Horticulture Code complaints, investigations and outcomes

 

We have received complaints from growers and traders and related industry associations about possible breaches of the Horticulture Code since it came into effect on 14 May 2007. We review all complaints that fall under our jurisdiction and will take strong action where necessary.

However, many of the complaints received fall outside of the ACCC's jurisdiction and the Trade Practices Act 1974, known as the Competition and Consumer Act 2010 from 1 January 2011 (the Act), are of a private contractual nature or lack sufficient evidence to substantiate a breach of the Horticulture Code or the Act.

When we receive a complaint about the Horticulture Code, we will usually recommend mediation as the first and best option. However, if a party has failed to comply with the code or is using its superior bargaining power to disadvantage another party, we may decide to take action.

For further information, or to make a complaint, contact the ACCC Infocentre on 1300 302 502.

What is our investigation process for Horticulture Code matters?

If the complaint involves a potential breach of the Horticulture Code and/or the Act, a three-stage investigation process may be commenced:

1. Initial assessment

A preliminary assessment of the complaint is made. It may include an initial interview with the complainant to verify general information including, for example, contact details and the name of the trader. If the complaint is assessed as substantive, it is progressed to the next stage. However, in some instances the matter may be best addressed through dispute resolution. We generally recommend that the parties use the dispute resolution procedure set out in the Horticulture Code as a first step where this might reasonably facilitate an outcome acceptable to both parties.

2. Initial investigation

The matter is then escalated to an ACCC enforcement officer, which is when further information and substantiation of the allegations is generally sought from the complainant and the other party. This may be through conducting interviews, obtaining and examining documents relating to the alleged conduct and careful application of the law to the known facts.

3. In-depth investigation

Additional evidence is collected and the matter is reviewed and analysed by senior enforcement staff. If the allegations can be substantiated by reliable evidence, the matter will generally be referred to the ACCC’s Enforcement Committee for consideration. The committee is responsible for deciding the most appropriate course of action, after considering the impact the action may have on the ongoing business relationship, the national market, relief available to affected persons and the value of precedent. The committee may elect to pursue the matter through litigation or resolve it by an administrative settlement.

Matters that the ACCC has pursued

Where the investigation of a matter has indicated serious breaches of the Horticulture Code and/or the Act, and the matter is able to be substantiated with sufficient evidence, we can and do take decisive action.

Recent matters that we have pursued are listed below.

Galdan Investments Pty Ltd (trading as Tropic Banana Company)

Conduct: breached the Horticulture Code by trading without code-compliant horticulture produce agreements and terms of trade, and without giving growers the required statements for the reporting periods.
Outcome: court enforceable undertakings
Date: January 2011

Galdan Investments Pty Ltd, trading as Tropic Banana Company, has acknowledged it contravened the Horticulture Code by trading with growers without horticulture produce agreements and without publically available terms of trade.  It also failed to report to growers as required by the code.

The ACCC has accepted undertakings from Galdan, that among other things, it will only trade with growers in horticulture produce where it has code compliant horticulture produce agreements in place and will publish and make publically available the terms on which it is prepared to trade.  Galdan will have a DVD produced focusing on the code and its obligations on growers and traders.  The DVD will be supplied at no cost to all growers who have traded with Galdan since the code's inception.

LaManna Bananas Pty Ltd (on behalf of the LaManna Group companies)

Conduct: breached the Horticulture Code by acting as growers' agent and selling produce on a non arm's length basis.
Outcome: court enforceable undertakings
Date: May 2009

On or after 14 May 2007, LaManna, acting as a growers' agent, occasionally sold produce between its related companies, as part of their distribution of produce across national markets. The ACCC raised concerns that these transactions were not at arm's length and that the companies may not have, in every case, properly obtained growers' consent, as required under the Horticulture Code.

LaManna gave the ACCC court enforceable undertakings that it would advise potentially affected growers of the ACCC's concerns and establish a special process to deal with any growers who raised concerns about sales of their produce. LaManna is also required to report to the ACCC on any grower's complaint that it can not resolve under that process and implement a trade practices law compliance program to help it avoid future code breaches.

Grove and Edgar

Conduct: breached the Horticulture Code by failing to comply with the code's pricing requirements in its dealings with two Northern Territory mango growers.
Outcome: court order
Date: December 2008

In June 2008 the ACCC filed proceedings in the Federal Court in Darwin alleging Grove & Edgar had failed to agree in writing the price to be paid for the produce of some Northern Territory mango growers either before or immediately upon delivery of their mangoes during the 2007 season.

Following settlement discussions between the parties, Justice Reeves made the following orders by consent:

  • a declaration that Grove & Edgar had breached the Trade Practices Act 1974 by failing to comply with the Horticulture Code of Conduct requirement that it agree in writing the price to be paid for produce either before or immediately upon delivery with two NT mango growers
  • Grove & Edgar write to all growers it traded with under the Horticulture Code at the time and any it commenced to trade with in the following two years advising those growers that it would comply with the code, in particular its pricing requirements.

