of their products", Mr Samuel said.