Media Release
Issued 5 April 2003-04/106
Brownlie Brothers guilty of misleading juice claims: fined $35,000
Hawkes Bay juice company Brownlie Brothers Limited has been fined a total of $35,000 after pleading guilty to breaching
the Fair Trading Act in relation to misleading labelling of its Simply Squeezed and Supreme Orange Juice products.
In his reserved judgment released today, Justice Clapham commented that this was a committed endeavour in a difficult
supply situation to at least maintain market share. "In this sense it was wilful activity."
The case was part of a Commerce Commission crackdown on misleading advertising in the juice industry, which saw eleven
companies investigated by the Commission early last year. The investigations resulted in two prosecutions - against
Freshly Squeezed Limited and Brownlie Brothers - and undertakings by five companies to make changes to their labels or
website content.
Commission Chair Paula Rebstock said the Commission had prosecuted Brownlie Brothers for misleading representations
relating to the freshness, content and origin in relation to its juice products.
"For both the Simply Squeezed and Supreme Orange Juice products, the overall impression created by the labelling and
marketing of the products was that they were made from New Zealand and/or Australian fruit, when in fact both products
contained imported Brazilian concentrate - up to 30 percent in the case of Simply Squeezed and up to 70 percent in the
case of Supreme," said Ms Rebstock.
"In the Commission's view, because of the nature of the products and the premiums that consumers pay for pure, fresh and
squeezed products, it is imperative that representations as to the nature, content and manufacturing process of orange
juice be of the highest levels of accuracy."
"Businesses need to make sure that the overall impression given by labelling does not mislead consumers or misrepresent
key components of a product," said Ms Rebstock.
"A consumer should be able to make an informed decision based on an overall impression - not through having to conduct a
comparative analysis of information contained in the fine print."
Background
The Commission undertook a number of investigations into the advertising practices of juice companies at the beginning
of last year.
In the course of the Commission's investigations, the Commission found that the key breaches related to:
- misleading representations with respect to "100%" juice - that is, claiming to be 100% juice when they contained
concentrate;
- using the term "squeezed" in a manner that implied freshness when the products concerned were made from blended juices
(i.e. juice plus concentrate);
- implying that the product was New Zealand made, when that was not the case.
In December 2003, Freshly Squeezed Limited was fined $10,000 after pleading guilty to making misleading claims about the
freshness, content and place of origin of its Arano and Fresh Selection juices.
IN THE DISTRICT COURT
AT NAPIER
CRI 2003-041-003200
THE COMMERCE COMMISSION
Informant
v
BROWNLIE BROTHERS LIMITED
Defendant
Appearances: B D Vanderkolk for Informant
L L Stevens QC for Defendant
Judgment: 29 March 2004
DECISION OF JUDGE J P CLAPHAM
[1] The defendant company has pleaded guilty to the following charges:
(a) CRN3041008435
Sections 10 and 40 of the Fair Trading Act 1986, did while in trade, engage in conduct that was liable to mislead the
public as to the nature and characteristics of goods, namely orange juice.
Particulars of Conduct:
The overall impression created by the labelling and marketing of "Simply Squeezed" orange juice is that it was made from
New Zealand and/or Australian fruit, when in fact it contained up to 30% imported concentrate.
(b) CRN3041008433
Sections 10 and 40 of the Fair Trading Act 1986, did while in trade, engage in conduct that was liable to mislead the
public as to the nature and characteristics of goods, namely orange juice.
Particulars of Conduct:
The overall impression created by the labelling and marketing of "Supreme Orange Juice" also marketed as "Supreme
Squeezed Style Orange Nectar" orange juice is that it was made from New Zealand products in New Zealand, when in fact it
contained up to 70% imported concentrate.
[2] Section 10 of the Fair Trading Act 1986 provides as follows:
10 Misleading conduct in relation to goods
No person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, manufacturing
process, characteristics, suitability for a purpose, or quantity of goods.
