3 November, 2017
What you need to know
Having cracked down on the egg and poultry industry in 2015, the ACCC has moved on to the dairy and beef industries. With two inquiries underway, the ACCC is clearly scrutinising market practices in these industries.
What you need to do
Be aware of any new trading requirements for the dairy and beef industries, including relating to reporting, that are proposed as a result of the ACCC's inquiries.
Take note of the ACCC's enforcement priorities, as misleading conduct and anti-competitive behaviour in the dairy and beef industries will face increased scrutiny by the regulator.
Do not have discussions with competitors or industry members regarding coordinated conduct, fixed pricing structures, or agreements to control output or to limit the supply of goods or services without legal advice.
Inquiry to shake up dairy industry
On 8 November 2016, the ACCC published its Dairy Inquiry Issues Paper outlining the key areas of focus for its 12-month inquiry into the dairy industry.
Launched on 1 November 2016, the inquiry is aimed at assessing the competitiveness, trading practices and transparency of the dairy industry, and delivering recommendations for improvement. The inquiry will focus on:
- the state of competition between milk processors;
- contracting practices between processors and farmers; and
- global supply market opportunities and other factors that determine the profitability of Australian dairy farms.
From March to May 2017, the ACCC held public forums in key dairy producing regions to obtain input from farmers. The ACCC's final report to the Treasurer is due on 1 November 2017.
High steaks in ACCC's beef with cattle industry
On 31 October 2016, the ACCC published its interim report on its six-month study of beef and cattle markets. The report outlines key recommendations for improving competitiveness in the industry, including:
- adopting objective carcass grading;
- improving market price reporting; and
- implementing measures to lessen anti-competitive behaviour at sale-yard auctions.
The ACCC is concerned that existing processes for grading carcases in abattoirs lack independence and transparency. The ACCC considers grading outcomes to be fundamental to determining prices, as they signal the demands of the market to producers.
Conduct in saleyard auctions has also come under scrutiny. The ACCC has undertaken to investigate specific allegations of cartel and other anti-competitive conduct involving saleyards separately from the study.
Finally, the ACCC considers that the ongoing consolidation of meat processors has the potential to reduce competition in regional markets. Accordingly, the ACCC has committed to closely scrutinising any proposed mergers in the future.
For further information please contact:
Joanna Lawrence, Ashurst
joanna.lawrence@ashurst.com
