Mitolo fined over unfair contracts

Australia’s largest potato wholesaler, Mitolo Group Pty Ltd, has been fined $240,000 by the Federal Court over unfair contracts with its potato growers.

In proceedings brought by the ACCC, the Federal Court found that Mitolo breached the Horticulture Code of Conduct in relation to 19 contracts entered into with potato growers between December 2016 and February 2018.

Under the unfair contracts terms, Mitolo could dictate or change the price it paid farmers for potatoes and vary other contractual terms. It could also declare potatoes as “wastage” without a proper review and prevent farmers from selling potatoes to alternative purchasers.

The Court deemed it unfair that Mitolo’s contracts prevented farmers from selling their own property unless the prospective purchaser entered into an exclusive potato farming agreement with Mitolo.

“This is the first Court imposed penalty for a contravention of the new Horticulture Code,” ACCC Deputy Chair Mick Keogh said.

“This is an important case for the ACCC as it goes to the heart of fairness issues the ACCC is seeking to address in agriculture. Since the ACCC’s Agriculture Unit was set up, a key concern raised by farmers relates to the degree of risk they carry and detriment they suffer as a result of imbalanced contracts.”

As part of the Court order Mitolo provided the ACCC a revised form of contract which provides potato growers with greater transparency and certainty over pricing, and allow them to sell potatoes to other parties if they are not satisfied with the price received from Mitolo.

“We take these matters very seriously, and the Court’s ruling confirms that both the Horticulture Code and the unfair contract terms law provide farmers with important protections against companies that seek to impose and enforce unfair terms,” Keogh said.

The potato wholesaler was ordered to pay the ACCC’s costs to the amount of $50,000.

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