AUSTRALIA – French dairy giant and Australia’s biggest dairy brand, Lactalis, has received a US$950,000 fine for breaching the dairy industry’s code of conduct. 

The French-owned company was initially found guilty of breaching mandatory Australia’s Dairy Code of Conduct in the 2020-21 milk season.

It was the first contested proceeding under the code which was introduced by the federal government in 2020 to promote fair trading between farmers and the companies that process their milk.

The court also found that Lactalis had breached the code by failing to publish its milk supply agreements on its website, and instead required farmers to sign up to receive their milk supply agreements by email.

According to Australian Competition and Consumer Commission (ACCC) deputy chair, Mick Keogh, the fine demonstrated the consequences of a breach.

“We took action because we considered Lactalis’s conduct would reduce transparency in the industry and served to perpetuate systemic bargaining power imbalances between processors and farmers,” he said.

“It sends a message to the wider industry that the dairy code is important and [processors] do need to comply with it and make sure they treat farmers fairly in their dealings.”

Mr Keogh said the outcome was unlikely to affect consumers or retailers, but it reinforced pricing transparency under the code.

Matthew Trace, the president of east AUS milk, which advocates for dairy farmers in New South Wales and Queensland, has also welcomed the fine.

“I think it shows that the Dairy Code of Conduct needs to be taken very seriously by milk processors and, in particular, compliance is extremely important,” he said.

“If any processor has tried to be a bit tricky with how they are complying, or simply lax in their efforts to comply, clearly there will be significant consequences.”

Mr Trace added that Lactalis had increased the price it paid to farmers this financial year after initially offering a milk price lower than last year.

In a statement, Lactalis Australia said it fully supported the Dairy Code of Conduct, and noted that the breaches related to the first year of the code’s application, and that no allegations had been made by the ACCC in subsequent years.

In addition, Lactalis noted the penalty reflects the Federal Court’s previous findings that the breaches were unintentional and technical only in nature.

“As one of Australia’s largest dairy processors, Lactalis Australia remains fully committed to the future of the Australian dairy industry,” the statement said.

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