Former Murray Goulburn Co-operative managing director, Gary Helou, has been ordered pay $200,000 in penalties by the Federal Court for being knowingly concerned in MG’s false or misleading claims on farmgate milk price expectations.
Mr Helou’s actions had maintained assurances of strong milk price payments in the 2015-16 milk season, failing to forewarn farmers of the likely price collapse which followed.
The maximum penalty available for each contravention of Australian Consumer Law is $220,000 for individuals prosecuted by the Australian Competition and Consumer Commission (ACCC).
He will also have to pay $50,000 towards ACCC’s court costs.
“The penalty imposed against Mr Helou reflects his seniority at MG and involvement in misleading representations about the farmgate milk price,” said ACCC deputy chairman, Mick Keogh.
“Farmers were denied the opportunity to plan for the impact of the reduced milk price on their businesses between, including implementing measures to reduce their exposure to decreased prices or shopping their milk around to other dairy processors.”
We were conscious not to seek penalty orders that would adversely affect farmers for the wrongs committed by Murray Goulburn
MG admitted to making false or misleading representations in breach of Australian Consumer Law when it reported to farmers in Victoria, South Australia and southern NSW it could maintain its bullish opening milk price of $5.60 a kilogram (milk solids) between February 29 and April 27 2016.
Mr Helou admitted he was involved in the misleading representations made by the former farmer-owned dairy company, which at that time was Australia’s biggest milk processor.
This included not informing farmers of risks known to MG and making unfounded assumptions the processor could achieve its milk powder sachet sales targets.
“Murray Goulburn’s misrepresentations meant farmers were not informed of the likelihood the final milk price would fall below the opening price,” Mr Keogh said.
“This was important information for farmers as it would have influenced the business decisions each farmer made.”
The ACCC did not seek a penalty against MG because as it was a co-operative, any penalty imposed against it could end up being paid by the very farmers that were misled.
MG could have faced a $1.1 million penalty for contravening consumer laws.
“We were conscious not to seek penalty orders that would adversely affect farmers for the wrongs committed by Murray Goulburn,” Mr Keogh said.
“So we focused on obtaining appropriate orders against the individuals involved in the conduct.”
As part of the resolution of the proceedings, Mr Helou has undertaken to the court he will not be involved in the dairy industry for three years.
In August the ACCC resolved its proceedings against Murray Goulburn’s former chief financial officer, Bradley Hingle, after he consented to an order that he pay a contribution to the ACCC’s costs.
He also committed to not being involved in the dairy industry for three years.
The court also ordered by consent that MG and Mr Helou pay a portion of the ACCC’s legal costs.
The co-operative will pay $200,000 and Mr Helou $50,000.
In May MG’s operating assets and liabilities were acquired by Canadian multinational dairy company, Saputo Inc.
Murray Goulburn continues to exist as a legal entity but only to deal with the ACCC and the Australian Securities and Investments Commission’s proceedings and current and future class actions.
MG retained approximately $200 million to deal with these liabilities, with any unspent money set to be distributed to farmer shareholders and unitholders.
Through its inquiry into the dairy industry last year, the ACCC made a number of recommendations, including for a mandatory code of conduct, which it hopes will address problems caused by bargaining power imbalances between processors and farmers.
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