The Heinz Little Kids Shredz product.

The Heinz Little Kids Shredz product.

The Federal Court of Australia has ordered a local Kraft Heinz unit to pay penalties totalling AUD2.25m (US$1.64m) for making a misleading health claim that its Little Kids Shredz products were beneficial for young children.

The country's consumer watchdog, the Australian Competition and Consumer Commission (ACCC), had sought a penalty of AUD10m for H.J. Heinz Company Australia.

The case goes back to June 2016 when the ACCC instituted proceedings against Heinz.

In March this year, the Federal Court found that Heinz had breached the Australian Consumer Law by claiming its Shredz products were beneficial to the health of children aged 1-3 years when this was not the case.

The Court also found that Heinz nutritionists ought to have known that a representation that a product containing approximately two-thirds sugar was beneficial to health of children was misleading.

ACCC Chair Rod Sims said: "The Heinz Group is one of the largest food companies in the world. We will continue to advocate for stronger penalties to deter large companies from engaging in serious contraventions of Australia's consumer laws, particularly now that Parliament has passed legislation substantially increasing the maximum penalties for breaches of the ACL.

"The ACCC wants to ensure that penalties for breaches of the consumer law are large enough to get the attention of the financial markets, boards and senior management."

The Court also ordered Heinz to establish a consumer law compliance programme and to pay the ACCC's costs.