Courts are inconsistent in the way they impose fines for misusing country of origin labels on products, and it appears that there is no clear formula or systematic guidelines that courts apply.

This is one of the conclusions of a Victoria University of Wellington study which analysed legal cases on the mislabelling of a product's country of origin, in particular "Made in New Zealand" labels.

The research was led by Associate Professor Samuel Becher and Dr Jessica Lai from Victoria's School of Accounting and Commercial Law.

"In Consumer Protection we Trust? Re-Thinking the Legal Framework for Country of Origin Cases" has been published in the San Diego Law Review.

“We found the way courts impose fines for misusing these labels lacks consistency, and it seems that there is no clear formula or systematic guidelines that courts apply,” says Dr Lai.

“The fines were at times less than the reported gains of the misleading conduct. Therefore they don’t deter firms from misbehaving, instead leaving them with a potential profit-incentive to continue mislabelling.”

Associate Professor Becher says the correct use of labelling is crucial for consumer trust and can have a significant impact on purchasing decisions.

“Trust is linked to healthier and wealthier societies. The law should be more vigilant to this. Disciplining sellers who make false country of origin statements is important for guaranteeing proper functioning of markets and fair competition. If sellers mislabel their products they gain an unfair advantage vis-à-vis those traders who do not cheat.”

They say that the Commerce Commission has been looking at policing mislabelling of country of origin statements, and Parliament is considering a new Bill regarding country of origin labelling for food.

Courts and policymakers should consider the broader picture to better understand how firms and consumers behave. This will enable the development of a more nuanced framework that can guide courts on when, how, and why the law should intervene.

“The courts should also take into account the contexts that may provide greater incentive to mislabel items ‘Made in New Zealand’—for example, products predominantly sold to tourists, like sheepskin, and valuable export products that are sensitive to dishonest behaviour, like Mānuka honey,” they say.