Competition watchdog the Australian Competition and Consumer Commission (ACCC) has accused the egg industry’s biggest player Australian Egg Corporation Limited (AECL) of attempting to form a cartel and has launched legal action against the company in the Federal Court.
The ACCC alleges that AECL attempted to induce its more than 100 member producers to cull hens or dispose of eggs to prevent oversupply, which would affect egg prices.
AECL is an industry corporation that collects government-approved statutory levies from member egg producers for promotions and research and development. Its Board includes representatives from some of the industry’s biggest players, including Frank Pace, founder of Pace Farms, and Zelko Lendich, managing director of Farm Pride Foods Ltd, Australia’s only publicly listed egg producer.
Mr Pace is not named in the court case.
The ACCC’s Federal Court action also cites AECL managing director James Kellaway and directors Jeffrey Ironside and Zelko Lendich as respondents, as well as Ironside Management Services Pty Ltd (trading as Twelve Oaks Poultry) (Twelve Oaks Poultry) and Farm Pride Foods Ltd (Farm Pride).
The ACCC alleges that, in February 2012, AECL held an ‘Egg Oversupply Crisis Meeting’ in Sydney, where it allegedly sought a coordinated approach by egg producers to reducing the supply of eggs, in response to a perceived oversupply. Mr Kellaway and Mr Lendich both attended and spoke at this meeting, which was chaired by Mr Ironside.
It is not alleged that this attempt to make a cartel arrangement involving Australian egg producers was successful.
ACCC Chairman Rod Sims said that retail egg sales were worth more than half a billion dollars annually and his was concerned by the organisation’s alleged attempt to reduce supply.
“Detecting, stopping and deterring cartels operating in Australian markets remain an enduring priority for the ACCC, because of the ultimate impact of such anti-competitive conduct on Australian consumers who will pay more than they should for goods,” he said.
“Today’s action sends a clear message that attempts by industry associations to coordinate anti-competitive behaviour by competitors will not be tolerated,” Mr Sims said.
The ACCC is seeking injunctions, pecuniary penalties against the companies involved as well as disqualification orders against AECL’s MD and the two Board members named in the action, plus other orders.
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