Lactalis has been fined A$950,000 ($644,000) after being found guilty of breaching Australia’s dairy code of conduct in the 2020-21 milk season.
The French-owned company was initially taken to court by the Australian Competition and Consumer Commission (ACCC) in July 2021 over alleged breaches to the Dairy Code of Conduct.
In September 2022, the ACCC ruled Lactalis had breached the code when it failed to publish milk-supply agreements on its website by a deadline of 2pm on 1 June 2020.
Another breach was identified connected with Lactalis “publishing and entering into agreements that allowed them to unilaterally terminate the agreement in circumstances that did not amount to a material breach”, according to a statement by the ACCC.
In particular, under the agreement, Lactalis was “permitted to unilaterally terminate the agreement when, in Lactalis’ opinion, a farmer had engaged in “public denigration” of processors, key customers or other stakeholders”.
Australia’s federal court has now determined that although there was no evidence of any actual harm suffered via that specific agreement term, it was possible it had “a chilling effect on the farmers who were subject to it”.
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ACCC deputy chair Mick Keogh said action was taken because the court 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,” Keogh said.
“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.”
“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,” Keogh added.
Just Food has approached Lactalis for comment on the recent penalties.
Lactalis is a major dairy processor in Australia and purchases milk from over 400 dairy farmers across all Australian states, according to the ACCC. The dairy group produces a range of dairy products across a number of brands including Pauls, Oak, Vaalia and Ice Break.
Last week, Italy’s principal farmers’ association Coldiretti accused Lactalis of “unfair” trading practices in milk procurement. Lactalis called the claims “unjust”.