Food giant Heinz misled consumers by claiming one of its snack ranges, marketed for toddlers, was beneficial for young children, the Federal Court has ruled.
Justice Richard White ruled on Monday that in using the terminology "no nasties" and "naturally sweet" the company was implying the products were nutritious.
"The prominent statements that the product comprises 99 per cent fruit and vegetables together with the pictures of the fruit and vegetables conjure up impressions of nutritiousness and health," Justice White said.
Heinz said in a statement it was disappointed with the ruling, "but respects the decision that has been made.
"Heinz is committed to providing high-quality food products and to communicating clearly and transparently with consumers on its packaging," the statement said.
"We are presently reviewing this matter carefully to see if there are any further learnings which can be applied going forward."
The Shredz products were a dehydrated snack made from 99% fruit, vegetable and chia seed ingredients and did not contain any preservatives, artificial colours or flavours. They have not been sold in Australia since May 2016.
An analysis carried out by the consumer watchdog indicated the three products contained, 62-63 per cent, 66 per cent and 62 per cent sugar.
"I am satisfied that each of the Heinz nutritionists ought to have known that a representation that a product containing approximately two-thirds sugar was beneficial to the health of children aged one to three years was misleading," Justice White said.
But he said those responsible for the packaging had "adopted a generally conservative approach to the claims which should be made".
The Australian Competition and Consumer Commission case centred on claims Heinz made representations on its packaging that suggested the snack had the same nutritional value as fresh fruit, it was a nutritious food for young children and it would encourage healthy eating habits.
Expert witness for the ACCC, nutritionist Rosemary Stanton, had told the court in July such depictions were misleading as the product "is not good for toddlers".
"This product is not that nutritious, it's not healthy and it's too high in sugar," she said.
Heinz had argued none of those alleged representations had been made and, even if they were, they were not misleading.
"We welcome the Court's decision today which shows that businesses that make false or misleading claims about the health benefits of products face serious consequences," ACCC Acting Chair Delia Rickard said in a statement.
The Obesity Policy Coalition, which alerted the ACCC to the claims on Little Kids Shredz, welcomed the judgment and hoped it sent a message to food manufacturers.
A hearing on penalties and other orders sought by the ACCC will be held on a date to be fixed by the court.
