Fantastic Furniture, Spotlight and Smash Enterprises have failed to meet the mandatory labelling standard.

The Federal Court in Melbourne has declared that the three retailers have supplied bean bag covered, which were not affixed with the required choking hazard warning label.

Acting ACCC chairman Michael Schaper said the warning labels on bean bag products carry a very important consumer product safety message.

"The labels warn about the severe danger presented to children if the filling is swallowed or inhaled," he said.

The court also imposed a civil penalty of $300,000 against Fantastic Furniture because it had supplied a significant number of the unlabelled bean bag covers on or after 15 April 2010. Prior to this date the ACCC could not seek penalties for such breaches.

In October 2008, Smash supplied more than 11,000 bean bags to Fantastic Furniture and Spotlight without the choking hazard warning label. Fantastic Furniture and Spotlight then supplied a significant number of those bean bag covers to consumers.

"The outcome sends a strong message to suppliers of products subject to mandatory product safety standards," Schaper said.

"Repeated breaches are likely to see you end up in court and exposed to substantial penalties."