An elderly man accused of running an illegal puppy farm has been allowed to get away with profiting from animal cruelty after a local council agreed to drop charges, say animal activists.

Anthony Sammut, 73, pleaded guilty on Monday in Victoria to one charge of operating an animal business on unregistered premises.

Sammut previously appeared in court charged with 13 animal cruelty offences in connection to an illegal puppy farm outside Little River.

The cruelty charges were laid after authorities raided his property in October.

Debra Tranter of Oscar's Law, a group opposed to the factory farming of pets, said Wyndham Council agreed to drop the 13 charges if Sammut admitted to operating the illegal business.

Ms Tranter said she does not understand why the council took this action given there was enough evidence to prove the animal cruelty charges.

"It's a disappointing outcome," Ms Tranter told AAP.

After he admitted to operating an unregistered business, Sammut was fined $5000 at Werribee Magistrates Court on Monday and given a voluntary five-year ban from breeding dogs.

"A $5000 fine is ridiculous," Ms Tranter said.

She says the 73-year-old would have been subject to greater penalties if he had been prosecuted for a single charge of animal cruelty.

Oscar's Law say it was a mistake for the council to prosecute Sammut over his unregistered business rather than his treatment of dogs.

"It's sending the wrong message out there that cruelty can be dismissed," Ms Tranter said.

"You can be cruel to animals in Wyndham City but you can't run an illegal business - that's the message they're sending."

Ms Tranter says the council could have set a precedent and led the way in animal prosecution cases.

"Puppy factories are on the political agenda across Australia," she said.

"Clearly the public don't want these places to exist."

Wyndham Council has been contacted for comment.