The consumer watchdog has called for food giant Heinz to be hit with a $10 million fine after misleading consumers by claiming one of its snacks, marketed for toddlers, was beneficial for young children.
But the company has described such a penalty as "oppressive" suggesting $400,000 would be a more appropriate figure.
In a hearing in the Federal Court in Adelaide, counsel for the Australian Competition and Consumer Commission, Tom Duggan, said the penalty imposed on Heinz had to be sufficient to act as a deterrent against similar conduct by the company and others operating in the food industry.
"If it's not big enough, in the end, it simply doesn't represent a sufficient deterrent," Mr Duggan told the court on Wednesday.
He argued the company's conduct in representations on the packaging of its Little Kids Shredz was "egregious" because of the potential implications for the diet and oral health of young children and involved both "willful blindness" and "recklessness".
But Michael O'Brien, for Heinz, said there were no facts to support the company's conduct being egregious and the court had ruled that while it made an error, it did not intend to mislead.
"This case is deserving of a penalty more in the nature of hundreds of thousands of dollars," Mr O'Brien said.
"One might think if it was a penalty of $400,000 what the court would be doing through that penalty is removing the total gross profit made by this company over the whole period of its sales (of Shredz)."
In his judgment in March, Justice Richard White ruled the prominent statements on the packaging, that the Shredz snacks comprised 99 per cent fruit and vegetables together with the pictures of the fruit and vegetables, conjured impressions of nutritiousness and health.
"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," he said.
The Shredz products were a dehydrated snack made from 99 per cent fruit and vegetable ingredients and did not contain any preservatives, artificial colours or flavours but had a high sugar content.
Nutrition expert Rosemary Stanton gave evidence against Heinz at the Federal Court in Adelaide. Source: AAP
More than one million were sold before the products were pulled from shelves in May 2016.
At the time of the judgment, Heinz said it was disappointed with the ruling but respected the court's decision.
"Heinz is committed to providing high-quality food products and to communicating clearly and transparently with consumers on its packaging," it said in a statement.
In testimony at the trial, expert witness for the ACCC, nutritionist Rosemary Stanton, told the court that depictions on the packaging were misleading as the product "is not good for toddlers".
Heinz had argued none of those alleged representations had been made and, even if they were, they were not misleading.
Justice White has reserved his decision on penalty to a date to be fixed.
