Coles (ASX:COL) and Brownes Foods Operations each paid AU$39,600 in penalties after Australia's competition watchdog issued two infringement notices for separate alleged breaches of the country's mandatory dairy industry code.
The Australian Competition and Consumer Commission (ACCC) alleged Coles Supermarkets Australia published two milk supply agreements requiring farmers to supply milk exclusively to Coles while imposing caps on the maximum volume of milk that could be produced, according to a Friday press release.
Separately, the ACCC said Brownes published two milk supply agreements that did not clearly specify minimum prices across the full supply period or explain the basis for those prices.
"Dairy farmers need clear accurate information about supply terms and prices when deciding who they will supply," ACCC Deputy Chair Mick Keogh said.
"Volume caps in exclusive milk supply agreements are particularly concerning. They can cause significant harm to farmers by limiting milk production while also restricting their ability to supply multiple processors," Keogh added.
The action comes a week after Australia's Federal Court found that Coles made false or misleading representations through its "Down Down" discount program in a separate case brought by the Australian Competition and Consumer Commission.
The regulator alleged Coles offered illusory discounts on 245 products by temporarily raising prices before promoting the items as discounted.
According to an earlier statement, Coles increased prices on selected products before offering them at promotional prices that were equal to or higher than their previous levels, making it harder for consumers to identify genuine discounts.
The ACCC said three other dairy processors were also contacted over minor alleged breaches of the code and had taken steps to improve compliance after receiving warnings.
Coles purchases about 490 million liters of fresh milk annually across southern Australia and Western Australia, while Brownes purchases about 150 million liters annually from about 50 dairy farmers in Western Australia, according to the ACCC.
