Court finds against ACCC in Australian egg cartel accusations

Posted by AFN Staff Writers on 17th February 2016

EggsThe Federal Court of Australia has ruled that a group of Australian egg producers did not attempt to induce a cartel arrangement despite allegations made by the Australian Competition and Consumer Commission (ACCC).


In its findings in relation to the proceedings initiated in May 2014, the Federal Court held that Australian Egg Corporation Limited (a promotional group for the Australian) egg industry, Farm Pride Foods and Ironside Management Services did not try and establish a cartel. The ACCC allegations were that the move was motivated by a desire to push up egg prices. The Federal Court disagreed.


The Court also found that Mr James Kellaway, the managing director of AECL, and Mr Jeffrey Ironside, a director of AECL and Twelve Oaks Poultry, did not attempt to induce egg producers to engage in cartel conduct.


The ACCC alleged that from November 2010, in AECL member publications, the AECL board encouraged its members to reduce egg production, in order to avoid oversupply which would affect egg prices.


The ACCC also alleged that, in February 2012, AECL held an ‘Egg Oversupply Crisis Meeting’ attended by egg producers in Sydney, where it allegedly sought a coordinated approach by egg producers to reducing the supply of eggs, in response to a perceived oversupply of eggs. Mr Kellaway and Mr Lendich both attended and spoke at this meeting, which was chaired by Mr Ironside.


The Federal Court however 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 did not establish that this action was intended to be pursuant to an agreement or understanding involving reciprocal obligations by competing producers.


ACCC Chairman Rod Sims said his regulatory body took action out of the impact a cartel could have had on prices.


“The ACCC took this action because it was concerned that the actions of AECL, Farm Pride, and Twelve Oaks Poultry, if successful, could have reduced the production or supply of eggs and ultimately increased the price to consumers and other businesses,” Sims said.


“The ACCC will carefully consider the judgment,” he stated.


In response to the ruling the AECL simply acknowledged that it was in its favour and that it would prioritising its energies into promoting Australian eggs.