The Australian Competition and Consumer Commission (ACCC) is taking action in the Federal Court against Australia's largest milk processor, Murray Goulburn (MG), for misleading conduct prior to slashing farmgate milk prices last year.
The ACCC has alleged MG engaged in unconscionable conduct and made false or misleading representations in contravention of the Australian Consumer Law.
It also alleges that former managing director Gary Helou and former chief financial officer Bradley Hingle were knowingly concerned in MG’s misleading conduct.
The ACCC claimed MG provided and maintained forecasts for its farmgate milk price in 2015-2016 “despite knowing that these forecasts were overstated and unachievable in the 2016 financial year (FY16) and that farmers were making decisions in reliance on these forecasts”.
The ACCC is seeking orders against MG that include declarations, compliance program orders, corrective notices and costs.
It said it had decided not to seek a pecuniary penalty against MG because, as a cooperative, any penalty imposed could directly impact on affected farmers.
But the ACCC said it was seeking declarations, pecuniary penalties, disqualification orders and costs against Mr Helou and Mr Hingle.
The ACCC has decided not to take any further action against Fonterra Australia about its cuts last year to its farmgate milk price, which were announced one week after MG’s milk price cut in April, last year.
ACCC chairman Rod Sims said “a major consideration for the ACCC in deciding not to take action was that Fonterra was more transparent about the risks and potential for a reduction in the farmgate milk price from quite early in the season”.
Mr Sims said many dairy farmers were in a relatively vulnerable trading position and relied on transparent pricing information in order to budget effectively and make informed business decisions.
“In these circumstances, farmers were entitled to expect MG to have a reasonable basis for determining its pricing, and to regularly update farmers if there was any change in forecast prices,” Mr Sims said.
“The ACCC alleges that MG’s conduct had an adverse impact on many farmers who, as a result of MG’s representations regarding the farmgate milk price, had made business decisions,” he said.
“The farmers relied on MG’s representations and were not expecting a substantial reduction in the farmgate milk price, particularly so close to the end of the season when it was not possible for them to practically readjust their expenditure.”