Murray Goulburn's former boss will be fined $200,000 for his part in misleading dairy farmers on how much they would be paid for their milk.
The settlement was approved in the Federal Court on Thursday between the former dairy producer and the Australian Competition and Consumer Commission.
The watchdog sought a pecuniary penalty against former managing director Gary Helou but not against the company itself.
The ACCC applied to the Federal Court seeking declarations Murray Goulburn and Mr Helou contravened Australian Consumer Law in 2016 in relation to representations made regarding the FY16 farmgate milk price.
Both the former dairy producer and Mr Helou admitted to the contraventions.
"The penalty imposed against Mr Helou reflects his seniority at Murray Goulburn and involvement in misleading representations about the farmgate milk price," ACCC deputy chair Mick Keogh said.
Mr Helou made misleading representations to farmers not informing them of risks known to Murray Goulburn and making unfounded assumptions the company could achieve its milk powder sachet sales targets.
"Murray Goulburn's misrepresentations meant farmers were not informed of the likelihood the final milk price would fall below the opening price," Mr Keogh said in a statement on Thursday.
"This was important information for farmers as it would have influenced the business decisions each farmer made."
Farmers were unable to plan for the impact of the reduced milk price in early 2016.
The ACCC did not seek a penalty against Murray Goulburn because as it was a co-operative and any penalty imposed against it could end up being paid by the very farmers who were misled.
"We were conscious not to seek penalty orders that would adversely affect farmers for the wrongs committed by Murray Goulburn, so we focused on obtaining appropriate orders against the individuals involved in the conduct," Mr Keogh said.
Mr Helou was banned from being involved in the dairy industry for three years as part of the court's proceeding.