Lactalis Australia in court for alleged dairy code breaches

Lactalis Australia in court for alleged dairy code breaches

COMMENT
Dairy
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The ACCC has started court proceedings against Lactalis for alleged breaches of the Dairy Code of Conduct.

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The ACCC has instituted Federal Court proceedings against Lactalis Australia Pty Ltd for alleged breaches of the Dairy Code of Conduct. This is the first time the ACCC has started proceedings for alleged breaches of the code.

The allegations made by the ACCC include that Lactalis failed to make its milk supply agreements publicly available on its website by the deadline of 2pm on June 1, 2020 as required by the code, and instead required farmers to sign up to a mailing list to receive a copy of the agreements.

The ACCC also alleges Lactalis failed to publish genuine non-exclusive milk supply agreements. Instead, Lactalis required farmers to supply a minimum of 90 per cent of their monthly production volume, which the ACCC alleges would prohibit most farmers from supplying milk to another processor.

It is also alleged that Lactalis failed to comply with the code's "single document" requirement by failing to provide farmers with all three documents that made up Lactalis' milk supply agreement. In a majority of cases, only one of the three documents was provided to farmers at the time the agreement was executed.

In addition, Lactalis published and entered into milk supply agreements with farmers that permitted it to terminate the agreement when, in the opinion of Lactalis, the farmer had engaged in "public denigration" of processors, key customers or other stakeholders. The ACCC alleges this clause would allow Lactalis to terminate agreements in circumstances where there was not a material breach, when the code requires that for processors to unilaterally terminate agreements, the circumstances must involve a material breach by the farmer.

This court action against Lactalis by ACCC is a reminder to all processors that the dairy code must be adhered to or processors risk court action by the ACCC. QDO has written a number of submissions to the ACCC regarding potential breaches of the code. It would not be surprising if further penalties or court action was taken by the ACCC against processors other than Lactalis.

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