Coles Supermarkets Australia and Brownes Foods Operations have each paid $39,600 in penalties after the ACCC issued each company with two infringement notices for separate alleged contraventions of the Dairy Code of Conduct.
The ACCC found Coles had breached the Dairy Code by publishing two separate milk supply agreements that required the supplier to provide milk exclusively to Coles, while also imposing a cap on the maximum volume of milk that could be produced.
Separately, the ACCC said Brownes breached the Dairy Code by publishing two milk supply agreements that did not clearly specify the minimum prices that applied throughout the entire supply period and did not justify the reason for the minimum prices.
ACCC deputy chair, Mick Keogh, said volume caps in exclusive milk supply agreements were of particular concern.
“Dairy farmers need clear accurate information about supply terms and prices when deciding who they will supply. Terms that limit a farmer’s ability to supply, or documents that don’t properly set out minimum prices and the reasons for them, undermine the transparency the Dairy Code is designed to deliver.
“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 said.
Coles purchases around 490 million litres of fresh milk annually across the southern dairy regions and Western Australia.
Brownes is a medium-sized milk processor located in Western Australia that purchases 150 million litres of milk per year from around 50 dairy farmers.
Neither Coles nor Brownes had made a public statement on the penalties at the time of publication.
Brownes was put up for sale in April 2025 after its Chinese parent company, Australian Zhiran Co, defaulted on a $200 million loan from Mengniu Dairy Co.
Brownes has also previously faced Dairy Code scrutiny: in 2021 it paid $22,200 in penalties after the ACCC found two milk supply agreements published in 2020 did not comply with the code.
As part of its compliance and enforcement program, the ACCC also engaged with three other unnamed dairy processors about minor alleged breaches of the Dairy Code. Those businesses have taken measures to improve their compliance after receiving warnings.
“Our Dairy Code enforcement approach is to be proportionate and fair, which means taking stronger enforcement action for more serious breaches or repeated non-compliance,” Keogh said.
The ACCC noted that the payment of a penalty specified in an infringement notice is not an admission of a contravention of the Code.
The Dairy Code of Conduct is a mandatory industry code applying to supply relationships between dairy farmers and processors with an aggregated annual turnover of more than $10 million. It requires dairy processors intending to purchase milk in the next financial year to publish standard form milk supply agreements and related documents on their websites by 1 June each year.
The ACCC is encouraging all dairy processors to review their obligations under the Code and ensure all required documents are compliant and published by the 1 June 2026 deadline.
