ACCC acts against Mitolo over unfair contract allegations

AUSTRALIA’s competition watchdog is taking legal action against the nation’s largest fresh potato wholesaler for allegedly using unfair terms in its contracts with growers.

Legal action: The Australian Competition and Consumer Commission alleges Mitolo’s contracts with growers breach the mandatory Horticulture Code.

AUSTRALIA’s competition watchdog is taking legal action against the nation’s largest fresh potato wholesaler for allegedly using unfair terms in its contracts with growers.

The Australian Competition and Consumer Commission alleges Mitolo’s contracts contain a raft of unfair contract terms, including one that prevents grower suppliers from selling their properties unless the prospective purchaser enters into an exclusive supply agreement with the company.

The Australian Competition and Consumer Commission alleges Mitolo’s contracts with growers breach the mandatory Horticulture Code by allowing the company to:

UNILATERALLY determine or vary the price Mitolo pays 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.

Mitolo is yet to respond to The Weekly Times request for comment.

ACCC deputy chair Mick Keogh said the Mitolo case was the first taken under the newly introduced Horticulture Code and the first to apply new laws on unfair contract terms to an agricultural industry.

“The issues in this case go to the heart of concerns about unfairness in the agriculture sector that led to the establishment of the ACCC’s dedicated Agriculture Unit, which is investigating agricultural supply chains and engaging with the sector,” Mr Keogh said.

“These are some of the most egregious terms we have seen in agricultural contracts, and are key examples of the contracting practices in the sector that we want to address.

“We believe that these terms have caused, or could cause, significant detriment to farmers, by passing a heavy burden of risk down to farmers, the most vulnerable player in the supply chain.”

The ACCC alleges Mitolo enters into exclusive supply contracts with growers before or at the time of planting, but does not determine the price it will pay until the potatoes are ready for harvest.

The ACCC is seeking declarations that the relevant clauses in Mitolo’s contracts are unfair contract terms and void, declarations that Mitolo breached the Horticulture Code, penalties for breaches of the Horticulture Code, injunctions, compliance program orders and costs.

The ACCC reported that Mitolo’s contract terms came to the ACCC’s attention via complaints from industry associations and farmers.

The Horticulture Code prohibits growers and wholesalers from trading in horticulture produce without a written agreement that complies with the requirements of the Horticulture Code. Traders are exposed to penalties of up to $63,000 for each instance of trading without a Horticulture Code compliant agreement.

The South Australian Mitolo Group processes and packs about 500 tonnes of potatoes a day for distribution to supermarkets across the nation.