The Federal Court found that chicken meat company La Ionica engaged in deceptive and misleading conduct by using the term "free-to-roam".

The company was ordered to pay a $100,000 fine, remove the ad from shops, and publish an ad admitting liability in a Melbourne newspaper.

According to ABC, Lawyers for Animals was one of groups who made the initial complaint to the consumer watchdog the ACCC which is fighting the matter in court.

The group's president Nichola Donovan says the ACCC has done a good job.

"I think as the truth begins to emerge with this admission, it will be potentially harder to continue to maintain that chickens have sufficient room to move around freely in these barn systems," she says.

La Ionica declined an interview request, saying other groups are still arguing the matter in court.

Other meat companies, and the Chicken Meat Federation, are fighting the ACCC over the "free-to-roam" label.

The case is scheduled for a three day trial March.