The repercussions of labelling a product “Extra Virgin Olive Oil” when it does not meet the standards set by the International Olive Oil Council;
1. What is “extra virgin olive oil”?
The International Olive Oil Council (“the Council”) sets and enforces the minimum standards for olive oil products and, by implication, standards for the labelling of products. The technical standard set by the Council is two-fold.
First, there is a chemical test which considers the level of fats and oils present in the olive oil. This has been called an objective test. Second, there is an organoleptic test (ie, taste, smell and appearance) to check the purity of the olive oil product. This is a subjective test. Oil qualifying as extra virgin must pass both of these tests.
Australia, however, is not a party to the International Olive Oil Agreement and these standards do not automatically apply. When labelling a product as “extra virgin olive oil”, therefore, a number of different scenarios and consequences can be imagined:
2. Minimum standards for olive oil in Australia
The only legal food standard that exists in respect of olive oil is Food Standard 2.4.1 “Edible Oils” created by the Australia New Zealand Food Authority (“ANZFA”) (see http://www.anzfa.gov.au/). The standard requires that olive oil be made from “the sound mature fruit of the olive tree” and that products labelled “extra virgin”, “lucca” etc must comply with the standard for olive oil (see ANZA). This standard does not attempt to differentiate between olive oil and extra virgin olive oil but a standard for all forms of olive oil.
The Australian Olive Oil Association (“the Association”) (http://www.aooa.com.au/) draws on the Codex Alimentarius created by the Council to set labelling guidelines for extra virgin olive oil. It has a basic definition of
“oil obtained from the fruit of the olive tree… under conditions which do not lead to the alteration of the oil… [and] is suitable for consumption in its natural state”.
and which passes the two-fold objective and subjective test. (see http://www.cac.org.cn/Main_Standards/v_8/STAN_033_1981.pdf) (attached).
The Association encourages olive oil producers and olive growers to join the Association. Through membership with the Association, it has a means to enforce this standard but short of membership, there is no means by which the Association can enforce this standard with regards to the labelling of olive oil. As a legal standard, therefore, “extra virgin olive oil” need only meet the basic ANZFA standard of being an edible oil.
3. Labeling under the Trade Practices Act
Labelling an oil “extra virgin olive oil” when it is not may attract section 52 of the TPA as it will be misleading and deceptive conduct. However, whether or not it is a breach will depend on the circumstances due to the lack of a legal standard concerning the process of manufacture of extra virgin olive oil.
A. Blatant breaches
Labelling margarine, canola oil or motor oil “extra virgin olive oil” is clearly a breach of the TPA. Another example might be where a product contains a mixture of olive oil and another oil such as canola oil. None of these products even match the description of “olive oil” yet alone “extra virgin olive oil”.
Liability may also arise under the Food Act 1984 (Vic) which prohibits the misleading labelling of food. However it is likely that the TPA will take precedence over this Act to the extent that the labelling offence is committed by a trading or financial corporation in trade and commerce.
B. Labelling any olive oil as “extra virgin” If a producer takes a refined olive oil (defined in the Codex above as “oil obtained from virgin olive oil” but not being extra virgin olive oil) product and labels it “extra virgin”, there may be an actionable breach of the TPA. When a producer labels a product “extra virgin” they are, in a sense, making a promise that the oil has been handled in a certain way so that it has a quality of being “extra virgin”. If the standard implied by the promise is breached, there may be a breach of TPA. The problem in ascertaining whether or not there has been a breach is the fact there is not a clear legal standard for manufacturing “extra virgin olive oil” in Australia. In Australia, “extra virgin” might mean that the oil has been produced from the first pressing of olives or that it is suitable for consumption in its natural state. However, even oil that has reached such a standard in Australia may still not be considered “extra virgin” under the two-fold test proposed by the Council. It is likely that so long as the oil reaches the promissory standard in Australia of being edible and being pressed directly from picking, the oil may safely be able to be described as “extra virgin” without attracting section 52 consequences. 3. The position of Association members
Where an Association member labels an oil as “extra virgin” which does not satisfy the requirements set down by the Association, it may be possible to allege there has been a breach of section 52. As an Association member, there may be an implied promise or representation that the standards in the Codex Alimentarius have been breached.
4. The position of imported olive oil
Olive oil and particularly extra virgin olive oil is very susceptible to settling and losing its quality and accordingly olive oil that is imported into Australia may lose its essential quality during the voyage on the ship. An importer who has paid extra consideration for and imports what they believe is “extra virgin”, may find that on arrival the olive oil, while still remaining edible in its natural state and still having met the requirements of manufacturing, is no longer extra virgin olive oil under the two-fold test of the Council. If the importer then bottles and labels the product “extra virgin” or simply on-sells it to a retailer he may or may not be in breach of the TPA.
Following the argument above, as there is no legal standard for the manufacture of extra virgin olive oil and it is merely a descriptive term, the importer is unlikely to be in breach of section 52. If the importer, however, is a member of the Association, different consequences may arise.
When labelling a product “extra virgin olive oil” there is a very fine line between breaching and complying with the TPA. With oil that obviously falls short of the standard of “extra virgin”, labelling it as such will clearly be in breach of section 52. However an oil that possesses the descriptive quality of “extra virgin” is unlikely to breach section 52, even if it does not reach the standard set down by the Council, will probably not.
This Update has been prepared for clients and professional associates of Baker & McKenzie. Whilst every effort has been made to ensure accuracy, this Update is not an exhaustive treatment of the areas of law discussed and no responsibility for any loss occasioned to any person acting or refraining from action as a result of material in this Update is accepted by Baker & McKenzie.
Source oliveoilbusinessMinimum standards for olive oil in Australia - IOOC Label Standards,