Watchdog tackles dairy executives
THE consumer watchdog is taking Australia’s biggest dairy processor, Murray Goulburn, to court alleging it misled farmers about prices it would pay for their milk before announcing a shock price cut that pushed many into financial distress.
The Australian Competition and Consumer Commission ( ACCC) has begun Federal Court proceedings against Murray Goulburn, the co- operative’s former managing director Gary Helou and its former chief financial officer Bradley Hingle.
The ACCC accuses Mr Helou and Mr Hingle of being “knowingly concerned” involved in the alleged misleading conduct up to April last year, with commission chairman Rod Sims saying the former executives were “heavily involved”.
Mr Sims said the ACCC had formally interviewed the two men but details were confidential.
The ACCC alleges the co- operative maintained its forecast of what farmers would receive for their milk in the 2015- 16 season – information farmers relied upon – despite knowing the prices were “overstated and unachievable”.
The watchdog is not seeking fines against Murray Goulburn because they could be borne by the co- operative’s farmer- members, but does want declarations, compliance orders, corrective notices and costs.
“We don’t want the farmers fretting that if we’re successful they’ll end up paying it ( the penalties) as a co- operative,” Mr Sims said yesterday.
He said the ACCC wanted to send a message to the company and all agricultural industries that they should not engage in the sort of behaviour the watchdog alleges happened.
“They should have more regard for the consequences for farmers. We want that signal sent loudly and clearly,” Mr Sims said.
However, the ACCC is seeking penalties against Mr Helou and Mr Hingle, who could face penalties of up to $ 220,000 for each breach of consumer law. Mr Helou told a Senate hearing in February he did not mislead farmers over the farmgate price, saying the company acted on the best information available at the time.
Murray Goulburn yesterday said it was considering the proceedings, noting that the ACCC was not seeking a pecuniary penalty against the co- operative.
The ACCC claims Murray Goulburn misled farmers between June 2015 and February 2016, when it told them there was a reasonable basis for milk prices to start at $ 5.60 per kilogram of milk solids ( kgms) and reach a final price of $ 6.05.
It further alleges that the co- operative misled farmers between February 2016 and April 2016 when it said it could maintain the opening price of $ 5.60 and that a final price of $ 5.60 was most likely.
In April last year, Murray Goulburn slashed its price to milk suppliers to between $ 4.75 and $ 5.00, saying $ 5.60 was no longer achievable, after a glut in the global dairy market caused a slump in prices. Mr Helou quit as MD that month after the price cut and a profit downgrade.