ACCC fines Brownes Dairy $22,200 for code breach

ACCC fines WA milk processor Brownes Dairy for breaches of Dairy Code of Conduct

Dairy
PRIORITY: ACCC deputy chair Mick Keogh says ensuring compliance with the dairy code remains an ACCC priority.

PRIORITY: ACCC deputy chair Mick Keogh says ensuring compliance with the dairy code remains an ACCC priority.

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The Australian Competition and Consumer Commission has fined Western Australian processor Brownes Dairy $22,200 for failing to comply with the mandatory Dairy Code of Conduct.

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The Australian Competition and Consumer Commission has fined Western Australian processor Brownes Dairy $22,200 for failing to comply with the mandatory Dairy Code of Conduct.

The ACCC issued Brownes with two infringement notices for allegedly failing to comply with the code last year.

Brownes Dairy is one of three major processors in the WA milk market and is supplied by 50 dairy farms in WA's south west.

It CEO Natalie Sarich-Dayton said the company was committed to adhering to the code.

The dairy code requires most dairy processors to publish on their websites, on June 1 each year, standard form milk supply agreements to cover all the circumstances in which they intend to purchase milk in the coming financial year on their websites.

This allows farmers to compare processors' minimum prices and contract terms.

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The ACCC issued Brownes Dairy two infringement notices for publishing two standard-form milk supply agreements (exclusive and exclusive A2) on its website in June 2020 that allegedly did not comply with the Dairy Code by:

  • not specifying a definite end date of the supply period;
  • allowing Brownes Dairy to unilaterally vary the agreement in circumstances other than those specified in the Dairy Code;
  • allowing Brownes Dairy to unilaterally vary the agreement without the variations being in writing; and
  • allowing Brownes Dairy to unilaterally reduce the minimum price for milk supplied ('unilateral prospective step down') in circumstances other than those specified in the Dairy Code.

"It is critical that processors take active steps to ensure compliance with the dairy code so that farmers have the certainty and transparency in relation to milk supply agreements that the code is intended to provide," ACCC deputy chair Mick Keogh said.

"One of the requirements of the dairy code is that processors ensure their milk supply agreements are compliant before publishing them on their websites, and in this instance Brownes Dairy published two supply agreements that were allegedly non-compliant with the code."

Brownes Dairy has addressed the ACCC's concerns in the 2021-22 agreements, which it published last month.

Brownes Dairy also undertook to write to farmers that it had contracts with, advising that it will only exercise its rights under existing agreements to the extent they are consistent with the terms of these new agreements.

Ms Sarich-Dayton said Brownes had published contracts believing they were compliant with the code.

"Once the error was pointed out to us we worked quickly to rectify it and have done everything requested by the regulators to become compliant," she said.

"The issue identified was administrative and no farmer was disadvantaged in any way from our inadvertent error."

Mr Keogh said ensuring compliance with the dairy code remained an ACCC priority."

"We are continuing to assess agreements published on June 1 this year, and any identified breaches may result in the ACCC taking enforcement action where appropriate," he said.

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"Brownes Dairy is committed to adhering to the Dairy Code and we published our contracts believing that we were compliant with the code.

Once the error was pointed out to us we worked quickly to rectify it and have done everything requested by the regulators to become compliant.

The issue identified was administrative and no farmer was disadvantaged in any way from our inadvertent error."


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