Invercargill firm Gateway Solutions Limited (formerly Silberhorn Limited) was fined $194,400 for misrepresentations it made about its deer velvet health supplements. The company and its director and majority shareholder, Mr Ian Allan Carline, were also found guilty of failing to supply information to the Commission during its investigation.

Silberhorn produced and sold health and dietary supplements, including a range of health supplements made from deer velvet. The range included products endorsed by golfer Sir Bob Charles. The deer velvet supplements were marketed as effective to support strength, activity and joint mobility.

For the Commission, the case began in February 2014 when it received a complaint alleging that Silberhorn’s deer velvet health supplements sold from March 2011 contained less deer velvet than was described on the product labels, with capsules being topped up with carob –a cheaper manufacturing aid.

In November 2017, a day before trial was due to begin, the company pleaded guilty to 26 charges under the Fair Trading Act for conduct that was liable to mislead the public as to the nature or characteristics of the products, including four charges for claims made on its website www.silberhorn.co.nz.

However, the case did not reach a sentencing hearing until September 2019 and Judge K J Phillips noted in his judgment that “the prosecution pathway of the charges has been protracted.”

In his judgment issued on 8 June, Judge Phillips said Silberhorn’s actions in underfilling the capsules were "deliberate acts” representing “a serious deficiency in the actual amount of product being supplied to the consumer.”

“It would have been impossible for “Joe Bloggs” a prospective consumer to have realised the lesser amount of deer velvet powder in the capsules he was consuming,” he said.

Judge Phillips found that Mr Carline believed his deer velvet product was “a superior powder” because of a change in the production process and “his belief, albeit not supported by scientific research or by any objective analysis, was a belief that he had through his own use of the deer velvet powder.” However, Judge Phillips found that although Mr Carline held that belief, it was not supported or established by other evidence that the judge accepted.

Commission Chair Anna Rawlings said “consumers had no way to determine whether the promised quantities of active ingredient were included in the capsules. Consumers have a right to know what they are ingesting and are entitled to trust that product labels are accurate. This is especially the case when the products claim to support health and consumers are unable to independently verify the truth of the claims made.”

The retail value of affected products was approximately $5 million, with 22 batches of product containing reduced quantities of deer velvet. This translates to more than 120,000 bottles and packs of the products, and more than 11 million capsules.

Silberhorn along with Mr Carline also both pleaded guilty to one charge of failing to produce documents required by a statutory notice issued by the Commission during its investigation into the matter. Mr Carline was fined $6,885.

Judge Phillips said “there was obstruction, unreasonable conduct and response and a total failure to comply with the information requested of the company and Mr Carline.”

Chronology

February 2014 – complaint received

May 2014 – voluntary request for information made by the Commission

September 2014 – notice compelling the production of information issued by the Commission

1 October 2015 – charges for failing to supply information

8 October 2015 – search warrants executed

May 2016 – charges for mislabelling

30 October 2017 – scheduled start of 8-week trial

31 October 2017 – guilty pleas

February 2018 – original sentencing date, based on signed, agreed Summary of Facts (cancelled to allow for a disputed facts hearing)

August 2018 – 8-day disputed facts hearing (originally set down for 3 days)

November 2018 – defendants’ appeal against finding from disputed facts hearing (dismissed)

September 2019 – sentencing hearing

June 2020 – sentencing judgment issued