Coles supermarket and dairy processor Brownes Foods Operations have incurred penalties related to breaches of Australia’s dairy code of conduct.
In a statement today (22 May), the Australian Competition and Consumer Commission (ACCC) said both companies have paid A$39,600 ($28,205) each in penalties related to what the regulator described as “separate alleged contraventions” of the code.
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The ACCC alleged Coles breached the code by publishing two milk-supply agreements that required suppliers to provide milk exclusively to the retailer. The regulator also claimed Coles included a cap on the maximum volume of milk farmers could produce.
Separately, the ACCC alleged Brownes Foods Operations – which trades as Brownes Dairy – published two milk-supply agreements that did not clearly set out the minimum prices applying across the full supply period. The regulator also said the processor “did not justify the reason” for those minimum prices.
However, the ACCC added payment of a penalty specified in an infringement notice is not an “admission of a contravention” of the code.
ACCC deputy chair Mick Keogh said: “Dairy farmers need clear accurate information about supply terms and prices when deciding who they will supply.
“Terms that limit a farmer’s ability to supply, or documents that don’t properly set out minimum prices and the reasons for them, undermine the transparency the dairy code is designed to deliver.
“Volume caps in exclusive milk supply agreements are particularly concerning. They can cause significant harm to farmers by limiting milk production while also restricting their ability to supply multiple processors.”
Australia’s dairy code of conduct is a mandatory industry code that took effect on 1 January 2020. It governs supply relationships between dairy farmers and processors that buy milk directly from farmers and have aggregated annual turnover above A$10m.
The ACCC is responsible for enforcing the code.
Coles buys about 490 million litres of fresh milk each year across the southern dairy regions and Western Australia, according to the ACCC statement. Brownes is a medium-sized processor based in Western Australia and purchases around 150 million litres a year from about 50 dairy farmers.
The ACCC also said it has engaged with three other dairy processors – unnamed – regarding “minor” alleged breaches of the code as part of its compliance and enforcement activity.
Those businesses have taken steps to improve compliance after receiving warnings.