[3] Section 40 of the Fair Trading Act 1986 provides as follows:
40 Contraventions of provisions of Part 1, Part 2, Part 3, and Part 4 an offence
(1) Every person who contravenes any of the provisions of Part 1 (except [sections 9, 14(2), 23, and 24]), or Part 2, or
Part 3 or Part 4 of this Act, commits an offence and is liable on summary conviction¡X
(a) in the case of a person other than a body corporate, to a fine not exceeding [$60,000]; and
(b) in the case of a body corporate, to a fine not exceeding [$200,000].
[(1A) Every person who contravenes section 24 commits an offence and is liable on summary conviction to a fine not
exceeding $200,000.]
(2) Where a person is convicted, whether in the same or separate proceedings, of 2 or more offences in respect of
contraventions of the same provisions of this Act and those contraventions are of the same or a substantially similar
nature and occurred at or about the same time, the aggregate amount of any fines imposed on that person in respect of
those convictions shall not exceed the amount of the maximum fine that may be imposed in respect of a conviction for a
single offence.
[(3) Despite section 14 of the Summary Proceedings Act 1957, proceedings under this section may be commenced at any time
within 3 years after the matter giving rise to the contravention was discovered or ought reasonably to have been
discovered.]
[4] Summary of Facts provides:
Background
Brownlie Brothers is a manufacturer and distributor of orange juice under a number of different labels.
The New Zealand Juice Industry is estimated to generate $140 - $150 million in turnover, representing some 18 litres of
juice per person per annum. Because of the nature of the products and the premiums that consumers pay for pure, fresh
and squeezed products, it is imperative that representations as to the nature, content and manufacturing process of
orange juice be of the highest levels of accuracy.
There are self-imposed guidelines (attached) in place in the Juice Industry, which are designed to provide a "best
practice" approach to juice labeling. Those guidelines confirm that the overall impression created by representations on
a label, either visual or written, is important in deciding whether the label is likely to be misleading to consumers.
It also confirms that a company name could, together with other representations on a label, be misleading and in breach
of the Act. The guidelines specifically state that claims relating to "fresh", "pure", "100%" or "squeezed" should not
be made where the product was made of imported orange concentrate that had been reconstituted in New Zealand.
The guidelines have been proved by the Commerce Commission and adopted by the New Zealand Juice Association in respect
of which the Defendant has been an active member.
"Simply Squeezed" Orange Juice
"Simply Squeezed" juice products are manufactured by Brownlie Brothers Limited at its production site located on an
orchard in Hawkes Bay. The director of the company is Stephen Brownlie. Orange juice is manufactured daily on a
made-to-order basis. The product is distributed nationally from this production plant.
The "Simply Squeezed" brand name has been in existence for 12 years since the company commenced manufacturing juice
products. "Simply Squeezed" was not at material times a trademark and is advertised on the company website
www.simplysqueezed.co.nz.
"Simply Squeezed" orange juice was made from only squeezed New Zealand and/or Australian orange juice prior to 12
February 2002. Since that date, imported orange concentrate has been continually added to the product, due to a shortage
in supply of squeezed juice. Imported orange concentrate became from this date a constant and permanent ingredient of
the "Simply Squeezed" product. The concentrate originated in Brazil and was used to make up to 30% of the "Simply
Squeezed" product.
A particular "Get Up" was used on the labeling of the "Simply Squeezed" brand. The "Get Up" was consistent between 12
February 2002 and June 2002. A true copy of the labeling of the "Simply Squeezed" brand between those dates is annexed
to this summary of facts and marked "A".
A slightly different "Get Up" was used from June onwards. A true copy of that "Get Up" is annexed to this summary of
facts and marked with the letter "B".
On each bottle of "Simply Squeezed" product there are two labels. There was no change made to the primary label to
reflect the addition of imported concentrate. It is acknowledged that the secondary label more accurately reflects the
constituent ingredients of the product and was changed from June 2002 to the end of the period set out in the
information.
The overall impression created by the labeling and marketing of the "Simply Squeezed" orange juice was that it was made
from New Zealand and/or Australian fruit when in fact it contained up to 30% imported Brazilian concentrate.
"Simply Squeezed" was advertised on Television One and Television Two in the Auckland region between 10 March 2002 and
10 May 2002 on 67 occasions (TVC to be played).
The television advertising contained the following script:
"There are at least two places you will find orange juice.
Inside an orange, and inside every bottle of Simply Squeezed.
