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.
Penalties for non-compliance
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 as of 1 July 2020) per breach
- for processors that do meet the definition of a small business entity – up to 100 penalty units ($22,200 as of 1 July 2020) per breach
- for farmers — up to 100 penalty units ($22,200 as of 1 July 2020) per breach.
Farmers and processors have different requirements with respect to complying with penalty provisions.
Penalty provisions - requirements for processors
Good faith
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- intend to purchase milk in the coming financial year and do not publish on their website before 2 pm on 1 June (Australian Capital Territory time) each year: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.
Penalty provisions - requirements for farmers
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.