Lactalis Australia has been ordered to pay $950,000 by the Federal Court for several breaches of the Dairy Code of Conduct in the 2020/21 season.

In court filings from July 2021, the Australian Competition and Consumer Commission (ACCC) alleged Lactalis had failed to publish a standard form of milk supply agreements (MSA) within the required timeline. The ACCC also alleged nine of the standard form MSAs published by the processor included clauses that would allow Lactalis to unilaterally terminate a contract without a material breach. The ACCC also alleged that Lactalis entered into 384 MSAs that contained an ‘offending combination of clauses’ which made non-exclusive supply agreements ‘inefficient and commercially unviable” according to ACCC.

The ACCC argued that Lactalis’ fine should total $1.3m for all breaches while the processor argued for a fine of $215,000. According to the presiding judge, the $950,000 fine ordered would “suffice to deter other processors who might otherwise fail to ensure the terms of their MSAs comply with the Dairy Code.” In his ruling, the judge said there were no evidence of any farmers suffering any harm as a result of the inclusion of the offending clauses in the MSAs.   

ACCC deputy chair Mich Keogh said the Commission took legal action because it considered Lactalis’ conduct to reduce transparency in the industry, “serving to perpetuate systemic power imbalances between processors and farmers“.