Simply Squeezed.
Delivered to a store near you each day."
The lines are spoken over a visual of an orange skin peeling back to reveal a bottle of "Simply Squeezed".
The Commission takes the view that the overall impression created by the television advertising is that the "Simply
Squeezed" orange juice contained ONLY New Zealand/Australia fruit, when in fact, it contained up to 30% imported
Brazilian concentrate and other ingredients.
The Defendant also provided point of sale advertising to supermarkets and other retail outlets on A3 sized paper and in
poster size. On each of the promotions were adapted from the words of the primary label of the Defendant's bottles
(produce point of sale advertising).
The representations made on the labels (particularly the primary brand label) give the impression that the product is
squeezed juice. This was reinforced by the television and point of sale advertising.
The product was not all squeezed orange juice. It can take up to two weeks for imported Australian squeezed single
strength juice to be landed at the Defendant's production plant. Orange juice concentrate is processed months or even
years earlier.
"Supreme Orange Juice" (also marketed as "Supreme Squeezed Style Orange Nectar"
Over at least the period between 1 January 2002 and 14 November 2002, the Defendant marketed a product called "Supreme
Orange Juice" (also marketed as "Supreme Squeezed Style Orange Nectar"). A true copy of the "Get Up" for the labeling of
that product is annexed to this summary of facts and marked with the letter "C".
The overall impression created by the labeling that it was made from New Zealand products in New Zealand, when in fact
it contained up to 70% imported Brazilian concentrate.
General
The Commission's guidelines have been in place for more than 7 years and Brownlie Brothers Limited have been members of
the Juice Industry Association for that entire period. They must be taken to have been fully aware of the guidelines.
Consumers pay a considerable premium for fresh, New Zealand made, and single strength (i.e not from concentrate) juices.
Consumers are utterly reliant upon representations made by traders in this area, with no independent means of assessing
the truth or otherwise of representations made.
There is an obvious detriment to competitors who produce genuine premium products who may be disadvantaged by inaccurate
and misleading claims. To produce genuine fresh squeezed orange juice, is an expensive operation and the Defendant by
its actions is effectively obtaining the same type of marketing without the associated cost.
Brownlie Brothers Limited produces 100,000 litres of orange juice per week under both brands. It supplies in excess of
330 supermarkets, comprising 60% of its business. The remaining juice distributed through approximately 880 other
outlets in the route trade (garages, hotels etc).
The director of the company, Stephen Brownlie, was interviewed by a Commission investigator on 30 May 2002. He
cooperated fully with the Commission, answering all questions and where necessary, forwarding further material to the
Commission after the interview. He acknowledged that up to 30% Brazilian concentrate had been used in the "Simply
Squeezed" brand since 12 February 2002 on a routine basis. He advised that this was as a result of an extremely short
supply in Australia of fresh squeezed orange juice. He claimed not to believe that the various representations made were
misleading.
It is accepted that the Defendant took steps to remedy the description of the constituent ingredients from June 2002. It
is not accepted by the Commission that this meets the Defendant's obligations under the terms of the Fair Trading Act,
even though the steps taken the description within the secondary label may amount to compliance of Food Control
Legislation.
The Commission is concerned with the overall impression given to a reasonable consumer confronted with a choice of
product and offered for sale. The Commission is of the view that the reasonable consumer should not be expected to
conduct a comparative analysis of information contained in secondary labeling but should be able to make an informed and
not misleading choice based on information conspicuously displayed.
The Defendant has no previous convictions for breaches of the Fair Trading Act.
[5] I record that I viewed with counsel the video advertising which is referred to in the Summary.
[6] I record my thanks to both counsel for their comprehensive and succinct submissions.
[7] Both counsel provided written submissions and I set out the essence of those submissions as follows.
[8] The informant's submissions on penalty set out the charges, identified the principles of sentencing under the Fair
Trading Act and referred specifically to the Commerce Commission v L B Nathan & Company Limited [1990] 2 NZLR 160 and said the factors to be taken into consideration were as follows:
- The objectives of the Act
- The importance of any untrue statements made.
- The degree of wilfulness or carelessness involved in making such a statement.
