Australia fines Coles over milk supply deals; flags Brownes’ pricing practices

May 22 (Reuters) – Australia’s competition watchdog said on Friday that Coles and dairy firm Brownes Foods Operations each paid A$39,600 ($28,270.44) after receiving infringement notices for restrictive milk supply terms and unclear pricing, respectively.

Here are some details:

• The Australian Competition & Consumer Commission (ACCC) alleges that Coles published two milk supply agreements that required exclusive supply to the nation’s No.2 grocer while imposing volume caps on production.

• The regulator did not disclose the counterparties to whom the agreements were issued.

• ACCC claims Brownes failed to clearly spell out minimum prices throughout the supply period or justify the reasons for those minimum prices, in two of its agreements.

• Volume caps embedded in exclusive milk contracts are especially troubling, the regulator said, as they suppress farmers’ output while shutting them out of alternative processors.

• The action comes after a court last week found that Coles misled consumers by raising prices on hundreds of items, then touting discounts that still exceeded earlier sale prices.

($1 = 1.4008 Australian dollars)

(Reporting by Kumar Tanishk in Bengaluru; Editing by Harikrishnan Nair)