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ACCC drops action against Fonterra

NZN 28/04/2017 Rebecca Howard

The Australian Competition and Consumer Commission has filed Federal Court proceedings against Australia's largest milk processor, Murray Goulburn Cooperative, for breaching the Australian consumer law.

But it decided not to take any further action against Fonterra Australia.

An investigation was launched when Murray Goulburn abruptly slashed its forecast payout for its farmer shareholders in April last year, a move that was followed by Fonterra's Australian unit in early May.

One of the reasons it opted not to take any action against Fonterra was that it was "more transparent about the risks and potential for a reduction in the farmgate milk price from quite early in the season," said ACCC chairman Rod Sims in a statement.

The ACCC alleges Murray Goulburn "engaged in unconscionable conduct and made false or misleading representations" and that former managing director Gary Helou and former chief financial officer Bradley Hingle were "knowingly concerned" in Murray Goulburn's conduct.

According to the ACCC, from June 2015 to February 2016 Murray Goulburn misled farmers when it set an opening farmgate milk price of A$5.60 per kilogram of milk solids and forecast a final farmgate milk price of A$6.05/kgMS "when that was not in fact the case."

It also alleges that from February 2016 until April 2016, Murray Goulburn misled farmers by representing it had a reasonable basis for expecting to be able to maintain its opening FMP of A$5.60/kgMS for the remainder of the season, and that it considered a final FMP of A$5.60/kgMS was the most likely outcome for FY16, something that was also not the case.

In April, Murray Goulburn cut the milk price to A$4.75-to-A$5.00/kgMS and said the prior forecast was no longer achievable.

The ACCC alleges Murray Goulburn knew farmers relied on information about the opening and forecast final price to make business decisions and was aware that many farmers were unable to easily switch milk processors, particularly those contracted to Murray Goulburn.

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