Call for Australia’s egg cartel claims to be re-examined

Competition Commission appeals judgement that egg industry association made no attempts to form a cartel.

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Ukrainian egg company Avangardco reported a net loss of US$4 million during the first quarter of fiscal year 2015. FOTER | 16:9clue
Ukrainian egg company Avangardco reported a net loss of US$4 million during the first quarter of fiscal year 2015. FOTER | 16:9clue

It may not quite be a case of business as usual over the coming weeks for the Australian Egg Corp. Ltd. (AECL), despite the new year starting on a positive note for the association.

Since February, the association must have felt that it was able to put allegations that it had attempted to form a cartel behind it, following dismissal by the country’s Federal Court of claims brought by the Australian Competition and Consumer Commission (ACCC).

In response to the court findings, the association stated that its priority now was to continue devoting all its energies to providing marketing research and development services to help the egg industry grow, while meeting its statutory commitments – or business as usual.

This case was unique in Australia as it involved allegations against an industry association, and may well offer lessons to other industry bodies. But rather than the case simply being consigned to the court records, the ACCC has now decided to appeal the court’s decision.

No intent established

The ACCC had alleged that the AECL, a number of its directors and managers, and two egg companies had attempted to induce egg producers who were AECL members to enter into an arrangement to cull hens or otherwise dispose of eggs, for the purpose of reducing the amount of eggs available for supply to consumers and businesses in Australia.

The hearing took place in April 2015 and looked at the AECL’s activities dating back to early 2012. The ACCC cited attempts to induce 19 egg producers to limit eggs supplies and halt downward price pressures on eggs. It alleged that the conduct went beyond dissemination of information to egg producers as to egg inventory levels and called for a form of coordinated and consolidated action to reduce the supply of eggs.

However, the Federal Court judgment found that, while the ACCC had established that the respondents intended that egg producers should take action to address and correct an oversupply of eggs, it had not established that this action was intended to be an agreement or understanding involving mutual or reciprocal obligation by competing producers.

But the ACCC is not happy, and this month it announced that it had filed a Notice of Appeal against the Federal Court’s decision.

On launching the appeal, the ACCC said: “It is important that we seek clarity from the Full Court on issues of what will and will not constitute attempted cartel conduct, particularly in the context of conduct by a trade association interacting with its members.”

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