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ACCTING3500 Accounting Theory

tag 0 Download 2 Pages / 347 Words tag 16-12-2020


Read the given article and highlight, provide examples of, and illustrate a range of principles and theories in accounting which are evident in the article (for example stakeholder theory, regulation, CSR etc) It is important to provide evidence (facts) from the articles to support any opinion and arguments you express

Heinz to pay $2.25m for 'misleading and deceptive' marketing of sugar-heavy food

By court reporter Rebecca Opie, ABC News Online, 24 August, 2018

Food giant Heinz has been fined $2.25 million for misleading the public by claiming a range of toddler snacks were healthy, when they contained more than 60 per cent sugar. Earlier this year the Federal Court found Heinz had deliberately misled the public about the nutritional content of its Little Kids Shredz range through claims on the packaging.

The legal action was launched by the Australian Competition and Consumer Commission (ACCC) following a complaint by the Obesity Policy Coalition (OPC) about products that are made from mostly fruit juice concentrates and pastes. Justice Richard White ordered Heinz pay $2.25 million to the Commonwealth within 30 days for breaching Australian Consumer Law, as well as ACCC's legal costs. He also ordered the food giant to establish a Consumer Protection Law Compliance program within three months.

At trial, the ACCC argued that the sticky snacks were higher in sugar than some confectionary but were marketed as being beneficial for young children. Justice White upheld the ACCC's claim that the representations on the boxes, which included images of fruit and vegetables and the words "99 per cent fruit and veg", falsely implied that the products were beneficial to toddlers. "Heinz ought to have known that it was making the healthy food representation in relation to each product and that that representation was false or misleading," he said.

Company was 'misleading' and 'deceptive'

Justice White said the products were not beneficial to children aged one to three due to their high sugar content and sticky texture. He found the company engaged in "misleading or deceptive" conduct that breached Australian Consumer Law. "Each of the Heinz nutritionists ought to have known that a representation that a product containing approximately two thirds sugar was beneficial to the health of children aged one to three years was misleading," he said. "Each ought to have known that consumption of a product with that level of sugar may have the effects which underpin the [World Health Organisation] guidelines."

In March, Heinz managing director Bruno Lino said the company was disappointed with the court's findings.

During a submissions hearing in August, counsel for the ACCC Tom Duggan said the Australian arm of Heinz should be forced to pay a $10 million penalty, describing the food giant's conduct as reckless. "The consumer is being diverted from other products which may be healthy," Mr Duggan said. "If [the penalty] is not big enough … in the end it simply doesn't represent a sufficient deterrent," he said.

Michael O'Brien for Heinz called for the penalty to be in the range of $400,000 which was the total gross profit of the Shredz range.

Penalties need to be bigger: ACCC

ACCC chairman Rod Sims said the fine fell well short of the $10 million penalty the watchdog called on the court to impose. "Heinz is one of the largest food companies in the world, we really do think that penalties need to be big enough so that the boards and senior management take notice of them," he said.

Mr Sims said changes to penalties for consumer breaches, which were settled in Parliament this week, will see fines increased from $1.1 million per breach up to what could be 10 per cent of turnover. "Now in the case of Heinz that would be up to a maximum of $43 million per breach," he said. "So it's 40 times higher than the maximum penalties used for this judgment." He said the new penalties will better reflect the seriousness of making misleading claims. "[The new regime] is going to mean penalties that companies really will be forced to take notice of so that this sort of behaviour is effectively deterred in future."

In a statement, Heinz managing director Bruno Lino said the company respects the decision that had been made.

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