The company behind La Ionica, Turi Foods, will pay a $100,000 penalty and take out a newspaper advertisement as part of a deal that ends legal action brought by consumer watchdog the Australian Competition and Consumer Commission.

Turi Foods included the "free to roam" claim in promotional material, including a poster featuring celebrity chef Geoff Jansz, produced since 2004.

Last month, the Federal Court in Melbourne heard that each chicken had a space equivalent to an A4 sheet of paper in which to move around.

Two other chicken suppliers that also made the "free to roam" claim, Bartter Enterprises and Baiada Poultry, and peak industry body the Australian Chicken Meat Federation, continue to fight the ACCC's lawsuit.

In a judgment handed down today, Federal Court judge Richard Tracey said Turi, which supplies about 9.5 per cent of the chicken eaten in Australia, had co-operated with the ACCC by removing signs from delivery vehicles as soon as the watchdog raised its concerns.

He said La Ionica attempted to gain an advantage over its competitors "by advertising that, as they have grown, the chickens have been free to roam around the sheds in which they were held".

"La Ionica has acknowledged that its statements to this effect have been misleading and deceptive," he said.

"Its customers and potential customers should be disabused."

Justice Tracey said the $100,000 penalty agreed between the ACCC and Turi Foods was "towards the lower end of the proper range" of up to $1.1 million.

"It is, however, within the permissible range and I would not depart from the proposed amount simply because I might have been minded to impose a higher figure within the range but for the agreement of the parties," he said.