Australia's competition watchdog has warned horticulture traders to check produce agreements for illegal terms after breaches were found in a fruit trader's contract.
The Australian Competition and Consumer Commission (ACCC) said M.V Napoleone & Co, trading as Red Rich Fruits, had changed its agreement with farmers after it was found to have breached the Horticulture Code of Conduct.
The trader has now amended the “unfair contract terms”, which guaranteed compensation from the grower if the trader couldn't sell the produce to a third party retailer. The grower would have to provide credit equal to the contracted value of the goods, likely to include the margin charged by Red Rich Fruits.
The ACCC said the produce agreement used by Red Rich Fruits was prepared by a horticulture trader industry group, which distributed the agreement to members.
Mick Keogh, deputy chair at ACCC, said: “We are concerned that there may be more widespread non-compliance in this industry, and believe other traders may be using similar agreements in their dealings with growers.
“Traders must check that their agreements do not contain unfair contract terms, and that they comply with the code, which is mandatory for industry participants.”
The ACCC also objected to Red Rich Fruits' pricing and payment clauses, which have been amended, because they may have breached the code's pricing formula and payment transparency terms.
Further audits with other traders are being carried out to ensure compliance in the industry, and enforcement action will be taken if necessary, said the ACCC.
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