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Mandatory saleyards code mooted, as senate inquiry probes ‘lack of industry response’

Jon Condon, 09/08/2017

A MANDATORY code of practice for saleyards activity is being considered as one of the recommendations put forward to the minister, as the senate inquiry into red meat processing reaches its concluding stages this week

Senators engaged in the inquiry sought answers yesterday as to why the industry had so far ‘failed to respond’ to recommendations put forward by the Australian Competition and Consumer Commission in its interim and final report.

The senate rural & regional affairs inquiry into the effect of market consolidation on the red meat processing sector, launched in 2015, is in its final few days of hearings before its report is due to be tabled on 17 August. MLA managing director Richard Norton gives evidence tomorrow morning, and there is a prospect that the Red Meat Advisory Council may be called one last time for evidence early next week.

Just three senators were in attendance for yesterday’s hearing session – chairman Glen Sterle, Bridget McKenzie (Labor, VIC) and Barry O’Sullivan (Nats, QLD). Giving evidence yesterday for the Australian Competition and Consumer Commission was Gabrielle Ford, general manager of the commission’s agriculture unit.

Both Senators McKenzie and O’Sullivan focussed much of their attention on responses to the 2015 Barnawartha sale episode, which provided much of the impetus for the launch of the inquiry in the first place.

Sen McKenzie asked whether changes to the concerted practises legislation under competition law since the Barnawartha sale ‘boycott’ occurred would have allowed a stronger outcome from ACCC’s original investigation into the incident.

“If the Barnawartha episode happened today, would we be able to prosecute anybody?” she asked.

“In theory it’s possible that we could,” Ms Ford said. “But the difficulty that ACCC found when it did investigate the alleged Barnawartha boycott was that the law required evidence of a ‘meeting of the minds’ of the alleged participants – that they agreed and understood what each other would be doing with respect to attendance at the sale. The difference under the concerted practise legislation is that that level of agreement is not required – it’s really about finding indications between competitors of likely moves, but not to the extent of a full agreement,” she said.

Ms Ford said the new legislation ‘definitely assists’ where signals or information might pass between competitors.

Sen O’Sullivan asked Ms Ford whether she knew of anything anyone in the red meat sector had done to canvas or implement changes that would mitigate ‘Barnawartha type behaviour’ into the future.

“Other than the progress of the concerted practises legislation, all that we have observed is efforts by the Australian Livestock and Property Association to make compliance with the competition and consumer Act more prominent part of its terms and conditions of sale, posted at saleyards and online,” Ms Ford said.

Sen O’ Sullivan said if, after a thorough investigation with all ACCC’s resources, it was unable to prosecute in those circumstances, what had changed since then in the law, regulation by government or government agencies, or self-regulation by industry stakeholders that would today enhance ACCC’s ability to prosecute.

“Other than the progress of the concerted practises legislation, I have not seen any other tangible changes,” Ms Ford said.

Sen O’Sullivan asked whether Ms Ford was aware of efforts by some senators to get industry stakeholders like AMPC, Cattle Council and others to consider creating a self-regulating environment which would inhibit ‘this sort of behaviour.’

When she answered in the affirmative, he asked whether she was aware that they had been ‘repelled.’

“No industry group – none – has taken up the challenge that has been laid before them to come up with a solution to this problem,” Sen O’Sullivan said.

Given that there was no evidence that any part of the industry had endeavoured to advance any initiatives that had the potential to succeed in self-regulation, Sen O’Sullivan asked Ms Ford what argument ACCC would have against the senate inquiry recommending to the minister that a compulsory code of conduct be drafted, concerning saleyard activity.

“While we have not seen tangible changes, I believe that there is increased awareness in the industry that the sort of things that worried us about the Barnawartha incident – and other behaviours, habits and practises in and around saleyard auctions – do really risk breaching the competition laws,” Ms Ford said.

“I’m not seeing any evidence of changes of culture or behaviour on the part of those who are the perpetrators,” Sen O’Sullivan responded.

“Everybody in the respective peak industry bodies has a vested interest in not changing the behaviour as it occurred at Barnawartha. What should government do in the absence of any activity out of industry?” he asked. “My only conclusion is that we need to advance a mandatory code of conduct – as had to happen in the sugar industry, when that industry failed to address its own issues.”

“Is there some other solution?” he asked.

Ms Ford said one option could be to encourage industry to adopt practises or codes voluntarily, and to test the effectiveness of those, before taking any step towards mandatory regulation.

“We’re at a point where there is some pressure on us to produce a final report and make recommendations on this to the minister,” Sen O’Sullivan said. “If there is no other ‘magic pudding’ solution, then the only thing left for us is to recommend that we regulate them, through a code of conduct,” he said.

“The alternative is that we do nothing: that industry stares down this parliamentary interest in the behaviour in saleyards. You have no third option for us – either industry does it themselves, we (government) do it, or absolutely nothing is done,” he said.

Ms Ford reminded the inquiry that the difference now, that did not exist at the time of the Barnawartha incident investigation, was an additional ‘string to the bow,’ in terms of the concerted practises legislation in competition law.

RMAC’s role

Questions during yesterday’s inquiry session also focussed on the choice of the Red Meat Advisory Council as the body to address the recommendations made in the ACCC’s report.

“What progress have you seen in their effort to implement your recommendations?” Sen O’Sullivan asked Ms Ford.

“We are having our first substantive discussion with them this month,” she said. “The progress we have seen has been primarily through the work done by MLA to expand and publicise its price reporting, as we recommended.”

Sen McKenzie asked how ACCC reacted to suggestions that RMAC did not have the capacity, legal authority or remit to deliver the changes required. “That’s what we’re hearing,” Sen McKenzie said.

“The basis of our recommendation about RMAC was built around it being in a position of leadership in the industry, to lead the industry in making the changes itself,” Ms Ford said. “It’s constituents encompass a broad range of the beef industry.”

 

 

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