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Fines for another company peddling royal jelly using false claims

29 September 2010

A company that admitted labelling imported royal jelly as New Zealand made, and as being of high potency when it was neither, has been fined $16,000 in the Auckland District Court. An individual associated with the company has also been fined $12,000.

NZ Korea Health Limited pleaded guilty to nine charges under the Fair Trading Act, following a Commerce Commission investigation. Mr Sang Rae Kim, also known as Jonathan Ken, pleaded guilty to two charges.

The company marketed and sold Green Top Royal Jelly at its stores in the Auckland region. The royal jelly was labelled as "Product of New Zealand", "New Zealand Made", and "Best of New Zealand". The product also bore the 'Buy New Zealand Made' logo, and bore an image of a kiwi carrying a New Zealand flag with the words "kiwi" and "Quality from New Zealand".

However, the main ingredient, powdered royal jelly, was sourced from overseas. The only New Zealand ingredients used in the product were the white beeswax used as a carrying agent for the royal jelly and the purified water used to make the capsule shell. The product was not registered with the 'Buy New Zealand Made' programme and so could not use the logo.

In addition, the product was represented as containing 6 per cent of the active ingredient 10HDA, although ESR testing revealed it had just 0.47 per cent 10HDA.

"The misrepresentations on the labels of this product were deliberate. They would have led consumers to believe they were buying a superior New Zealand made product, for which they may have paid more than the product was actually worth," said Greg Allan, Commerce Commission Enforcement Manager, Wellington.

"Mr Kim was responsible for the labelling of the products and knew that the claims were wrong. In making these misleading claims he and his company harmed consumers, who may have paid more than they should have for an inferior product, and he also harmed competitors who labelled their products correctly," said Mr Allan.

This is the third case the Commission has completed recently involving false country of origin claims and potency claims on royal jelly products sold in Auckland.

It is also the third time the Commission has prosecuted Sang Rae Kim and associated companies for Fair Trading Act breaches. Mr Kim and Tomorrow Dreamline Limited were sentenced on 18 March 2005 on four charges in relation to misrepresentations about the level of UMF (Unique Manuka Factor) contained in its own branded honey. Mr Kim was fined $15,000 and the company $20,000. In November 2005 Tomorrow Dreamline and Mr Kim (under the name Jonathan Ken) were fined a total of $15,400 for similar breaches of the Fair Trading Act.

"Traders who deliberately target the tourist market with false and misleading claims not only harm the consumers who buy the products, and competing businesses who can honestly make those claims, but also New Zealand as a tourist destination," said Mr Allan.

Background

Royal Jelly is a key active ingredient used in dietary supplements. It comes from the honey bee secretion that is used in the nutrition of larvae.10-Hydroxy-2-Decenoic Acid (10HDA) is a substance which exists only in royal jelly. 10HDA is a fatty acid which is involved in growth and immunity. 10HDA is an important factor in assuring quality and potency. New Zealand royal jelly is believed to be of a high quality, with readings of 10HDA higher than found in royal jelly from other countries. In New Zealand royal jelly products made from imported ingredients make up approximately 95 per cent of the market. Genuine New Zealand royal jelly products are sold at a premium price.

Related cases. On 4 May 2010 New Zealand Natural Care Products Limited pleaded guilty to two charges of breaching the Fair Trading Act related to making false or misleading representations concerning the country of origin of royal jelly products. The company was fined $15,000 in the Auckland District Court.

On 28 May 2010 Shim's International Limited, trading as Royal Deer of New Zealand, was convicted on two charges of breaching the Fair Trading Act in relation to claims made about its product Health Plus Royal Jelly Extract. The company was fined $6,000.

The labels on Shim's International's royal jelly product claimed it was a "Product of New Zealand", and also pictured a kiwi with the words "Manufactured in New Zealand", and a map of New Zealand with the words "Export quality from New Zealand". The product was in fact made up of powdered royal jelly sourced from China, and the only New Zealand ingredients were the white beeswax used as a carrying agent for the royal jelly and the purified water used to make the capsule shell.

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