‘It wasn’t deliberate’: Lactalis moves to reassure milk suppliers after being slapped with $950,000 fine

Lactalis Australia has moved to assure contracted dairy milk suppliers it was not “deliberately” trying to one-up them by breaching the Dairy Code of Conduct two years ago, maintaining the errors were unintentional and technical in nature.

The French-owned company was slapped with a nearly $1 million fine this week for breaching provisions of the Code, with the Australian Competition and Consumer Commission arguing it weakened the bargaining power of the farmers that supplied its milk.

A Lactalis Australia spokesman said it acknowledged the penalty imposed by the Federal Court and fulled supported the Code as “an important instrument to ensure fair and equitable commercial dealings between processors and Australia’s dairy farmers”.

“The breaches relate to the first year of application of the dairy code in respect of the 2020-21 milk season,” he said.

“No allegations were made by the ACCC as to subsequent years.”

The fine was the first of its size to be handed out by the Federal Court since the Dairy Code of Conduct was introduced for the 2020-21 milk season, while Brownes Dairy were ordered to pay $22,200 in infringement notices after it failed to comply with Code.

The Australian Competition and Consumer Commission said Brownes had paid two infringement notices issued after it published two supply agreements on its website in June 2020, which allegedly did not comply with the code because the agreements supplied no end date.

The Lactalis spokesman said the $950,000 penalty reflected the Federal Court’s previous findings that the breaches were “unintentional and technical only in nature”.

“Lactalis maintains the breaches were not a deliberate attempt to gain any kind of advantage in our contractual milk supply arrangements with Australian dairy farmers,” he said.

“Subsequent to the action brought against it by the ACCC in 2021, Lactalis has fully complied with all terms of the Dairy Code of Conduct and introduced an extensive internal compliance program.”

Following implementation of the Dairy Code of Conduct in 2019, it has been subject to its own review by the Department of Agriculture, Fisheries and Forestry to address widespread uncertainty and misinterpretation by the industry.

Now in its third year, the code is delivering positive financial outcomes for farmers, encouraging strong competition from Australian processors with record-high farm gate milk prices seen in the 2022-23 milk season.

Lactalis is one of Australia’s largest dairy processors and buys milk from more than 400 dairy farmers across all States, producing a wide range of dairy products across various brands including Pauls, Oak, Vaalia and Ice Break.

WA fresh milk processor Harvey Fresh is a subsidiary of Lactalis Australia.