Coles and Brownes Foods Operations have each been fined $39,600 after breaches of the Dairy Code of Conduct.
According to the Australian Competition & Consumer Commission, the breaches, relating to milk supply agreements between the two companies, were said to force suppliers to provide milk exclusively to Coles with a maximum production capacity. For Brownes’ contravention, no minimum price was provided to suppliers, and no explanation was provided.
Brownes is Western Australia’s oldest dairy company. It processes more than 125 million litres of milk each year, and handles Coles’ dairy processing in WA from its farmers in the state.
“Dairy farmers need clear, accurate information about supply terms and prices when deciding who they will supply,” ACCC deputy chair Mick Keogh said.
“Terms that limit a farmer’s ability to supply, or documents that don’t properly set out minimum prices and the reasons for them, undermine the transparency the Dairy Code is designed to deliver.”
The commission said it had also engaged with three other dairy processors over minor breaches of the Dairy Code and added that the businesses in question have made the necessary adjustments.
“Volume caps in exclusive milk supply agreements are particularly concerning. They can cause significant harm to farmers by limiting milk production while also restricting their ability to supply multiple processors,” Keogh said.
“Our Dairy Code enforcement approach is to be proportionate and fair, which means taking stronger enforcement action for more serious breaches or repeated non-compliance.”
For Coles, the fines will be minimal compared to what lies in store from the recent court case brought against the supermarket giant relating to misleading pricing promotions. In that case, also brought by the ACCC, the analysis examined whether 245 products and 255 promotions advertised as discounts actually decreased in price over the period from February 2022 to May 2023.
Under Australian Consumer Law, the legislation against which this case was determined, each contravention can carry a maximum fine of $50 million. No such judgment on penalties has been made at this point.
