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ACCC probe finds competition concerns, but no processor collusion in Barnawatha boycott

Beef Central, 09/12/2015
Cattle selling at the Barnawatha auction complex.

Cattle selling at the Barnawatha auction complex.

THE Australian Competition and Consumer Commission says it has identified some competition concerns in its investigation into allegations that nine meat processors collectively boycotted a prime cattle sale at Barnawartha  earlier this year.

However, it says the evidence obtained by the ACCC investigators did not demonstrate that the processors had reached an agreement not to attend the 17 February sale.

The investigation commenced following reports that meat processors had agreed not to attend the sale at Barnawartha in response to the saleyard using pre-weigh selling.

ACCC Chairman Rod Sims said the ACCC conducted an extensive investigation of the conduct due to concerns that any agreement or understanding between the processors may have breached the Competition and Consumer Act 2010 (the Act). To establish a breach of the Act, the ACCC would need to demonstrate that there was an agreement, and a commitment by at least one of the parties not to attend the sale.

In a statement this morning the ACCC said it used its statutory powers to request information, data and documents from all of the nine processors involved.

The ACCC followed this up by conducting a number of compulsory examinations of key individuals involved in buying cattle from the Barnawartha saleyard.

The investigation found that there was uncertainty before the sale about whether the Barnawartha saleyard would use a pre or post weigh selling method.  It was also clear that certain processors strongly opposed the pre-weigh method.

“Although it was clear that processors communicated about the sale, the evidence did not demonstrate that any of the processors entered an arrangement or reached an understanding not to attend the sale, which is required to establish a breach of the Act,” Mr Sims said.

While the evidence obtained confirmed that a number of processors had legitimate reasons for their non-attendance, it also confirmed that representatives of some of the competing nine processors had communicated with each other on a regular basis.

‘There is a fine line between social discussions about industry issues and exchanging information between competitors…’

“There is a fine line between social discussions about industry issues on the one hand, and exchanging information in circumstances that may constitute an understanding between competitors on the other,” Mr Sims said.

“Competitors talking about whether they will buy goods or services is a high-risk activity which may breach competition laws.”

In line with the Federal Government’s Agricultural Competitiveness White Paper, the ACCC has recently formed an Agricultural Enforcement and Engagement Unit which has been provided with the information collected during the Barnawartha investigation and has also been closely following concerns raised by the sector during the recent Senate Inquiry into the effect of market consolidation on the red meat processing industry.

As one of its priorities in 2016, Mr Unit said the Unit will focus on reviewing practices in the red meat industry that raise competition or fair trading concerns.

“The agriculture sector is a priority for the ACCC and this investigation has reinforced a number of concerns we have regarding conduct in the red meat sector. We will continue to monitor broader competition issues in the red meat sector, including the dynamics of dealings between producers, processors, and market intermediaries,” Mr Sims said.

Source: ACCC

 

 

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Comments

  1. Antony West, 10/12/2015

    Judging by Clarke Roycroft’s own comments, that now clears processors involved in the Barnawatha sale incident of any wrongdoing.

  2. Clarke Roycroft, 09/12/2015

    If you won’t a proper result you would grab all phone records for a fortnight before and a week after the event of all the so called suspects. This would either clear or condemn. But this would be to difficult a task for a dysfunctional organisation like the ACCC.

    Excellent idea, Clarke. So good, in fact, that the ACCC already did it. Beef Central understands that landline and mobile phone records, plus email records for the February-March period were collected for significant number of processor stakeholders. Beef Central’s inquiries suggests the ACCC’s investigations were extremely thorough, by any standards. Editor

  3. Sandy Maconochie, 09/12/2015

    An obvious outcome. As communicated earlier in the year this whole things was always going to be a waste of time and a massive waste of money and resources. Wonder if anyone knows how much money? Honestly surely the producer bodies that instigated this realise this now.

  4. Loretta Carroll, 09/12/2015

    This was the best opportunity farmers have had for many years to demonstrate collusion by processors and livestock buyers in the sale yards. The ACCC clearly know of the extensive collusion in the industry, however their thresh-hold for the level of evidence required to take it to the next level, court, is unrealistic and unobtainable. We all know there was no co-incidence that nine processors didn’t attend the sale. Yes nine processors did boycott NVLX at Barnawartha to enforce post-weighing. My investigations have not revealed any other country in the world that weigh livestock after the fall of the hammer – sometime hours after the sale. Shame on the ACCC – they have let the farmers down once again. This decision is totally unacceptable and should be contested. I suggest farmers should seek ministerial intervention!

  5. Peter James McHugh, 09/12/2015

    Well I’ll be Nine workers from different companies just happened not turn up for work on the same day that they have for years, hope they all had a Doctor’s certificate that would make sense only to the ACCC. This is one government body that does not need a Dental plan.

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