The Australian Competition and Consumer Commission (ACCC) says the Australian arm of global food giant Kraft-Heinz should be forced to pay a $10 million penalty for implying a range of toddler foods was healthy.

Earlier this year, the Federal Court concluded Heinz had deliberately misled the public over the nutritional content of the Little Kids Shredz range of products, which were sold until May 2016.

The boxes of fruit pastes, purees and concentrates stated "99 per cent fruit and veg", when they contained 60 per cent sugar.

That meant they could have been marketed as a confectionery.

"The nature and characteristic of the conduct in this case is very serious, indeed it's egregious," Tom Duggan, acting for the ACCC, told the Federal Court hearing in Adelaide.

He said it was very difficult to determine the real costs and consequences of the products, given their risks to childhood obesity and tooth decay and a big financial deterrent was needed.

"The consumer is being diverted from other products which may be healthy," Mr Duggan said.

"If [the penalty] is not big enough … in the end it simply doesn't represent a sufficient deterrent," he said.

"The conduct of Heinz involved wilful blindness or recklessness."

But when Mr Duggan referred to Heinz Australia's $448 million annual revenue in 2016, Justice Richard White said the company was "not being punished simply because it's big".

Heinz lawyers dispute claims

Lawyers for Heinz defended the company's actions and disputed claims its conduct was "egregious".

"There are no facts that support that sort of character or description," Michael O'Brien said.

The Federal Court in Adelaide. ( ABC News: Gary Rivett )

He argued the fact the product was "not beneficial" was not the same as "detrimental".

"Your Honour didn't find the product … was detrimental to children," Mr O'Brien said.

"It is not tantamount to saying this is a dangerous product … a poisonous product."

"The company is a conscientious company."

He suggested a penalty in the range of $400,000 would be more appropriate than the $10 million figure put forward by the ACCC.

He said this was the total gross profit of the Little Kids Shredz range, whereas $10 million was an "oppressive" prospect for Heinz.

Justice White is yet to impose a penalty.