There’s something alluring about products that are Australian made. Knowing that a particular product has been produced, built or manufactured in Australia conjures up a sense of quality and care. Or maybe a customer just wants to do their bit to support local industry. Either way, people are prepared to pay a premium for products that bear the stamp of Australian quality or origin.
Businesses keen to take advantage of this fact need to make sure that these claims can be substantiated and aren’t misleading. Section 29(1)(k) of the Australian Consumer Law (ACL) specifically states that:
“A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services make a false or misleading representation concerning the place of origin of goods”
What constitutes the “country of origin” of a good? The place of origin is obvious when a product is sourced, designed, manufactured and sold in the same country. What if the process involves a number of countries?
The ACL gives guidance in section 255(1) which provides that a representation that a product was “made in” or “manufactured in” a given country will not be misleading if the following two criteria are met:
- The goods were substantially transformed in the given country; and
- 50% or more of the total cost of producing or manufacturing the goods is attributable to manufacturing or production that occurred within that country.
“Substantially transformed” means undergoing a fundamental change in form, appearance or nature such that the goods existing after the change are new and different goods from those existing before the change.
The test is country of origin focused and will not apply to claims as to a geographical location, such as the Barossa Valley.
Seatwise manufactures pine deck chairs and wants to market them as “Australian Made”. The pine wood is sourced and cut to the appropriate sizes in China. It is then shipped to Australia where a local team of designers shape the wood into pieces, assemble the pieces into the chairs, then polish and package the chairs for sale.
The goods clearly underwent a substantial transformation in Australia as they went from chopped wood pieces to a finished deck chair. Provided the cost of the manufacturing occurring in Australia made up at least 50% of the total cost of producing the chairs, Seatwise can label its chairs “Australian Made”.
The claim of “Australian Made” may be more problematic if the chairs were fully assembled in China and were only polished and packaged in Australia.
Note: Requirements are even more strict for “produce of” or “grown in” claims.
The prohibition on making false country of origin claims even applies to more subtle representations about the origin of a product, including the use of pictures on packaging or labels. For example, a packet of biscuits that has a koala in a gumtree on the packet is likely to be considered to be a representation that the biscuits are Australian made.
It’s important that businesses ensure that their claims do not breach the requirements of the Australian Consumer Law, as penalties can include fines of up to $1.1 million for companies and $220,000 for individuals together.
If you make “Made in Australia” claims or other location of origin claims regarding the products you make or services you provide and want to ensure compliance with the ACL, please contact CIE Legal.