An Australian dairy processor has been found guilty of breaching the Dairy Code of Conduct, in the first court case against a processor under the code since it came into effect in 2020.
The code regulates the relationship between dairy farmers and the companies that buy their milk.
In particular, the code bans retrospective cuts to the milk price paid to farmers and forces processors to announce their prices before the start of a milk supply season.
The Federal Court today found Lactalis Australia had breached the code when it failed to publish its milk supply agreements on its website by 2pm on June 1, 2020 — the deadline for the 2020-21 supply season.
Lactalis was previously known as Parmalat and produces dairy brands such as Pauls milk and ice cream, Ice Break coffee and Vaalia yoghurts.
According to Federal Court documents in 2020, Lactalis bought 950 million litres of milk, or about 11 per cent of raw milk, from 400 dairy farmers Australia-wide.
The case was brought against Lactalis by the Australian Competition and Consumer Commission, which enforces the Dairy Code of Conduct.
Justice Roger Derrington found Lactalis breached the code by publishing agreements that allowed them to "unilaterally terminate the agreement in circumstances that did not amount to a material breach".
However the court dismissed the ACCC allegation Lactalis failed to publish "genuine non-exclusive milk supply agreements by requiring farmers to supply a minimum of 90 per cent of their monthly milk production".
Not first investigation
ACCC deputy chair Mick Keogh told the ABC the organisation also took action against several other companies alleged to have breached the code in its first year of operation.
"They amounted to infringement notices which typically might be $13,000 to $15,000 for an unlisted company and $60,000 or so for a listed company and resolved those matters quite quickly," Mr Keogh said.
He likened infringement notices to a "speeding fine".
"But in this instance Lactalis decided to go through with the full contest and that's their right, there's no issue with that," he said.
"I guess in some respects it's useful to have a judge interpret the code and make determinations on exactly what is required so that clarifies it for everyone."
Mr Keogh did not rule out an ACCC appeal, but also flagged the case may instigate changes to the code in an upcoming review.
A 'practical approach'
In response to the judgement, Lactalis said it had sought to take a practical approach to working with farmers under the Dairy Code of Conduct and did not seek to adversely impact farmers in any way.
Lactalis said it would carefully consider the judgement and that it sought to comply with the code at all times.
The company said no allegations had been made by the ACCC against it in subsequent milk-supply seasons.
Penalties will be determined at a future hearing.
