The ACCC has reinforced its commitment to ensuring compliance with the Horticultural Code of Conduct by taking enforcement activity against a major banana wholesaler, LaManna Bananas Pty Ltd and its associated entities.
The Code was introduced in May 2007 to protect the interests of growers of horticultural produce in the marketplace. The ACCC is vigilantly supporting the operation of the Code, stating that it “will not hesitate to act on suspected breaches”.
Following on from enforcement activity in the Murray Brothers and Grove & Edgar cases which we reported on in the March 2009 edition of the e-Bulletin, the ACCC has now investigated the LaManna Group for suspected breaches of the Code, following a complaint by a single grower.
ACCC investigations revealed that the LaManna Group entities had from time to time engaged in conduct contrary to section 18 of the Code, by selling some of the horticulture produce consigned to them between associated group entities, without obtaining express consent from growers in every case. Such conduct raises concerns that the sale of produce was not always on an arms-length basis and potentially impacted on the growers’ ability to receive the best possible returns for their produce.
LaManna Bananas Pty Ltd, on behalf of the LaManna Group has been required to make the following court enforceable undertakings as a result of its breaches of the Code:
- to refrain from selling horticulture produce consigned to them by a grower for whom they act as agents between themselves, without the grower’s express consent
- to advise potentially affected growers of the ACCC’s concerns
- to establish a process to deal with growers who raise concerns about the previous sale of their produce and, in particular, to have any concerning transactions reviewed
- to implement an appropriate trade practices law compliance program to assist in avoiding any future contravention of the Code.
Meanwhile, proposals to amend the Code are still being considered. In the March edition of the e-Bulletin we reported that the Horticultural Code Committee was in the process of considering 13 recommendations made by the ACCC to improve the Code. Such recommendations included:
- extending the Code to regulate “first point of sale” transactions of horticulture produce between a grower and retailer, exporter or processor and between growers and traders who are operating under a written agreement entered into before the introduction of the Code
- amending the Code to require that if a merchant does not reject produce within 24 hours of physical delivery, the produce is deemed to be accepted (as opposed to allowing the merchant to determine a time period for providing a notice of rejection)
- amending the Code to require that before delivery, merchants provide a grower with either a price or a formula for calculating the price of the produce by reference to the amount received by the merchant from a third-party purchaser. Currently the Code prohibits a method for the calculation of the price of produce being included in an agreement and requires that the price (if not already determined) simply be agreed before or immediately upon delivery of the produce).
The LaManna Group enforcement proceedings coincide with the Committee’s third meeting in early May 2009, after extensive consultation with representatives of the horticulture industry at its second meeting in March 2009. The purpose of the Committee’s third meeting was to resolve its views on the possible implications for the industry of the ACCC’s recommendations.
The Committee is now finalising its report to the Minister for Agriculture, Fisheries and Forestry, which will not only detail the Committee’s recommendations, but also the divergent views encountered throughout the consultation period across industry sectors.