Fertiliser companies amend contracts after ACCC probe found some businesses were ‘disadvantaging farmers’

Australian fertiliser suppliers have agreed to amend their contracts to be fairer to farmers ahead of new laws that could result in fines of up to $50 million or 30 per cent of a company’s turnover. The Australian Competition and Consumer Commission recently wrapped up a probe into unfair contract terms launched after “receiving complaints” fertiliser suppliers were using contracts in a way that could “disadvantage farmers”. ACCC deputy chair Mick Keogh said the organisation had examined copies of standard form fertiliser agreements and identified unfair contract terms in those agreements from what is understood to be three different suppliers. This included giving the supplier the right to unilaterally vary the quantity to be delivered to the buyer or to terminate the agreement if the supplier believed it would not be able to supply the goods. Some terms restricted buyers’ rights to raise issues about defects with the goods. He said all of the suppliers engaged with had agreed to change their contract terms to address the ACCC’s concerns by the new unfair contract term laws set to come into effect on November 10. Under the laws, the ACCC will be able to take court action to seek pecuniary penalties for breaches of the unfair contract term law. The maximum penalty will be the greater or $50 million or three times the value of the benefit derived. If that value cannot be determined, then those fined would have to cough up 30 per cent of the company’s turnover during the period it engaged in the conduct. Mr Keogh said the probe was an ”important reminder” to agricultural businesses to ensure unfair contract terms were removed or risk significant penalties once the new laws came into affect. “We will continue to monitor traders in the fertiliser industry and, more broadly, across the agricultural sector, and we will investigate if we have concerns with contract terms,” Mr Keogh said. “If a small business thinks an unfair contract term is being included or enforced in their agreement, we recommend they obtain independent legal advice to understand the options available to them.” The new unfair contract terms provisions will also expand the definition of a ‘small business’ to include businesses with up to 100 employees or up to $10 million in annual turnover. A spokeswoman for WA’s biggest fertiliser supplier CSBP said it had not been approached by the ACCC and adopted “specific contract terms that are fair to customers”. “Fertilizer Australia has been collaborating and liaising with the ACCC over recent months to ensure standard industry supply contract templates reflect contemporary practice and are fair and reasonable,” she said. The introduction comes after a Dairy Code of Conduct was introduced to regulate conduct between dairy farmers and milk processors in that industry on January 1, 2020. Lactalis Australia was slapped with a $950,000 fine in July for contravening the Dairy Code of Conduct by failing to meet some of its obligations in relation to the 2020-21 milk season. The ACCC took the company to task claiming it had breached a number of provisions of the code, and, in doing so, weakened the bargaining power of the farmers that supplied its milk. Summit Fertilzer and CBH Fertiliser did not respond to requests for comment.