- The extent to which the statements in question depart from the truth.
- The degree of dissemination.
- The resulting prejudice to consumers and other traders in the relevant market.
- Whether any and if so what efforts have been made to correct the statements.
- The need to impose deterrent penalties.
- A guilty plea.
- The maximum penalty.
- Degree of co-operation..
[9] In addition it was submitted that the financial circumstances and size of the defendant company are also factors to
be taken into account and referred to the decision of Commerce Commission v Cooney (Unreported decision of the
Christchurch District Court 11 December 1988 - Abbott DCJ). Specific reference was, of course, made to the Sentencing
Act and I was asked to note that the maximum fine against the defendants had been increased on 8 July 2003 to
$200,000.00 for bodies corporate by the Fair Trading Amendment Act 2003.
[10] (i) The informant referred to the objectives of the Act submitted the intention of the Act is to provide:
- An informed market place.
- Free and equal competition to exist between retailers.
- Open and accurate dealings between consumers and suppliers.
- Remedies and penalties.
(ii) And made submissions in respect of the following features.
(a) The Importance of any Untrue Statements Made. The informant explained the need for accuracy and definition of
contents.
(b) The Degree of Wilfulness or Carelessness Involved in Making Such a Statement. The prosecution, inter alia, submitted
it was not inadvertent, it was not wilful but that consideration must have been given to the issues.
The informant relied on Greig J comments in Commerce Commission v The Fresh Juice Company Limited (1997) 8 TCLR 131.
(c) The Extent to which the Statements in Question Depart from the Truth. The products were not all squeezed orange
juice - 70% and 30% respectively, imported concentrate. It is important to note the primary label and the secondary
label. The secondary label having no impact on the overall impression.
(d) The Degree of Dissemination. The area and volume of sales, posters and TV programme were commented on.
(e) The Resulting Prejudice to Consumers and Rival Traders. This related to both consumers and competitors.
(f) Whether and if so what Efforts have been made to Correct the Statements. The informant accepted steps had been
taken.
(g) The Need to Impose Deterrent Penalties. Inter alia it was submitted the penalty must deter others.
[11] The informant dealt with the actions of the defendant by referring to the guilty plea, the defendant being a first
offender, the co-operation of the defendant with the informant and the degree of contrition.
[12] Under the general heading of Penalty a number of cases were mentioned and specific reference was made to the juice
cases.
[13] Under the heading of Juice Cases reference is made to the decision of Rio Beverages Limited (14 August 2002, Hole
DCJ, District Court Auckland) a fine of $22,600.00 on five charges and in that decision quotation of the learned Judge
was repeated:
"The consumer has been misinformed. It cannot make a reliable choice when comparing these products with those of rival
traders. Likewise a rival trader who is honest in his labelling also suffers because this product is perhaps sold more
widely than it should have been. The retail sales of these products were substantial."
[14] As I understood the reference it related to the consumer and the competitor.
[15] In Commerce Commission v Double R Soft Drinks Limited (2 September 2002, Green DCJ, District Court, Christchurch) a
fine of $4,000.00 imposed. A comment made by the learned Judge "the fines were probably on the lenient side". Commerce
Commission v Indio Beverages Limited (13 May 2003, Gittos DCJ, District Court Auckland) four charges relating to alcohol
drinks a fine of $7,000.00 on each of the information, a total of $28,000.00. A comment made, also there was a damages
claim and a withdrawal of product from the market.
[16] In decision of Recordon DCJ 22 December 2003, District Court Waitakere, Commerce Commission v Freshly Squeezed
Limited contrary submissions were received from the informant and defendant's counsel on this particular case.
[17] In summary it was submitted by the informant that the significant and influential factors on sentence would
include:
(i) The period of offending.
(ii) The distribution of the product in the market place.
(iii) The share of the market enjoyed by the defendant.
(iv) The fact that the offending had been aggravated by marketing.
(v) An assessment that the conduct of the defendant was wilful as opposed to inadvertent and careless.
(vi) The primary labelling and its endorsement in the market were misleading.
(vii) The approach has to consider as a fundamental factor the overall impression of the product packaging.
(viii) The quintessential need for deterrence.
