Australian fears arise over country-of-origin labelling laws after Federal Court ruling against Nature's Care

By Cheryl Tay

- Last updated on GMT

Australian fears arise over country-of-origin labelling laws after Federal Court ruling against Nature's Care
Australian supplement and health good manufacturers have expressed concerns over potential sales losses, following changes to Aussie country-of-origin labelling laws.

This comes after a high-profile court case between Australian supplement brand Nature's Care and Australian Made Campaign Limited (AMCL), which resulted in the Federal Court ruling that the company's imported fish oil and vitamin D capsules were not permitted to be labelled 'made in Australia', despite the encapsulation process taking place in Australia.

This ruling was issued under the Australian Consumer Law's (ACL) Country of Origin labelling provisions.

Nature's Care had applied earlier this year with Australian Made Campaign Limited (AMCL) for the renewal of its licence to use AMCL's 'made in Australia' kangaroo logo for its Fish Oil 1000 + Vitamin D3 soft gel capsules; the licence was set to expire on December 31, 2018.

Repeated rejection

Based on the Australian Competition and Consumer Commission's (ACCC) industry guide on complementary healthcare products and country-of-origin labelling, however, the application was rejected.

The company then appealed to the Federal Court to declare that the product had been last "substantially transformed"​ in Australia so it could be labelled as 'made in Australia', even though it contained mainly imported ingredients.

Following this, the ACCC intervened on the basis of the case being of public importance, providing the Court with expert advice and evidence to support AMCL's rejection of Nature's Care's licence renewal.

In response, Nature's Care filed proceedings against the ACCC in the Federal Court on September 4, after which the Court ordered that the ACCC be removed as a respondent, but allowed to continue its involvement in the case between AMCL and Nature's Care.

The ACCC argued that, according to its guidelines, encapsulation or the addition of a vitamin should not be seen as a 'substantial transformation' of imported ingredients. Satisfied with this position, the Court ruled that Nature's Care would not be allowed to label its product as 'made in Australia'.

Guidance for good

The aforementioned guide was published in March 2018 by the ACCC, to detail how Country of Origin labelling laws applied to complementary healthcare products, after Parliament passed new laws that altered the criteria for 'made in Australia' claims.

While companies in Australia are not required by law to include the country of origin on product labels, companies that make false or misleading country-of-origin claims are liable for legal action.

The new framework requires products manufactured in Australia using imported ingredients to be last 'substantially transformed' in the country in order to qualify for the ACL's 'made in' safe harbour defence, which automatically defends such companies from court action against false or misleading country-of-origin claims.

The ACCC releases guidelines in tandem with new laws passed by the Commonwealth Parliament to reflect its interpretation of these laws.

While the ACCC's guides are not binding, they gives the Commission the necessary leverage to intervene in cases such as the one between Nature's Care and AMCL.

ACCC deputy chair Mick Keogh said the Commission was "pleased"​ with the ruling as it was "consistent with the guidance the ACCC has given industry about country-of-origin labelling"​.

He added that the legal definition of 'substantial transformation' would differ from one product to another, making the test for 'substantial transformation' "complex and technical"​ in application.

"Country-of-origin representations can be a powerful marketing tool for businesses, as many consumers are willing to pay extra for Australian-made products. The ACCC will take action to maintain consumer confidence in labels claiming that products are Australian-made," ​Keogh said.

Company concerns

Rules and standards around complementary healthcare supplements in Australia have been constantly reviewed and tightened over the years.

Recently, Minister for Industry, Science and Technology Karen Andrews announced a Complementary Medicine Taskforce to examine how changes to the Country of Origin labelling laws would affect the manufacturing of complementary medicines in Australia, in response to concerns raised by industry over the changes.

CEO of trade association Complementary Medicines Australia (CMA) Carl Gibson told NutraIngredients-Asia ​that Australian companies were being negatively impacted, saying: "Australian products are well recognised as premium in the complementary medicines sector, thanks to our strict quality and safety manufacturing standards, and Australia's strong 'clean and green' reputation.

"Central to Australian branding is the green and gold AMCL logo, which provides a competitive advantage in international markets. The potential cost of no longer being able to use the logo is our industry’s $1.2bn export market to China, future export opportunities, and a workforce that supports a $4.9bn industry."

He added that a major factor in the success of the Australian complementary medicines industry was rising demand across Asia for such products, placing the country on the verge of overtaking the US as the top importer of complementary medicines into China.

Chinese consumers have long had a strong preference for supplements and health foods from Australia, including vitamins, minerals, herbal extracts and TCM. The Chinese market for such goods is currently valued at US$30bn, and expected to increase 10% annually until 2025.

Gibson said: "The Taskforce will report in early 2019, (and) a timely resolution is needed to address industry's concerns and support Australian manufacturing jobs.”

NutraIngredients-Asia​ also contacted Nature's Care for a response, but the company declined to comment.

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