Lactalis Australia has been fined AUD 950,000 (approx. $641,993) in penalties for breaching the dairy code of conduct by “failing to meet some of its obligations” in relation to the 2020/21 milk season.
Following proceedings brought by the Australian Competition and Consumer Commission (ACCC), the court found in September last year that Lactalis had breached the code by “publishing and entering into agreements that allowed Lactalis to terminate an agreement in circumstances that didn’t involve a material breach”.
Under the terms, Lactalis was permitted to unilaterally terminate the agreement when it viewed the farmer to have engaged in “public denigration” of processors, key customers or other stakeholders.
The ACCC commenced proceedings against Lactalis for alleged breaches of the code for the first time in 2021.
On Tuesday, 25 July, the court found clauses like these to have breached the code’s objective, and said it was possible it had “a chilling effect on the farmers who were subject to it”.
“We took action because we considered Lactalis’ conduct would reduce transparency in the industry and served to perpetuate systemic bargaining power imbalances between processors and farmers,” ACCC deputy chair Mick Keogh said.
The court also found Lactalis to have breached the code by not publishing its milk supply agreements on its website.
Lactalis said it acknowledges the penalty imposed by the Federal Court in relation to the action brought by the ACCC and that no allegations were made in relation to subsequent years.
In a statement, it said: “Lactalis maintains the breaches were not a deliberate attempt to gain any kind of advantage in our contractual milk supply arrangements with Australian dairy farmers…Lactalis fully supports the Dairy Code of Conduct as an important instrument to ensure fair and equitable commercial dealings between processors and Australia’s dairy farmers.”
Keogh added: “The code was introduced to help dairy farmers make informed choices about where they sell their milk by ensuring there is transparency in pricing agreements and by allowing them to compare agreements from different processors in a timely fashion.
“These were the first contested proceedings under the dairy code and the outcome is an ongoing reminder that processors who fail to comply with the code may face significant penalties”.
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