[18] Bearing all those matters in mind together with the principles of the Sentencing Act it was submitted that the
total fine in the instant case should not be less than within a mid range of $35,000 - $50,000.00 - apportioned
$10,000.00 to $15,000.00 in respect of the "Supreme" range and the balance to the "Simply Squeezed" range. In addition
costs were sought in the sum of $750.00 in respect of each information.
[19] The submissions in respect of the defendant emphasised that it was to the particulars in respect of each of the
informations that the pleas related. The emphasis then, it was submitted, should be upon information CRN 3041008433 "The
overall impression created by the labelling of Supreme Orange Juice also marketed as "Supreme Squeezed Style Orange
Nectar" orange juice is that it was made from New Zealand products in New Zealand when in fact it contained up to 70%
imnported concentrate. In respect of information CRN3041008435 "the overall impression created by the labelling and
marketing of "Simply Squeezed" orange juice is that it was made from New Zealand and/or Australian fruit when in fact it
contained up to 30% imported concentrate.
[20] The company acknowledged that there were inaccuracies in the labelling and presentation of its products but it was
important to note that it took steps to correct these inaccuracies during the period concerned and co-operated fully
with the Commerce Commission Officers. Initially the company was under the impression that the new labelling placed on
its products when it started adding concentrate was compliant with the industry guidelines for product description. That
it was at that time following the same approach in its labelling that had been adopted by many of its competitors who
were also affected by the squeezed juice and fruit supply shortfall in 2002 and thought that its labelling would not
mislead customers. Submissions were made as to the basis of the company's operations, the percentage of market share and
the turnover in the market place. Submissions were made as to its portion of the market.
[21] The defendant's submissions dealt with the background of the industry, the position insofar as the defendant's
company was affected by the unilateral cancellation of supplier contract, the steps that it took in respect of its
"Simply Squeezed" juice product on 12 February 2002, the alteration that in fact had been made to its ingredients label,
the emphasis that had been placed upon the "Supreme" orange juice product in identifying the first ingredient as "orange
concentrate". The company emphasised the qualified form of the "Simply Squeezed" label introduced in February 2002
reflecting the defendant's uncertainty about the severe short supply that was applicable.
[22] Submissions were made on the role of the New Zealand Juice Association and the correspondence adduced indicating
communication within the industry itself as to standards and the ongoing discussion with the Commerce Commission.
[23] The background submissions dealt with the interpretation and acceptance of the meaning of various words and the
potential conflict and ongoing discussion with the Commerce Commission in respect of that. One of the steps taken by the
defendant was to obtain legal advice as to its labelling and the advice received was confirmatory of its approach and
conduct.
[24] The company's problems arising from its shortfall of squeezed juice supply lead it to amend the "Simply Squeezed
and Supreme" ingredients labels in June 2002 when the earlier labels stock was exhausted. The new "Simply Squeezed"
ingredients label would state that imported reconstituted orange juice was an ingredient.
[25] The Commerce Commission's interest commenced from a complaint made by the juice industry competitor Charlie's
Trading Company. The Commission has stated that Mr Brownlie co-operated fully during its investigation and acknowledged
that "Simply Squeezed" contained up to 30% imported concentrate. It was submitted that he also told the investigators
that he did not believe his company's labelling and representation of its products had been misleading. From June 2002
"Simply Squeezed" product bearing the new label listing imported reconstituted orange juice was sold. It was emphasised
that the company in October 2002 amended the "Supreme" orange juice product label of its own volition.
[26] It was emphasised that publicity surrounding the Commerce Commission investigation into the juice industry and its
intention to prosecute the defendant had an adverse effect upon the company and disadvantaged it potentially in respect
to its competitors and potential customers. The company in its submissions emphasised that the following matters were
worthy of consideration:
(i) There was evidence and confusion within the New Zealand Juice Association and its members about the Commission's
interpretation of the guidelines and appropriate labelling practices.
(ii) The company attempted to relabel its products in a manner that it thought was compliant with the general
guidelines. The company emphasised that the taking of corrective actions was a matter relevant to penalty as emphasised
in the High Court in Connell v L D Nathan & Company Limited (1989) 3 TCLR 362.
