Advertisement

Dairy giant to face court for allegedly misleading farmers

Directors face fines of up to $220,000.

Directors face fines of up to $220,000. Photo: Getty

The competition watchdog is taking milk processor Murray Goulburn to court, alleging it behaved unconscionably and misled farmers on the milk prices they could expect to receive.

In April last year, Murray Goulburn slashed farm-gate milk prices and forced farmers to pay back money they had already received.

The decision left many farmers individually owing Murray Goulburn (MG) in excess of $100,000 and sparked a crisis in the sector.

The Australian Competition and Consumer Commission (ACCC) said today it was taking action against Murray Goulburn in the Federal Court, alleging the information it provided to farmers in the months before dropping the milk price was “false and misleading”.

ACCC chairman Rod Sims said farmers who were not expecting the price cut were adversely affected and not able to re-adjust their budgets.

“We’ll be alleging that Murray Goulburn knew that farmers relied on this information and that they made decisions based on what Murray Goulburn was telling them,” he said.

“That caused the farmers considerable problems, because many had invested money based on that price.

The ACCC also alleges former managing director Gary Helou and former chief financial officer Bradley Hingle “were knowingly concerned in Murray Goulburn’s conduct”.

Mr Sims said Mr Helou and Mr Hingle could face significant penalties relating to their actions.

“The penalty for them could be up to $220,000 per contravention,” he said.

Mr Sims said with multiple parties affected, they could face multiple penalties.

“I don’t want to pre-empt the court proceedings. There could be multiple contraventions here and each contravention would have a penalty of up to $220,000 per breach.”

In a statement, the milk processor acknowledged the receipt of the proceedings filed.

“Murray Goulburn Co-operative Co Limited (MG) has been notified by the Australian Competition and Consumer Commission that it has filed proceedings against MG in the Federal Court of Australia.

“The proceedings have been served on MG today and allege that MG engaged in unconscionable conduct and made false or misleading representations in contravention of the Australian Consumer Law. These allegations arise in connection with the milk price decrease announced by MG in April 2016.

“MG is considering the proceedings, however notes that ACCC has decided not to seek a pecuniary penalty against MG.”

Court action will give ‘gutted’ farmers some resolution

Victorian dairy farmer Adam Jenkins, president of lobby group United Dairy Farmers of Victoria, said farmers were “gutted” by the retrospective price cuts last year and the court action by the ACCC would provide some resolution.

“At least someone and some people have been accountable for the actions that did feel totally wrong last year,” Mr Jenkins said.

“Now it’s obviously going to be taken that little bit further which I think we are quite pleased with.”

He said farmers also welcomed the fact the ACCC would not seek financial penalties against the dairy co-operative.

“I think that was one of the biggest things that we grappled with when it happened last year was that any fine, or any judgement against Murray Goulburn, at the end of the day it ends up back on the farmers.

“Now the farmers are already struggling with the decision that was made last year and you’d hit them again, so we’re pleased with the way the outcome has come.”

No action against Fonterra

The ACCC also investigated the conduct of fellow milk processor Fonterra which also slashed prices paid to farmers, but announced it would not take further action against the company.

Lobby group Australian Dairy Farmers said while it welcomed the proceedings against Murray Goulburn it was surprised the ACCC was not pursuing Fonterra.

“We acknowledge the ACCC is an independent regulator and after applying the law has concluded that they were more transparent in their activities,” a statement issued by Australian Dairy Farmers read.

Fonterra issued a statement saying the past 12 months had been incredibly challenging for Australian dairy farmers and the broader dairy industry.

“We understand it will take time to rebuild confidence in the dairy industry.

“We are currently working on a range of initiatives, including a more transparent milk price, and industry measures to help get our industry back on track.”

– ABC

Stay informed, daily
A FREE subscription to The New Daily arrives every morning and evening.
The New Daily is a trusted source of national news and information and is provided free for all Australians. Read our editorial charter
Copyright © 2024 The New Daily.
All rights reserved.