Murray Goulburn Co-operative has reached a settlement with Australia’s competition watchdog over a court case into allegations that it misled farmers in 2016 about the price they would be paid for their milk.

The agreement with the Australian Competition and Consumer Commission (ACCC) is subject to the approval of the Federal Court of Australia.

As per the settlement, the commission will seek a penalty against the cooperative’s former managing director Gary Helou, but not against the firm.

In April 2016, Murray Goulburn reduced its milk price by 20%, which concerned farmers as the cut was implemented late in the milking season when it was too late to find another buyer.

“The commission will seek a penalty against the cooperative’s former managing director Gary Helou.”

Following a year-long investigation, the ACCC found that the dairy cooperative never indicated to its farmers of the risk factor in its prices.

This is Murray Gouldburn’s second recent lawsuit following a settlement in late 2017 with the Australian Securities and Investments Commission. The company agreed to pay a A$650,000 ($493,150) fine for certain company disclosures.

In April, Canadian firm Saputo completed an acquisition of Murray Goulburn for $1.31bn. Saputo manufactures a wide range of dairy products, including cheese, milk, extended shelf-life milk and cream products, as well as cultured products and dairy ingredients. The firm funded the settlement through a bank loan.

Murray Gouldburn manufactures a wide range of dairy foods, including drinking milk, milk powder, cheese, butter and dairy beverages, as well as a range of ingredient and nutritional products such as infant formula.