ACCC urges egg industry to review free range claims after Pirovic penalty

Posted by AFN Staff Writers on 17th November 2014
ACCC urges egg industry to review free range claims after Pirovic penalty
ACCC urges egg industry to review free range claims after Pirovic penalty

The Australian Competition and Consumer Commission has called on egg industry participants to take heed of the recent Pirovic Enterprises Federal Court decision.

In September 2014, the Federal Court handed down a $300,000 penalty against Pirovic after finding, by consent, that its ‘free range’ egg representations were false or misleading.

ACCC sees no need for government ‘free range’ standard

Addressing the Australian Farm Institute Conference in Melbourne, ACCC Chairman Rod Sims said the ACCC will be writing to egg suppliers this week.

“We are encouraging them to consider whether they should review the words and images used on their free-range egg cartons and any advertising claims about their free range eggs,” Mr Sims said. “Some have expressed concern that there is no government standard that producers need to meet to be a free range producer. We see no need for any standard,” he said.

“In the Pirovic case the court ruled that free range means the birds can and do go outside on most days,” Mr Sims said. “It is up to producers to determine how to meet this common sense definition,” he said.

“Any prescriptive standard beyond this would likely have requirements that are not relevant to what consumers understand free range to mean,” Mr Sims said.

ACCC also comments on agriculture competition

Mr Sims also outlined areas where Australian agriculture could benefit from better competition policy and measures that can make markets work.

He said privatisation, road transport, shipping and water were areas where the agricultural sector stands to benefit from reforms proposed as part of the Harper Competition Review.

“I urge you to engage strongly with this reform agenda, and to push for other reforms that can improve how markets work to your benefit,” Mr Sims said.

Drawing on findings from a recent Productivity Commission report on the dairy industry, Mr Sims warned against having governments promote ‘national champions’.

“The argument is a contradiction: if you cannot beat your rivals at home how can you hope to do so overseas?” Mr Sim said. “Interventions by governments to restrict competition with the aim of designing an ‘ideal’ market structure are fraught with risks and difficulties,” he said.

“While the intention may be noble, history tells us that such interventions typically entrench inappropriate market structures and create a dependency on government assistance,” Mr Sims said.

ACCC supports collective bargaining for farmers

In the context of the Harper Competition Review, Mr Sims also outlined some proposed changes to competition laws which are relevant to farmers.

In particular, he said three sets of improvements are needed around the collective bargaining and notifications process.

“First, there is a need to make collective boycott action possible; this is where, say, farmers could legally collectively withhold their produce from sale until they gain a purchase contract they are satisfied with,” Mr Sims said.

“Second, we are conscious that small businesses do not use the simpler and faster notification process to seek protection under the Act as frequently as they use the authorisation process. We believe this is because of the lack of flexibility of the notification process,” Mr Sims said.

“Third, we consider the maximum threshold to notify a collective bargaining arrangement should be reviewed to ensure that it is not restricting participation by small business,” Mr Sims said.

He also discussed misuse of market power, unconscionable conduct, use of industry codes of conduct, credence claims and access to infrastructure.