Lactalis, the owner of brands such as Pauls, Ice Break, and Oak, has been fined $950,000 for contravening the Dairy Code of Conduct.
In proceeding brought forward by the Australian Competition and Consumer Commission (ACCC), the Federal Court found that Lactalis had breached the Dairy Code by publishing and entering into agreements that allowed Lactalis to unilaterally terminate an agreement if, in Lactalis’ opinion, the farmer had engaged in “public denigration” of processors, key customers, or other stakeholders.
The court found clauses like these strike at the Code’s essential objective, and, although there was no evidence of any actual harm suffered, it was possible it had “a chilling effect on the farmers who were subject to it”.
Mick Keogh, Deputy Chair of the ACCC, said they took action because they considered Lactalis’ conduct would reduce transparency in the industry and served to perpetuate systemic bargaining power imbalances between processors and farmers.
“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.”
The Court also determined that Lactalis violated the Code by not disclosing its milk supply agreements on its website. Instead, the company required farmers to subscribe and receive these agreements via email.
“Ensuring that small businesses receive the protections they are entitled to under industry codes continues to be one of the ACCC’s enduring compliance and enforcement priorities,” said Keogh.
The proceedings against the French-owned company were the first contested under the Dairy Code and Keogh said the outcome is an ongoing reminder that processors who fail to comply with the Code may face significant penalties.
To stay up to date on the latest industry headlines, sign up to the C&I e-newsletter.