Atkinson Produce Pty Ltd (trading as Murray Brothers)

Conduct: breached the Horticulture Code by trading without code-compliant horticulture produce agreements and terms of trade.
Outcome: court enforceable undertakings
Date: December 2008
 
On or after 14 May 2007, Atkinson, a Queensland horticulture produce trader, traded with growers under horticulture produce agreements and terms of trade that did not fully comply with the code. Atkinson acknowledged that on some occasions it failed to agree on prices in writing with growers, and may have inadvertently misled some growers about the compliance of documents.

Atkinson gave the ACCC court enforceable undertakings that, among other things, it would redraft its horticulture produce agreements and terms of trade so that they complied with the code, and notify affected growers. Atkinson was also required to arrange, at its expense, a trade practices law seminar on the code for its management, employees and growers.
 

Karragullen Cool Storage Pty Ltd

Conduct: breached the Horticulture Code by trading in horticultural produce without code-compliant horticultural produce agreements and by failing to prepare, publish or make publicly available code compliant terms of trade
Outcome: court enforceable undertakings
Date: May 2008

On or after 14 May 2007, Karragullen, a Western Australian merchant, traded with growers without having code-compliant horticultural produce agreements in place and did not prepare, publish or make publicly available its terms of trade.

Karragullen has acknowledged that it contravened the code and the Act and has cooperated with the ACCC in resolving the matter.

The ACCC has accepted court enforceable undertakings under s. 87B of the Act from Karragullen that:

  • it will not trade in horticulture produce that is subject to the Horticulture Code without having code-compliant agreements in place
  • it will prepare, publish and make publicly available code compliant terms of trade
  • at its expense, it will arrange a trade practices law seminar on the code for its management, employees and growers. The seminar will be conducted by a suitable qualified compliance professional or legal practitioner with expertise in trade practices law
  • it will notify the growers it trades with about the contraventions of the code and provide details of the trade practices seminar
  • it will provide copies of its code compliant agreement and terms of trade to the ACCC within specified timeframes.

Karragullen will publish a notice about the matter in the Farm Weekly and WA Fruit Grower magazines.

Scamonte Ventures Pty Ltd (trading as Scalzi Produce WA)

Conduct: breached the Horticulture Code by trading in horticultural produce without code-compliant horticultural produce agreements and by failing to prepare, publish or make publicly available code compliant terms of trade
Outcome: court enforceable undertakings
Date: May 2008

On or after 14 May 2007, Scalzi, a Western Australian merchant, traded with growers without having code-compliant horticultural produce agreements in place, and did not prepare, publish or make publicly available its terms of trade.

Scalzi has acknowledged that it contravened the code and the Act and has cooperated with the ACCC in resolving the matter.

The ACCC has accepted court-enforceable undertakings under s. 87B of the Act from Scalzi that:

  • it will not trade in horticulture produce that is subject to the Horticulture Code without having code-compliant agreements in place
  • it will prepare, publish and make publicly available code compliant terms of trade
  • at its expense, it will arrange a trade practices law seminar on the code for its management, employees and growers. The seminar will be conducted by a suitable qualified compliance professional or legal practitioner with expertise in trade practices law
  • it will notify the growers it trades with about the contraventions of the code and provide details of the trade practices seminar
  • it will provide copies of its code compliant agreement and terms of trade to the ACCC within specified timeframes.

Scalzi will publish a notice in the Countryman newspaper.

Brimcove Pty Ltd (trading as Etherington)

Conduct: breached the Horticulture Code by trading in horticultural produce without code-compliant horticultural produce agreements and by failing to prepare, publish or make publicly available code compliant terms of trade
Outcome: court enforceable undertakings
Date: May 2008

On or after 14 May 2007, Etherington, a Western Australian merchant, traded with growers without having code-compliant horticultural produce agreements in place, and did not prepare, publish or make publicly available its terms of trade.

Etherington has acknowledged that it contravened the code and the Act and has cooperated with the ACCC in resolving the matter.

The ACCC has accepted court enforceable undertakings under s. 87B of the Act from Etherington that:

  • it will not trade in horticulture produce that is subject to the Horticulture Code without having code-compliant agreements in place
  • it will prepare, publish and make publicly available code compliant terms of trade
  • at its expense, it will arrange a trade practices law seminar on the code for its management, employees and growers. The seminar will be conducted by a suitable qualified compliance professional or legal practitioner with expertise in trade practices law
  • it will notify the growers it trades with about the contraventions of the code and provide details of the trade practices seminar
  • it will provide copies of its code compliant agreement and terms of trade to the ACCC within specified timeframes.

