Buyer beware as MG carries court action
AN outright buyer of Murray Goulburn is likely to inherit a “poison chalice”, with court action being taken against the dairy processor by the Australian Competition and Consumer Commission.
It is understood the responsibility for defending MG in the Federal Court for making misleading and deceptive representations and contravening Australian consumer law will transfer to a new buyer if it acquires the co-operative as a whole.
However, it is unclear what happens if MG is sold in parts.
The ACCC said it had no comment as its case against MG was before the courts.
MG has denied making misleading or deceptive representations in setting the 2015-16 farmgate milk price or breaking consumer law. The ACCC had made accusations against MG, its former managing director Gary Helou and former chief financial officer Brad Hingle in a statement of claim in July.
Mr Helou and Mr Hingle have filed their defences, denying false, misleading or deceptive representations or being involved in contraventions of Australian consumer law.
In its statement of claim, the ACCC said MG announced a season opening price as early as May 2015, based on a final farmgate milk price of $6.05 a kilogram of milk solids.
It alleged MG kept making milk payments based on a final farmgate price of $6.05/kgMS right through until April last year despite knowing the payment was unachievable just two months earlier.
Mr Hingle said milk prices were “ultimately a matter for determination by the (MG) board or a sub-committee delegated by the board”.
The ACCC alleged dairy farmers supplying MG relied on the “misleading” statements on the opening and final milk prices to make business decisions and were exposed to “risk of financial harm”.
A pre-trial case management conference will be held in the Federal Court on Friday. No trial date has been set. This week media reports suggested Fuyang Farming was the latest Chinese party weighing a bid for MG.
Another company reportedly interested is China Resources, which already owns a stake in the company.