Former Murray Goulburn (MG) managing director Gary Helou has been ordered by the Federal Court to pay $200,000 in penalties for his involvement in MG’s false or misleading claims about the farmgate milk price it expected to pay dairy farmers during the 2015-16 milk season.
MG’s decision to slash its milk price to $4.70 a kilogram milk solids (kgms) in April 2016, after earlier forecasting an opening milk price of $5.60 kgms, caused widespread hardship among many dairy farmers in the south-west and elsewhere in Australia.
MG admitted to making false or misleading representations in breach of the Australian Consumer Law when it told farmers in Victoria, South Australia and southern NSW from February 29 2016 until April 27, 2016, that it could maintain the opening milk price of $5.60/kgms.
Mr Helou has admitted he was involved in the misleading representations made by MG.
This included not telling farmers of the risks MG knew about maintaining that opening milk price and making unfounded assumptions that MG could achieve its milk powder sachet sales targets.
Australian Competition and Consumer Commission (ACCC) deputy chair Mick Keogh said MG’s misrepresentations meant MG’s dairy farmers were not informed of the likelihood the final milk price would fall below the opening price.
“This was important information for farmers as it would have influenced the business decisions each farmer made,” Mr Keogh said.
“Farmers were denied the opportunity to plan for the impact of the reduced milk price on their businesses between February and April 2016, including implementing measures to reduce their exposure to a decrease in the milk price or shopping their milk around to other dairy processors,” he said.
“The penalty imposed against Mr Helou reflects his seniority at Murray Goulburn and involvement in misleading representations about the farmgate milk price,” Mr Keogh said.
The ACCC did not seek a penalty against MG because MG was a co-operative and any penalty imposed against it could end up being paid by the farmers that were misled.
“We were conscious not to seek penalty orders that would adversely affect farmers for the wrongs committed by MG, so we focused on obtaining appropriate orders against the individuals involved in the conduct,” Mr Keogh said.
As part of the finalisation of the proceedings, Mr Helou has given an undertaking to the Federal Court that he will not be involved in the dairy industry for three years.
In August 2018, the ACCC ended its proceedings against MG’s former chief financial officer, Bradley Hingle, after he agreed to an order that he pay a contribution to the ACCC’s costs and gave an undertaking to the court that he wouldn’t be involved in the dairy industry for three years.
The Federal Court also ordered that MG and Mr Helou pay a portion of the ACCC’s legal costs.