Australian Competition and Consumer Commission v Lactalis Australia Pty Ltd (No 2)

Lactalis Australia Pty Ltd was found to have contravened certain provisions of the Competition and Consumer (Industry Codes—Dairy) Regulations 2019 (Cth) (the Dairy Code) by failing to publicise Milk Supply Agreements (MSAs) as required. The Australian Competition and Consumer Commission (ACCC) brought proceedings against Lactalis for the contraventions, and the Court concluded that Lactalis had contravened certain provisions of the Dairy Code. The Court then directed that submissions be filed in relation to the appropriate penalty, if any, to be imposed by the Court. The Court was required to determine the appropriate penalty to impose on Lactalis for the contraventions of the Dairy Code. The Court considered the nature and extent of the contraventions, the circumstances in which they occurred, and whether Lactalis had previously been found to have engaged in similar conduct. The Court also considered the principles relating to the imposition of civil penalties, including the need to ensure deterrence and compliance with the Dairy Code.
After considering the submissions and the relevant principles, the Court imposed the following penalties on Lactalis: $50,000 for the Non-Publication Contravention, $150,000 for the nine Termination Clause / Publication Contraventions, and $750,000 for the 384 Termination Clause / Contract Entry Contraventions. The total penalty imposed on Lactalis was $950,000, which was approximately 2.9% of Lactalis’ profit in the 2020 financial year. The Court found that this penalty was appropriate to ensure deterrence and compliance with the Dairy Code. The ACCC also sought a disclosure or adverse publicity order and a compliance order, but the latter was not pursued as Lactalis had already taken substantial steps to ensure its future compliance with the requirements of the Dairy Code. The Court found that an adverse publicity order should be made to increase transparency around Lactalis’ contraventions and to provide clarity to farmers about their rights under the Dairy Code.
The Court imposed the following orders on Lactalis: (a) Lactalis must pay a pecuniary penalty of $50,000 for the contravention of s 12 of the Dairy Code; (b) Lactalis must pay a pecuniary penalty of $150,000 for the nine contraventions of s 13 of the Dairy Code; and (c) Lactalis must pay a pecuniary penalty of $750,000 for the 384 contraventions of s 17 of the Dairy Code. There was no order as to costs. The total penalty imposed on Lactalis was $950,000, which was appropriate to ensure deterrence and compliance with the Dairy Code.