The Dairy Code of Conduct contains penalty provisions. Not complying with a penalty provision could result in the ACCC taking court action seeking a financial penalty for the breach, or issuing an infringement notice.
Not complying with a penalty provision in the Code may result in:
- for processors that do not meet the definition of a small business entity — up to 300 penalty units ($66,600. This will increase to $82,500 from 1 January 2023) per breach
- for processors that do meet the definition of a small business entity – up to 100 penalty units ($22,200. This will increase to $27,500 from 1 January 2023) per breach
- for farmers — up to 100 penalty units ($22,200. This will increase to $27,500 from 1 January 2023) per breach.
Farmers and processors have different requirements with respect to complying with penalty provisions.
All processors must deal with farmers in good faith. Failing to act in good faith will breach a pecuniary penalty provision.
Processors that are not small business entities
A processor that is not a small business entity may breach a penalty provision if they:
- intend to purchase milk in the coming financial year and do not publish on their website before 2 pm on 1 June (Australian Capital Territory time) each year:
- one or more standard form milk supply agreement(s)
- for each standard form milk supply agreement, a statement of circumstances in which the processor would enter into a milk supply agreement in that form
- in each standard form milk supply agreement, a statement of justification for each minimum price specified in the standard form
- refuse to enter into a milk supply agreement in the form published on their website when the specified circumstances related to that milk supply agreement exist and a farmer offers to enter into an milk supply agreement in that form
- fail to publish a report on disputes by 2 pm on 1 June (Australian Capital Territory time).
In addition, a processor will breach the Code if they enter into a milk supply agreement that does not comply with the Code.
Farmers may also be subject to pecuniary penalty provisions in the Code. Farmers may breach the pecuniary penalty provisions if they:
- do not deal with processors in good faith
- unilaterally vary a milk supply agreement and, as a result of the variation the milk supply agreement, it does not comply with the Code
- unilaterally vary or terminate a milk supply agreement other than as specifically provided for by the agreement
- do not retain certain records relating to milk supply agreements
- unilaterally vary a milk supply agreement in writing and the written variation is not a single document and written in plain English.