One of Western Australia's biggest egg producers will have to fork out more than a million dollars after it was penalised on Tuesday for falsely labelling some of its products free range.

The Australian Competition and Consumer Commission brought the action against Snowdale Holdings in 2014 over its farms in Carabooda and the Swan Valley in Perth's north, which produce brands including Eggs by Ellah.

And on Tuesday morning they were fined $750,000 and ordered to pay $300,000 more in court costs - at a hearing at the Federal Court in Perth.

ACCC investigations revealed the company sold 71 per cent of its eggs as 'free range' from 2012-2013 and charged consumers a premium for them.

According to the ACCC, the company made claims the eggs were laid by hens that were able to go outdoors and roam freely, but the same court heard last year that investigations found half of the chickens probably never got outside because the sheds were overstocked and had only one exit, which was too small.

The landmark guilty verdict was handed down in May, 2016. 

During the hearing Snowdale did not provide the court with its flock sizes for the Carabooda farm, but based on the number of eggs laid, the ACCC calculated that up to 17,000 chickens were kept in a barn.

The court heard Snowdale's "Free Range Eggs by Ellah" were advertised as being sourced from the Swan Valley farm, but they were consolidated from both properties and put indiscriminately into cartons.

Humane Society International director Verna Simpson said the court decision was a "major victory for Australian consumers."

"The highest penalty ever handed down in a case of this kind to date is $300,000," she said.

"This company had been charging a premium for eggs produced in anything but free range conditions for 14 years.  Consumers can be thankful that justice has been served and Snowdale Holdings have been held to account for their deception."

Ms Simpson said the society wanted to know how such a "massive deception" by Snowdale was not uncovered by supermarket giants Coles and Woolworths who sold the eggs labelled as 'free range'.

"If Coles and Woolworths had revealed this consumer fraud years ago then such a travesty would not have been allowed to continue for more than a decade." she said.

"The current free range egg price wars are another example. You can be sure that if you are only paying $4 a dozen then the eggs are not genuine free range. At that price the producer would go broke."

Former Greens animal welfare spokesperson Lynn MacLaren said the court ruling made it clear producers could no longer deceive consumers with false free range labels.

"This decision was challenged by the egg producers and when tested under the light of the scrutiny of the Federal Court they came up wanting," she said outside of the court on Tuesday.

"The label for free range is something to be cherished - it is has integrity and today this is what this court decision has ruled.

"We do need to improve that label, we do need to improve that standard for the free range label, but what today proves is that any producer that does abuse that label will be held up under the laws today."

Following a Fairfax Media investigation by the Two Rocks-based Sun City News, WA's Department of Environment Regulation and the City of Wanneroo inspected the Snowdale farm in September 16, 2014, and found "large amounts of chicken manure, carcasses and broken eggs" in alleged breach of the Health Act.

Notices were issued to clean up the rotting carcasses and refuse – since complied with, according to the City – but soil samples revealed the presence of fly lavae.

The Sun City News investigation found "thousands of dead chooks, discarded eggs, tonnes of dumped chicken manure plus hundreds more chooks that appear to be in very poor condition" wandering on Crown Land behind the property.

More to come...

- with AAP