ACCC needs more teeth to ensure market transparency: ABA

Beef Central, 12/01/2017

The Australian Beef Association is calling for the Federal Government to give the ACCC’s Agricultural Enforcement and Engagement Unit greater powers to conduct industry investigations.

ABA executive officer David Byard said the ACCC was forced to rely on a 10-year-old data when it conducted its recent Australian cattle and beef market study, because it did not have the power to gather information compulsorily.

However the Federal Government has told Beef Central it believes the ACCC’s current powers are adequate and appropriate for its work (more on the Federal Government’s response below).

Mr Byard said the Federal Government’s $11.4m investment to establish a 12-member specialist Agriculture Enforcement and Engagement Unit within the ACCC was a welcomed and appreciated by beef producers who had long been calling for a stronger approach to competition issues.

However he said the interim report from the ACCC’s cattle and beef market study was based on a “desktop study” because the regulator did not have the power to collect up-to-date information from supermarkets on the true breakdown of retail beef percentage costs.

Mr Byard said updated information sourced from within the industry was needed to ascertain a clearer picture than that presented by the ACCC’s interim report.

“We acknowledge the ACCC interim report highlights the many problems within the industry, but to my utter disbelief the report contained information supplied by Coles back in 2007,” Mr Byard said.

“The detail came from a report conducted by the ACCC, after then-Minister for Agriculture, Peter McGauran, expressed concern with the record prices on supermarket shelves and record lows in saleyards.”

Mr Byard said the information provided by Coles at the time was that the producer received 54pc of the retail price, the processor 13pc, and with retail costs at 30pc, this left a 3pc margin for supermarkets.

Mr Byard said producers believed at the time that the 54pc figure provided by Coles was not accurate.

ABA’s assessment of 2007 figures suggested producers received only 28pc of the retail price. He said Meat & Livestock Australia reported in January 2015 that for the precious 10 years, producers had received an average of 32pc retail value.

“This is nowhere near the 54pc claimed during the 2007 study, which producers disbelieved when the claim was presented,” Mr Byard said.

“In my opinion, these figures (54pc) were entirely erroneous and misleading. Yet now it would appear because the two large supermarkets have refused to give evidence for this study on meat margins, the ACCC has chosen to use the old information once again.”

Mr Byard said the ACCC had acknowledged its struggle to get accurate and relevant data to determine the percentage breakdown of retail beef through the supply chain.

“As producers we are disappointed it did not have the power to gather information compulsorily for this desktop study.

“Figures quoted in the interim report were almost 10 years old, and in my opinion cannot be relevant today.

“How can producers and industry as a whole get a clear picture if the ACCC is unable to collect the information it needs to investigate the concerns in this area?”

Mr Byard said the Minister for Agriculture and Treasurer should ensure the ACCC has the necessary powers for the Agricultural Unit to gather accurate and relevant data.

“Beef producers will continue calling for greater transparency within the industry, and if the government is genuinely serious about industry reform their $11 million investment should ensure that the ACCC is given teeth to do its job,” Mr Byard said.

“The ACCC requires the power to make sure that everybody giving evidence can support that evidence, and if this doesn’t happen, we will end up with nothing more than expensive window dressing and a wasted exercise.”

Government response

A spokesperson for the Department of Agriculture told Beef Central the Government committed $11.4 million in the Agricultural Competitiveness White Paper to appoint an ACCC Commissioner dedicated to agriculture and establish the ACCC’s Agricultural Unit, in response to farmers’ concerns about supply chain transparency.

The unit initiated a study into cattle and beef markets in Australia to examine competition, efficiency, transparency and trading issues in beef and cattle supply chains. The study is ongoing and is the first of several agricultural market studies that the ACCC will conduct over the coming years.

The spokesperson said the ACCC has considerable powers to obtain information under the Competition and Consumer Act 2010.

“As is appropriate, these powers vary depending on the nature of the work or investigation being undertaken.

“For example, when Treasurer Scott Morrison requested the ACCC undertake an inquiry into the dairy industry under Part VIIA of the Competition and Consumer Act 2010, he provided the Commission with powers to obtain information from companies.

“Given the breadth of information that may be requested by the ACCC and the consequences for not complying with notices to supply information, it is appropriate that these powers are limited to investigating potential breaches of the law and to conducting inquiries at the direction of Ministers, and not be available at the broad discretion of the regulator.”




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