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THE ACCC has begun proceedings against milk processor Murray Goulburn alleging it contravened Australian Consumer Law after suddenly reducing prices last year.
The ACCC alleges Murray Goulburn engaged in unconscionable conduct and made false or misleading representations and has filed proceedings in the Federal Court.
It has also been alleged that former managing director Gary Helou and former chief financial officer Bradley Hingle were knowingly concerned in Murray Goulburn's conduct.
ACCC Chairman Rod Sims says the proceedings related to representations made between June 2015 and April 2016 about the average farmgate milk price (FMP) it expected to pay them during the 2016 financial year.
"The ACCC alleges that Murray Goulburn's conduct had an adverse impact on many farmers who, as a result of Murray Goulburn's representations regarding the farmgate milk price, had made business decisions," says Sims.
"The farmers relied on Murray Goulburn's representations and were not expecting a substantial reduction in the farmgate milk price, particularly so close to the end of the season when it was not possible for them to practically readjust their expenditure."
The ACCC alleges that Murray Goulburn, Australia's largest milk processor misled farmers by representing that it had a reasonable basis for setting and maintaining an operating FMP of $5.60 per kilogram of milk solids and a forecast Final FMP of $6.05 per kilogram.
It also alleges the company considered the forecast final FMP of $6.05 per kilogram was the most likely outcome for FY16, when that was not in fact the case.
The ACCC says Murray Goulburn's conduct was unconscionable because the company knew that farmers relied on information about the opening FMP and the forecast FMP to make significant business decisions during the financial year.
Sims says the milk processor took advantage of the vulnerable position of milk farmers.
"Many farmers are in a relatively vulnerable trading position, and rely on transparent pricing information in order to budget effectively and make informed business decisions," says Sims.
"In these circumstances, farmers were entitled to expect Murray Goulburn to have a reasonable basis for determining its pricing, and to regularly update farmers if there was any change in forecast prices."
Business News Australia
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