Don’t “soil” your business: ACCC issues infringement notices in agribusiness sector
ACCC is raisin awareness in the agribusiness sector
As part of the ACCC’s Compliance and Enforcement Priorities for 2021, Rod Sims announced that the agriculture sector – including the Horticulture Code of Conduct (Horticulture Code) – would be a key strategic priority for the ACCC this year (see our earlier blog post here). “Raisin” awareness of this objective, the ACCC has actively investigated businesses in the agribusiness sector for allegedly making misleading representations, imposing unfair contract terms and breaching the Horticulture Code, all of which are prohibited by the Competition and Consumer Act 2010 (Cth).
We raise two “grape” examples in this blog, which arise from the conduct of Victorian table grape traders, Grape Co Australia Pty Ltd (GCA) and Grape Co Farms Pty Ltd (GCF).
Firstly, last month the ACCC issued an infringement notice to GCA for making misleading representations about the origins of the grapes they supply, contrary to Australian Consumer Law. In this case, GCA made a statement on its website that “every single one of our grapes is personally hand-selected from the finest fruit on our family’s estate in Sunraysia Australia”. The ACCC considered that this statement represented that all GCA branded grapes were grown on the company’s family estate. However, allegedly some of their grapes were grown on the properties of third parties. As a result, GCA paid a penalty of $13,320 and has since amended its website to more accurately reflect the origin of grapes marketed to consumers.
Secondly, contrary to the requirements of the Horticulture Code, GCF:
- failed to prepare and publish their terms of trade, so that they were publicly available; and
- traded without a written a horticulture produce agreement in place.
Under the Horticulture Code, a horticulture produce agreement must specify certain matters, all of which are set out in clauses 16 to 18 of the Horticulture Code. Examples of key matters that these agreements must specify include:
- the process to be adopted by the parties for varying and terminating the agreement;
- the requirements relating to quantity or quality of the produce covered by the agreement; and
- the payment period for delivery of the produce.
Businesses, particularly those in the agribusiness sector, should be aware that the maximum civil penalty that can be imposed for failing to comply with the requirements of the Horticulture Code discussed in this post is 300 penalty units per contravention ($66,600 as at July 2021).
For the alleged Horticulture Code contraventions, GCF was issued with two infringement notices, totalling $21,600. Not only did GCF ultimately pay these infringement notices, it also agreed to amend a number of terms in its standard form contracts which were considered by the ACCC to likely be unfair contract terms. These included terms which gave GCF the ability to unilaterally change or terminate the contract with short notice and to withhold part of the payments made to them by the growers.
It’s important to note that the payment of a penalty specified in an infringement notice is not an admission of a contravention.
In light of these enforcement activities, businesses in the Horticulture and Dairy industries should:
- consider the process to be adopted by the parties for varying the agreement;
- be vigilant in ensuring any claims they make about the origin, quality or characteristics of their products can be substantiated;
- regularly review their websites and other marketing materials for false and misleading statements;
- be aware of the requirements of the Horticulture Code and ensure the nature and terms of their contracts are not unfair contract terms, and otherwise meet the requirements of the Horticulture Code.
For more details about the penalties incurred by GCF, check out the ACCC’s media release here.
For more details about what this means for your business, check out our client alert here.
So, there you have it…. hot off the wine press!