(iii) The company had relabelled its products not once but twice during the year 2002 in its efforts to comply with the
law and to provide consumers with appropriate guidance on the ingredients in its products.
(iv) The legal advice it obtained was supportive of its approach to relabelling its products.
(v) The company and in the person of its director had co-operated fully with the Commission in its investigation
following an industry competition's complaint.
(vi) The company noticing its own oversight in October 2002 in respect of its "Supreme" product it took corrective
action itself without complaint or request from the Commerce Commission.
(vii) The plea of guilty to the particulars in the information acknowledge the company's wrong doing but was further
evidenced in these circumstances of its efforts to ensure that the labelling of its products did not mislead the public
as to their products nature and characteristics. The company has not previously been before the Court for breaches of
the Commerce Act. Submissions were made in respect of the Freshly Squeezed case before Judge Recordan and finally in
respect of other issues that were to be argued before the Court costs had been agreed and paid in respect of that.
Some General Matters
[27] Compliance with the Food Control Legislation is not a defence.
[28] By way of background the Commerce Commission at some time issued a summary of its particulars regarding juice
labelling. Below are set out particulars of that statement:
(i) The Fair Trading Act creates strict liability offences. This means that it does not matter what you might intend to
convey by your representations or advertising. The test is what was conveyed. This is assessed by reference to the
ordinary person/consumer/customer. The Courts regard this person as someone who might be intelligent, or not so
intelligent, astute or gullible, from various walks of life etc. It is quite a "low" test.
For some food industry people the application of the Fair Trading Act is confused as it operates in an environment that
is also subject to specific legislation (Food Act/Regulations). It must be understood that compliance with this specific
legislation will not always lead to compliance with the Fair Trading Act.
The Commission's advice is that, as a first step, labelling and advertising should be prepared to comply with specific
industry legislation.
As a second step, the labelling should be reviewed in terms of what it would say to the ordinary consumer.
(ii) Finally, whilst the Commission can provide guidelines and explain what it thinks would, might, might not, or would
not, breach the Fair Trading Act it cannot provide industry participants with a prescriptive list of labelling terms and
how they must be used. Often a problem under the Fair Trading Act will occur because of a combination of terms, words
and pictures and it is not until that combination is assessed, in the context in which it appears, that a view can be
reached as to whether it is in breach of the Act.
(iii) From the description of specific examples which should be regarded as "best practice" approach. I have selected
the following examples:
1. Pure.
Pure should only be used to describe products, or parts of products, which contain only one ingredient, and that juice
that is reconstituted cannot be described as pure.
2. Fresh
Fresh should only be used to describe juice which is made, delivered and available for consumption in the shortest
possible period of time.
3. Squeezed.
Squeezed should only be used for not from concentrate juices. Where "squeezed" is used along with "fresh", "freshly, or
other words that indicate immediacy (eg "daily") the product should be fresh, in terms of the definition above, and not
from concentrate.
4. Place of Origin
Country of place of origin labelling is not mandatory under the Fair Trading Act. Where there is any information on
labelling indicating country or place of origin it should be accurate in terms of the country or place from which the
product gains its essential characteristics. For example, juice reconstituted in New Zealand could be labelled "Bottled
in NZ from imported concentrate". .
5. Overall Impression.
Where an overall impression is created by using a combination of terms, pictures, logos or images the impression created
must be accurate.
[29] It was emphasised by defendant's counsel:
(i) that this was a s.10 offence not a s.13 one.
(ii) It was the particulars of the offending as set out in informations which the defendant had accepted by its guilty
plea.
(iii) That contrary to the submissions of the informant that the conduct did not fit or fall into the wilful category.
[30] It did not appear to me that the informant challenged the defendant's submissions as to the value of the market and
the defendant's share of it.
[31] I accept there is a need for care when considering the market place within which the defendant operates and there
is weight in the defendant's submissions that one should be careful when considering cases and different market places.
Again the 1995 guidelines issued by the Commissioner are a useful starting point and the maximum penalty must be a
factor to be weighed in assessing penalty.
