Auckland’s Xue (Frank) Chen has been sentenced to 12 months’ home detention for the sale of caged eggs which were falsely labelled as ‘free range’, following a Commerce Commission investigation.
Chen sold eggs through his trading company Gold Chick, a producer and supplier of free range eggs. However, he also purchased caged eggs from other suppliers, packaged into egg cartons labelled as “free range”, and then sold to wholesale suppliers, retailers and directly to the public at the higher prices that free range eggs attract.
During the charge period, Chen’s company purchased more than three million caged eggs.
In sentencing in the Auckland District Court on 21 July, Judge Field said Chen’s “motivation seems to be entirely financial” and that the offending could “discredit an entire industry in the minds of consumers when they can’t be sure what they are buying is in fact the product.”
Commerce Commission Chair, Anna Rawlings said “many consumers are willing to pay more for free range eggs but it is not possible to visually distinguish between free range and caged eggs…consumers must trust claims by suppliers that eggs are genuinely free range. Chen abused that trust for financial gain…We estimate the fraudulent profit from selling caged eggs as free range was approximately $320,000.”
The Commission opened its investigation into Chen’s business in June 2017 following a complaint from a former Gold Chick employee. Surveillance showed regular purchases of eggs from a supplier known to solely produce caged eggs. A search warrant was executed in December 2017 and the evidence recovered included invoices from the caged eggs supplier and burnt remains of its packaging labels.
Chen has undertaken to make a $50,000 donation to the SPCA.
Chen was convicted under the Crimes Act but it is an offence under the Fair Trading Act to make false, misleading or unsubstantiated representations.
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