The Federal Court upheld claims by the ACCC that Steggles ads, saying its chickens were "free to roam in large barns", were misleading because the chickens had a living space smaller than an A4 piece of paper.

The Chicken Meat Federation has told ABC that nothing will change as a result of the ruling, because the industry has already stopped using the term "free to roam".

But ACCC commissioner Sarah Court says the commission is considering levelling penalties against the federation itself, which was also found to have engaged in misleading conduct.

"If industry associations want to get involved with these kinds of significant marketing campaigns, then the industry association needs to make sure that what it is telling its members and encouraging its members to do also falls within the confines of the law," she said.

"Industry associations across the board will now be sitting up and taking notice of their potential liability for this kind of conduct."

Federal Court judge Richard Tracey said the ability of the chickens to move around freely was most restricted in the early stages of their growth.

"Until the levels dropped at some point between the 33rd and 42nd days of the growth cycle, chickens could not, in my judgement, be said to be free to roam around the sheds at will and with a sufficient degree of unimpeded movement to justify the assertion that they were free to roam," the judgement says.

"They could not move more than a metre or so (at most) without having their further movement obstructed by a barrier of clustered birds."

As stocking densities were thinned after 4-5 weeks, Justice Tracey said the chickens could be considered "free to roam".

"By this time a bird which wished to move around the barn could weave its way across the floor through gaps between other birds or around smaller clustered groups," he said.

The court's decision is the culmination of an 18-month battle by the ACCC against Baiada, which sells chickens under the Steggles and Lilydale Free Range Chicken labels.

Poultry producer La Ionica agreed in January to withdraw its "free to roam" claim and pay a $100,000 penalty.

The court also upheld claims from the ACCC that the Australian Chicken Meat Federation had breached consumer law by using the term "free to roam".

Ms Court said the watchdog will consider imposing fines on the Chicken Meat Federation.

But executive director of the Chicken Meat Federation, Dr Andreas Dubs, says the ruling won't have any consequences for the industry.

"Nothing will happen because we haven't used that term since the ACCC initially took the case to court," he said.

Dr Dubs says the industry was simply trying to communicate to consumers that the chickens are not kept in cages.

"The court ruling does acknowledge that it wasn't a deliberate attempt to mislead," he said.

"We never sat around a table and said 'how can we best mislead people', that's absolutely not the point.

"The fact that 30,000 chickens are in a large barn and the fact that there are 18 birds per square metre is all on our website."

Dr Dubs says the ruling leaves the industry in a difficult situation when it comes to advertising its products.

"You have to use some words and when we talked to the ACCC at the beginning and they said 'use different words'.

"We said 'what should we say?'"

Baiada refused a request for an interview with the ABC, providing a statement saying the density of the chickens does not give rise to any animal welfare issues.