[32] I emphasise:
(i) one needs to consider the specific market which is affected by the defendant's conduct subject, of course, to the
overriding consideration as to the public interest.; and
(ii) The conduct of the defendant company and the consequential effect on consumers and competitors. Here there was no
evidence placed before me as to consumer complaint but rather competitor complaint from Charlies Trading Limited.
(iii) The overall impact of the TV advertising, the posters and the primary label on the product in my view creates a
very strong impression of fresh Simply Squeezed orange juice, but this juice contained concentrate.
[33] That the Juice Association of which the defendant is a member is in active discussion with the Commerce Commission
about these and other relevant issues.
[34] In general terms, however, to maintain ones market share in a difficult supply market when one moves from imported
squeezed orange to using concentrate seems to me to be a financial and commercial decision involving some of the
following factors; consideration as to cost, time, different preparation, estimation of market reaction and no doubt
other and more subtle features. Costs/profit and a loss of market share seem to me to be predominant factors. Such cost
must to take into account the cost of advertising, for example see exhibits 2 and 3, and any television advertising. The
recovery of such costs, is hoped no doubt, to come from anticipated or future revenue. Revenue comes from the customer
base and in a fixed or known market either from maintaining market share or increased market penetration at the expense
of competitors. Thus what is portrayed as being sold is of the utmost importance. What is being sold? When purchasing a
customer believes he or she is buying what is disclosed in the primary advertising placed upon the bottle. The primary
label in my view makes it clear what the customer believes is being sold in respect of both informations. The secondary
label provides the ingredients contained within the bottle. In this case the secondary label was altered from time to
time but the primary label was not. It is correct as the defence emphasised that one is obliged to consider the overall
impression as alleged in both informations.
[35] I am entitled to draw inferences from facts that have been proved or in this instance conceded by the defence.
These are not to be guesses or speculation but rather should be logical, reasonable and fair deductions. Here it seems
to me that this was a committed endeavour in the difficult supply situation to at least maintain market share. In this
sense it was wilful activity. It is no doubt common ground that the primary label carries considerably more impact than
the secondary label setting out the ingredients. This distinction is more obvious with "Simply Squeezed" whereas in the
case of "Supreme" orange juice nectar the labels both primary and secondary are of similar size.
[36] I have regard to the submissions received orally and in writing from both counsel. Sections 7 of the Sentencing Act
in this instance makes it clear that there should be deterrence of such conduct, that the Court should denounce it and
that the penalty should reflect the necessity to protect the community. In respect of s.8 - the principles of sentencing
one needs to have regard to the seriousness of the offence, the maximum penalty, the offenders circumstances.
[37] In respect of s.9, I identify here the following mitigating factors:
(i) The company has no prior convictions against the provision of the Commerce Act.
(ii) The period of time within which the conduct took place.
(iii) I confirm that counsel acknowledged that the defendant was in a position to pay a fine and was not in the position
that Judge Green found himself in Commerce Commission v Double Soft Drinks Limited.
(iv) A plea of guilty has been entered with the consequential saving in costs and time.
(v) The taking of corrective actions by the defendant.
(vi) The contrition/remorse of the company by its director's actions, the company representative attending at the
hearing with his counsel, the companies full co-operation with the Commissioner.
Of the aggravating features identified by the informant I place weight on the following:
(I) the wilful activity in the market place in respect of at least endeavouring to maintain market share.
(ii) The conduct with its potential to mislead consumers.
(iii) The premeditation involved in the assessment of the campaign as reflected in the exhibits 2 and 3 and the
television marketing campaign itself.
(iv) The overall erroneous impression of the marketing ploys.
(v) The potential impact upon competitors.
(vi) The clear requirements to ensure that this product is marketed in accord with the law.
[38] The informant for its part acknowledges in its submission as to penalty that there should be a distinction between
informations ending 33 and 35.
[39] In respect of the guilty plea I allow a total discount of $10,000.00 for both informations.
[40] Balancing the above features as best I can but emphasising the need here to deter others and to denounce this
conduct, the defendant company is ordered to pay costs of $130.00 and solicitor fees of $500.00 in respect of both
informations and the defendant is convicted and fined $8,000.00 on information 3041008433 and convicted and fined
$27,000.00 on information 3041008435.
_________________________
J P Clapham
District Court Judge