Mitolo Group Pty Ltd

Mitolo Group Pty Ltd (Mitolo) and Maranello Trading Pty Ltd (Maranello) have undertaken that they will not, for a period of 3 years from the commencement of the undertaking, enter into, or offer to enter into, any standard form contract where the contract does not expressly specify a price for the supply under the contract which exceeds $300,000, or where the contract has a duration of more that 12 months, $1 million, with a grower of commercial ware potatoes for the supply of commercial ware potatoes on terms which are less favourable overall than those set out in the template agreement at Annexure “A” to the undertaking. Amongst other matters, the agreement set out in Annexure A provides growers with the opportunity to sell potatoes to other parties if growers are not satisfied with the price they have received from Mitolo.

The undertaking follows the resolution of proceedings commenced by the ACCC against Mitolo and Maranello on 25 June 2018 in the Federal Court of Australia in matter number VID 758 of 2018.

On 2 August 2019, the Federal Court declared that certain terms of contracts between Mitolo or Maranello and potato growers entered into between December 2016 and February 2018 were unfair contract terms and therefore void.  The contract terms which were declared to be unfair included terms that allowed Mitolo to unilaterally determine or vary the price Mitolo paid farmers for potatoes, unilaterally vary other contractual terms, declare potatoes as “wastage” without a mechanism for proper review, and prevent farmers from selling potatoes to alternative purchasers. The Court also declared that terms in Mitolo’s contracts preventing farmers from selling their own property unless the prospective purchaser entered into an exclusive potato farming agreement with Mitolo were unfair contract terms.

In addition, the Federal Court ordered that Mitolo pay a pecuniary penalty of $240,000 for contraventions of the Horticulture Code of Conduct in relation to 19 contracts entered into with potato growers, arising from Mitolo trading pursuant to contracts which did not specify the time in which the price was to be agreed with growers in writing. Mitolo was also ordered to pay the ACCC’s costs in the amount of $50,000.

In resolving the matter, Mitolo made admissions to the Court and made joint submissions with the ACCC in relation to the appropriate penalty to be imposed.