Australian Consumer Law: Product Recall and Product Safety Regime From the Perspective of the Food Industry

The Australian Consumer Law (the ACL) revised the product safety and product recall regimes previously found in the Trade Practices Act 1974 (the TPA).  Businesses that supply “consumer goods” must familiarize themselves with these changes.

On 1 January 2011, the TPA was renamed the Competition and Consumer Act 2010 (Cth) (the Act) and the ACL, which is a schedule to the Act, came into force.

This introduction of a single, national consumer law brought with it many changes.  

One important change related to the safety of consumer goods.  This note looks at the new regime in respect of product recalls and also suppliers’ reporting obligations, with a particular focus on its application to the food industry.

Consumer Goods

The new regime applies to “consumer goods”, which are defined in the ACL as meaning:

“goods that are intended to be used, or are of a kind likely to be used, for personal, domestic or household use or consumption, and includes any such goods that have become fixtures since the time they were supplied if:

(a)     a recall notice for the goods has been issued; or

(b)     a person has voluntarily taken action to recall the goods.”

Most food products are clearly consumer goods.  It is important to remember that this definition does not just include goods that are sold to individuals, e.g. the food you can buy from a supermarket, but also goods that are supplied to a business if the goods are “of a kind likely to be used for personal, domestic or household use or consumption,” so this regime will apply to food sold in trade. Also, unlike the definition of “consumer” under the ACL, this definition is not restricted to goods costing less than $40,000.

Product Recalls

The essence of the regime in respect of product recalls, both compulsory and voluntary, has not materially changed, but there are a couple of important changes businesses should be aware of.

The first is the introduction of the need to recall not only where it appears that “the goods will or may cause injury to any person”, but also where it appears that “a reasonably foreseeable use (including a misuse) of such goods will or may cause injury to any person.”

The intention is that goods will need to be recalled not only where it looks like they may cause injury when used as intended, but also where the good is used or even misused for a purpose other than that for which it was primarily intended, as long as that use or misuse is reasonably foreseeable.

The second important change relates to voluntary recalls.  The TPA was frustratingly vague when it came to assisting businesses in determining whether to undertake a voluntary product recall.  The ACL sets these obligations out more clearly.  This should be of some assistance to businesses and their advisors.  The obligation to advise the Minister within 2 days of commencing a voluntary recall remains, so businesses will need to continue to be well prepared when undertaking a voluntary recall.

Whilst there is still the requirement to notify the Minister, in the case of food recalls, Food Standards Australia New Zealand (FSANZ) must also be notified.  FSANZ will, helpfully, nationally co-ordinate the recall of foods that are a health and safety risk to consumers.

One of the challenges of any recall is preparing for the recall and planning for the recovery of the dangerous products.  Due to the way in which food is sold, there is often little opportunity to directly contact consumers where they have bought a food product that is being recalled from a retail outlet.  Advertising and warning notices, as well as appropriate communications with retail outlets, will be of real importance. 

Further, the potentially high volume and vast number of retail outlets for a food product can prove a real logistical challenge. 

Manufacturers, wholesalers and importers are required under the Australian New Zealand Food Standards Code (the Code) to have in place a documented system to ensure the recall of unsafe food, and to comply with that system when recalling unsafe food. 

Having a recall system in place is not only a legal requirement, but a well thought out system will be of real benefit in the event of a recall, and assist in the crucial planning and execution stages. 

When a decision is made to undertake a recall, it is important to present to the Minister and FSANZ a plan for an effective recall.  This will give the Minister and FSANZ the confidence that the recall will be properly conducted, and reduce the risk of recall processes being imposed by the Minister/FSANZ that are not as in tune with the commercial objectives of the business undertaking the recall.

Manufacturers, wholesalers and importers of food products should all ensure that their recall system is up-to-date.

Supplier Reporting Obligations

The ACL also introduced a new obligation on suppliers of “consumer goods” to report to the Minister, within 2 days of becoming aware, where a consumer good is associated with the death or serious injury or illness of any person.

This obligation applies whether the supplier:

• considers that the death or serious injury or illness was caused, or may have been caused, by the use or foreseeable misuse of the consumer goods, or
• becomes aware that another person considers this to be the case.

• it is clear that that the death or serious injury or illness was not, or it is very unlikely that it was, caused by the use or reasonable misuse of the consumer goods, or
• the supplier, or another person, is required to notify the death or serious injury or illness under certain specified laws or industry codes of practice. 

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