Friday, 19 July 2019 Sydney
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Red Rich Fruits amends contracts with growers after ACCC concerns::

A trader in apples, pears and other fresh fruits has agreed to change its horticulture produce agreements with growers after the ACCC raised concerns the agreements contained unfair contract terms, and terms which did not comply with the Horticulture Code of Conduct.

M.V Napoleone & Co Pty Ltd, trading as Red Rich Fruits, has agreed to amend a term in its standard form horticulture produce agreement considered by the ACCC to likely be an unfair contract term under the Australian Consumer Law.

The term allowed Red Rich Fruits to seek credit from a grower for produce Red Rich Fruits had on-sold to a third party, but which was then rejected by the third party. The grower was required to provide credit for the amount the third party had contracted to pay Red Rich Fruits for the rejected produce, which was likely to include the trader’s profit margin.

Other terms were also amended in response to ACCC concerns about compliance with the Horticulture Code of Conduct. These included pricing and payment clauses that may have breached the Code’s pricing formula and payment transparency terms.

The ACCC is currently auditing traders’ compliance with the Horticulture Code of Conduct and examining whether other operators’ agreements contain similar terms.

The horticulture produce agreement used by Red Rich Fruits was prepared by a horticulture trader industry group, which distributed this agreement to its members for their use.

“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,” ACCC Deputy Chair Mick Keogh said.

“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.”

“We urge traders and their representatives to review horticulture produce agreements to ensure they do not contain non-compliant terms,” Mr Keogh said.

“The ACCC will continue to audit agreements and will take enforcement action where appropriate.”

More information can be found at Horticulture Code of Conduct.

Background

The Horticulture Code is a mandatory industry code prescribed under the Competition and Consumer Act 2010. It came into full effect on 1 April 2018 and replaced the old Horticulture Code. The Horticulture Code’s purpose is to improve the clarity and transparency of trading arrangements between growers and wholesalers trading in horticultural produce.

The Horticulture Code prohibits growers and wholesalers from trading in horticulture produce without a written agreement that complies with the requirements of the Horticulture Code. Traders are exposed to penalties of up to $63,000 for each instance of trading without a Horticulture Code compliant agreement.