01.Egg industry in hot water
The egg industry’s most powerful body, the Australian Egg Corporation, is being taken to court by the ACCC, along with three of its directors and two egg producing companies, for attempting to engage in an alleged egg cartel.
It’s alleged that the Egg Corporation encouraged its members to reduce egg production by culling hens or disposing of eggs to prevent an oversupply of eggs.
While Egg Corporation was ultimately unsuccessful in its cartel attempt, the ACCC alleges that its board (which included three of its directors, James Kellaway, Jeffrey Ironside and Zelko Lendich) encouraged members through Egg Corporation member publications in November 2010, and later at an "Egg Oversupply Crisis Meeting" to reduce the supply of eggs.
Two egg companies, Twelve Oaks Poultry and Farm Pride, of which Mr Ironside and Mr Lendich are the respective directors, are also alleged to have been involved in the cartel attempt. At the relevant time, the Egg Corporation had between 100 and 150 egg producing members.
The estimated retail value of eggs was over $566m in 2012, and the ACCC is concerned that if the alleged cartel attempt was successful it could have affected egg prices.
The ACCC is seeking a range of measures such as fines and declarations, as well as an order that the Egg Corporation, Farm Pride and Twelve Oaks establish and maintain a compliance programs, and that the three directors attend compliance training.
“Industry associations need to be conscious of competition compliance issues when they bring competing firms together,” said ACCC chairman Rod Sims.
Egg Corporation's history with the ACCC
In 2011, the Egg Corporation proposed increasing the stocking densities 13-fold for free range eggs, from 1500 birds per hectare, as suggested under the national Model Code of Practice for the Welfare of Animals, to 20,000 birds per hectare.
However the ACCC rejected the proposal in 2012, following a CHOICE campaign on the issue.