WCB dumps milk supply contract terms ACCC says are ‘unfair’
CANADIAN dairy giant Saputo has been forced to dump clauses deemed unfair by the nation’s competition watchdog from its Warrnambool Cheese and Butter milk supply agreements, which penalise farmers for supplying its rivals.
In a letter to sent to suppliers late last week, WCB milk supply manager Anthony Cook said it had dumped the clauses after the Australian Competition and Consumer Commission raised concerns they were unfair under Australian competition laws.
“While we don’t think the operation of the MSA has been unfair, we nonetheless want to assure you that we would not intentionally vary the Handbook in a way that would be detrimental to you and other milk suppliers,” Mr Cook stated in his letter.
As a result WCB has told suppliers it was “waiving its rights” under clause 4 in its MSAs to penalise farmers for ceasing to supply and dumping a clause that demands exclusive supply.
ACCC deputy chair Mick Keogh said: “Unfair contract terms in milk supply agreements had the potential to harm dairy farmers and their businesses.”
“WCB has worked with the ACCC to find a solution that balances the farmers’ rights under the milk supply agreements and addresses the ACCC’s concerns about potentially unfair contract terms.”
The ACCC had warned WCB that its contracts with farmers contained terms that allowed it to unilaterally vary the milk price and other milk supply terms, with the farmer unable to terminate the milk supply agreement early without incurring a financial penalty.
It found WCB’s contracts also placed restrictions on farmers selling their farm and required farmers to indemnify WCB for loss which could be avoided or mitigated by WCB.
The watchdog’s action follows dairy processors refusal to support the ACCC’s call to adopt mandatory code of conduct, which it argued would improve contracting practices between dairy processors and farmers.
But to date the Australian Dairy Industry Council’s farmer and processor members have refused to support a mandatory code.
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