Union Dairy Company pays penalty for alleged breach of Dairy Code

Riddoch Trading Pty Ltd, trading as the Union Dairy Company (UDC), has paid a penalty of $10,500 after the ACCC issued it with an infringement notice for allegedly failing to comply with its publishing obligations under the Dairy Code.

The Code requires dairy processors to publish standard form milk supply agreements on their website by 2.00pm on 1 June each year.

The ACCC alleges that instead of publishing its exclusive supply agreement on its website, UDC required dairy farmers to fill in an online form with data such as herd size and current processor before they could access the agreement.

UDC also allegedly did not publish a non-exclusive agreement until about two months after the 1 June deadline.

“Processors must make their milk supply agreements publicly available, rather than putting them behind a portal or other barrier,” ACCC Deputy Chair Mick Keogh said.

“In failing to properly publish its agreements by the time required by the Dairy Code, UDC may have made it more difficult for farmers to quickly access key information and identify the best supply agreement and milk processor for their circumstances.”

“We’re also concerned that UDC’s delay in publishing a non‑exclusive agreement may have sent the incorrect message to farmers that UDC is not obliged to offer such agreements, and that farmers may have missed out on the option to consider a UDC non-exclusive agreement,” Mr Keogh said.

“We know that many farmers and processors are making time-critical milk supply decisions in June each year, so processors must make their documents publicly available by the due date.”

“It’s very important that processors and farmers understand the requirements of the Dairy Code and comply with them. The Dairy Code is legally binding and breaches may result in the ACCC taking enforcement action,” Mr Keogh said.

Background

UDC is a subsidiary of the Midfield Group, a major agricultural processing group of companies based in Warrnambool, Victoria. UDC bases its operations in Penola, South Australia.

The Dairy Code came into effect on 1 January 2020. It is a mandatory industry code regulating the conduct of farmers and milk processors in their dealings with one another. It aims to improve the clarity and transparency of trading arrangements between dairy farmers and those buying their milk.

Under the Dairy Code, a publisher must, on or before 2.00pm on 1 June each year, publish on its website:

  • one or more standard forms of milk supply agreements
  • for each standard form milk supply agreement, a statement setting out the circumstances in which the processor would enter into the agreement

Where a processor offers to enter into an exclusive supply agreement in particular circumstances, the Code requires a processor to publish an option of a non-exclusive supply agreement which it would also enter into in those particular circumstances.

The publication obligations of the Dairy Code apply to all processors with an annual aggregated turnover of $10 million or more in the previous financial year.

All processors and farmers, regardless of size, must at all times deal with each other in good faith under the Code.

Note

The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Dairy Code.

The ACCC can issue an infringement notice when it has reasonable grounds to believe a person or business has contravened a penalty provision of the Dairy Code.

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