A. Giumelli & Sons (1989) Pty Ltd

Conduct: breached the Horticulture Code by not preparing, publishing or making publicly available its terms of trade and by trading without horticulture produce agreements
Outcome: court enforceable undertakings
Date: April 2008

On or after 14 May 2007 A. Giumelli & Sons traded with growers as a merchant but did not have code-compliant horticultural produce agreements in place, and did not prepare, publish or make publicly available its general terms of trade. It also traded as a grower in its own right without having code-compliant agreements with the merchants involved.

A Guimelli & Sons has acknowledged that it contravened the code and the Act and has cooperated with the ACCC in resolving the matter.

The ACCC has accepted court enforceable undertakings under s. 87B of the Act, where A. Giumelli & Sons will:

  • not trade in horticulture produce subject to the Horticulture Code without having code-compliant agreements in place
  • will prepare, publish and make publicly available its terms of trade
  • at its expense, arrange a trade practices seminar on the code for its management, employees and growers; the seminar will be conducted by a suitable qualified compliance professional or legal practitioner with expertise in trade practices law
  • notify its growers about the contraventions of the Horiticulture Code and provide details of the seminar
  • provide copies of its code-compliant agreement, terms of trade and a report on the seminar to the ACCC within specified timeframes
  • at its expense, publish a notice in the Countryman newspaper about the matter.

Erceg Holdings Pty Ltd

Conduct: breached the Horticulture Code by trading without code-compliant horticulture produce agreements
Outcome: court enforceable undertakings
Date: March 2008

On or after 14 May 2007 Erceg, a Western Australian merchant, traded with growers without having code-compliant horticulture produce agreements in place with the growers. Erceg acknowledged that this trading contravened the Horticulture Code and the Act. Erceg also acknowledged that a farm produce supply agreement it offered to growers in October 2007 was not a code-compliant contract.

Erceg cooperated with the ACCC and immediately took action to advise growers about its conduct and introduce code-compliant terms of trade and horticulture produce agreements.

Erceg has given the ACCC court enforceable undertakings that it:

  • will not trade in horticulture produce with growers who have not entered into a code-compliant horticulture produce agreement with Erceg
  • will offer growers code-compliant horticulture produce agreements
  • will make publicly available its terms of trade
  • will have company officers or employees authorised to sign horticulture produce agreements on its behalf attend trade practices compliance training
  • will confirm it has written to all growers to whom it has sent copies of its farm produce supply agreement, informing them that:
    • (i) the Farm Produce Supply Agreement did not meet the mandatory requirements of the Horticulture Code.
    • (ii) trading in horticulture produce without a compliant horticulture produce agreement in place is contrary to regulation 6 of the Horticulture Code and a breach of the Act.

Non-compliant template horticulture produce agreements widely distributed by trader associations

Outcome: template agreements were amended to bring the templates into compliance with the Horticulture Code
Date: September 2007

We have received and investigated a number of complaints regarding the template horticulture produce agreements developed and widely distributed by some trader associations.

As a result of our investigations, it is our view that these templates included clauses that might have breached the Horticulture Code.

Some clauses in these template agreements enabled the merchant to unilaterally reject produce because of a change in market conditions after the merchant had purchased the produce. It is our view that such a clause is likely to be unlawful under the code as market risk for the produce passes to the merchant when the merchant purchases the produce.

Other clauses required a grower to agree to a price under a merchant agreement that was well short of a commercially realistic price for the produce and promised the grower a possible bonus dependent on the final price obtained by the merchant. It is our view that such a clause is likely to constitute a method of calculating a price and therefore risked breaching the code.

In response to these concerns, trader associations, including Fresh State, Brismark, the New South Wales Chamber of Fruit and Vegetable Industries Inc. and the Chamber of Fruits and Vegetable Industries in Western Australia (Inc.), have worked with us to bring their template horticulture produce agreements into compliance with the Horticulture Code.

Traders' non-compliant horticulture produce agreements

Outcome: horticulture produce agreements were amended to bring the templates into compliance with the Horticulture Code and traders implemented compliance strategies to inform their staff and growers about the code.
Date: September 2007

We have received and investigated complaints that some traders’ horticulture produce agreements were not compliant with the code. Some of these agreements contained clauses that we believe might have breached the Horticulture Code.

We have worked with several traders of horticulture produce to bring their horticulture produce agreements into compliance with the Horticulture Code.

These traders include Holman Fresh Pty Limited, LaManna Bananas Pty Ltd, LaManna Bananas (Adelaide) Pty Ltd, Verona Fruit Pty Ltd, the Australian Banana Company and Costa Exchange Ltd.

Following discussions with us, the traders agreed to revise their agreements and to implement a Horticulture Code compliance strategy to inform their staff and growers about the Horticulture Code.

We have also liaised with Fresh Choice WA Pty Ltd to ensure that its horticulture produce agreements comply with the Horticulture Code.