Hamilton-based dairy company, Milkio Foods Limited has been fined $420,000 for misleading customers about the origin of some of their dairy products with claims like "100% Pure New Zealand" despite importing the core ingredient from India.
In deciding the penalty amount Judge Ingram emphasised the significant damage the misrepresentations could do to the New Zealand dairy industry, noting the damage was "not merely to consumers, but also to other producers who rely upon "brand New Zealand" in connection with sales of dairy products."
Commerce Commission Fair Trading General Manager, Vanessa Horne, says this was an important case for the Commission to prosecute because of the global value of New Zealand's export brand.
"New Zealand has built an international reputation for high quality dairy products, which underpins the value of our dairy industry and exports," Ms Horne says.
"Milkio took advantage of this reputation to promote their own products through the use of descriptions like "from the clean green pasture-based dairy farms in New Zealand," and "produced and manufactured in pristine New Zealand" despite some of their products using imported butter from India."
Milkio used false and incomplete information to retain approval to use the FernMark logo and licence number, which is a trusted symbol used internationally to identify products made in New Zealand.
Judge Ingram referred to the use of FernMark as the "cherry on top of Milkio's brand positioning strategy…intended to provide an additional and unassailable layer of quality assurance to the consumer."
"In this case the claimed level of negligence or carelessness reaches a level that might fairly be described as wilful blindness, perhaps to the point of "commercial sleepwalking", Judge Ingram said.
"This conviction should serve as a warning to others who may be looking to falsely claim the New Zealand brand," Ms Horne says. The Commission will act to protect consumers and businesses who are upholding the requirements of the Fair Trading Act for accurate information that can be backed up by producers and retailers.
Milkio pleaded guilty to 15 breaches of the Fair Trading Act for making false representations about the country-of-origin of the butter used in their ghee products, and using the FernMark logo and licence number without proper authorisation.
The case was referred to the Commission by the Ministry of Primary Industries.
