Mandatory dairy code of conduct: Lactalis fined by Federal Court

French dairy giant Lactalis has been hit with a six-figure fine for contravening the mandatory dairy code of conduct.

Lactalis has been ordered by the Federal Court to pay a fine of nearly $1 million for contravening the dairy code of conduct.

The French dairy giant was today slapped with $950,000 in penalties for failing to meet some of its obligations in relation to the 2020-21 milk season.

In September 2022, the Federal Court ruled that Lactalis had breached the dairy code by publishing and entering into agreements that allowed the processor to unilaterally terminate an agreement in circumstances that didn’t involve a material breach by farmers.

The Australian Competition and Consumer Commission brought about the proceedings against Lactalis, the first contested in court since the introduction of the code three years ago.

Lactalis produces a number of household brands including Pauls and Ice Break. Picture: Timothy A. Clary

ACCC deputy chairman Mick Keogh said: “We took action because we considered Lactalis’ conduct would reduce transparency in the industry.

“(The conduct by Lactalis) served to perpetuate systemic bargaining power imbalances between processors and farmers.”

The Federal Court also found Lactalis had breached the code by failing to publish its milk supply agreements on its website, and instead required farmers to sign up to receive their supply agreements by email.

“The code was introduced to help dairy farmers make informed choices about where they sell their milk by ensuring there is transparency in pricing agreements,” Mr Keogh said.

“These were the first contested proceedings under the dairy code and the outcome is an ongoing reminder that processors who fail to comply with the code may face significant penalties.”

More than 400 farmers nationwide supply Lactalis, which processes brands including Pauls, Oak, Vaalia and Ice Break.