An Australian plastic bag manufacturer will be penalized for falsely claiming its high density polyethylene shopping bags are biodegradable.
An Australian court has declared an Adelaide-based packaging company, Nupak Australia Pty. Ltd., engaged in misleading and deceptive conduct and made false representations about its Goody-branded HDPE bags.
The Federal Court of Australia proceedings were to resume Dec. 6, when Nupak's penalties would be decided. The maximum fine for such offenses is US$990,000.
Australia's competition watchdog, the Canberra-based Australian Competition & Consumer Commission, brought claims against Nupak in July.
ACCC also has taken the supplier of the biodegradable chemical additive used to manufacture the bags, Adelaide-based Goody Environment Pty. Ltd., to court. That trial starts in March.
From at least May 2009, Nupak made claims its Goody-brand bags were biodegradable and compostable.
However, ACCC claimed Nupak's bags did not biodegrade or disintegrate in accordance with Australian Waste Standard criteria and the resin contained molybdenum additive in amounts exceeding the maximum concentration prescribed by the standard.
ACCC said because the bags did not comply with the waste standard, they also did not comply with requirements of South Australia's Plastic Shopping Bags (Waste Avoidance) Act of 2008.
South Australia became Australia's first state to ban HDPE bags in May 2009 and its act prohibits retailers from selling or giving away plastic carry bags of less than 35 microns thick. The South Australian law is backed by fines of more than A$3,000 for retailers that supply banned bags.
Nupak agreed in court to stop making representations about the bags being biodegradable or compostable, unless it had scientific testing supporting its claims.
The Federal Court said Nupak breached the Trade Practices Act of 1974 by making false environmental claims. The act protects consumers and prevents companies from engaging in restrictive trade practices.
The court ordered Nupak to:
* Publish corrective notices on its website and in Adelaide's daily newspaper.
* Write to every customer supplied with Goody-brand bags informing them of the court's orders.
* Implement a trade practices compliance and education program.
* Contribute US$9,800 to ACCC's legal costs.
In January 2010, ACCC published an online guide explaining potential legal pitfalls in making unsubstantiated claims about the environmental performance of plastic single-use shopping bags. The bags are generally given to supermarket customers to carry groceries home.
The guide warns that manufacturers or retailers making false or misleading environmental claims can breach Australia's Trade Practices Act.
The guide said plastic bags should not be described in vague terms such as environmentally friendly, environmentally safe, planet safe, or green, unless the claims can be supported by verifiable testing methods.
ACCC said omitting relevant information also risks breaking the law.
Misleading conduct can include what is not said, the commission warned. If you put 'recyclable' on a product when it can be recycled only in limited circumstances, this could be a misrepresentation through silence.
The guide said business operators must be careful if claiming their bags meet voluntary or mandatory environmental standards, including the Australian standard on biodegradable plastics (AS4736-2006) or similar benchmarks in Europe (EN13432) or the U.S. (ASTM 6400).
If your product does not meet that standard's requirements or has not been accredited as claimed, you risk breaching the Trade Practices Act, the guide said.