ACCC alleges contraventions of the Horticulture Code of Conduct

The Australian Competition and Consumer Commission has begun proceedings in the Federal Court, Darwin against Grove & Edgar Pty Ltd, a horticulture produce trader based at the Sydney Produce Markets, for alleged breaches of the mandatory Horticulture Code of Conduct*.

The ACCC alleges that during October and November 2007, Grove & Edgar failed to agree in writing with three Northern Territory mango growers the price to be paid for each of the growers produce either before or immediately upon delivery of the mangoes.

The ACCC also alleges, in respect of its trade with one Northern Territory mango grower, Grove & Edgar agreed a price range to be paid for mangoes, instead of an amount.

The ACCC seeks:

• declarations the alleged conduct contravened the Trade Practices Act 1974
• an injunction requiring Grove & Edgar, when agreeing to purchase horticulture produce as a merchant under a Horticulture Produce Agreement pursuant to the code, to agree with each grower:
• -  the price to be paid by Grove & Edgar for the purchase of the grower's produce, not a price range or a method for calculating an amount; and
• - in writing either before, or immediately upon, delivery of the grower's produce to Grove & Edgar the amount to be paid for the produce.
• an order requiring Grove & Edgar send a letter to each of its growers advising the outcomes of the ACCC's court proceedings and notifying growers entering into Horticulture Produce Agreements with Grove & Edgar of its commitment to agree in writing an amount to be paid for produce consistent with the requirements of the code, and
• costs.

A directions hearing will be held in the Federal Court, Darwin, before Justice Reeves at 9:30 a.m. on 15 July 2008.

Background

*On 14 May 2007 the Horticulture Code of Conduct came into effect as a prescribed industry code of conduct under the Trade Practices Act 1974.

The purpose of the code is to regulate trading in the horticulture produce industry. The code encourages greater clarity and commercial transparency in trade transactions between growers and wholesale traders by clarifying the responsibilities and obligations of each.

The code requires, amongst other things, that a trader and grower enter a horticulture produce agreement (HPA) which must be in writing and signed before they trade in horticulture produce with each other. The HPA can contain terms unique to the parties' situation, however, the code does set out minimum requirements about what must be included in a HPA including the requirement that wholesalers act as either a merchant or an agent. The code places very specific obligations on traders depending on whether they act as a merchant or a trader.

Relevant to this matter merchants are required to agree, in writing, a price with a grower, either before or immediately upon delivery. Further the price must be an amount and not a method for calculating the price.