The Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against industry services body, the Australian Egg Corporation Limited (AECL), along with two egg producing companies for allegedly attempting to create an egg cartel.
The ACCC alleges that the AECL along with other corporate and individual respondents, attempted to persuade egg producers who were members of AECL to enter into an arrangement to cull hens or otherwise dispose of eggs, for the sole purpose of reducing the amount of eggs available on the Australian market, therefore driving up prices.
The government watchdog alleges that the AECL board communicated the proposed arrangement via member publications in November 2010. It is also alleged that, in February 2012, AECL held an ‘Egg Oversupply Crisis Meeting’ where it sought to arrange a coordinated approach by egg producers to reduce the supply of eggs, in response to a perceived oversupply of eggs.
Managing director of AECL, James Kellaway and Zelko Lendich, director of AECL and a former director of egg producer Farm Pride both spoke at this meeting, with Jeffrey Ironside – director of AECL and Twelve Oaks Poultry, acting as chair.
The ACCC has instituted proceedings against:
- The Australian Egg Corporation Limited (AECL);
- Mr James Kellaway, the managing director of AECL;
- Two egg producing companies, Ironside Management Services Pty Ltd (trading as Twelve Oaks Poultry) (Twelve Oaks Poultry) and Farm Pride Foods Limited (Farm Pride);
- Mr Jeffrey Ironside, a director of AECL and Twelve Oaks Poultry; and
- Mr Zelko Lendich, a director of AECL and a former director of Farm Pride.
“Retail egg sales, one of many sales channels, were valued at over $566 million in 2012* and eggs are a staple food product for Australian consumers. Indeed, egg consumption per capita has increased in the past 10 years leading to an increase in the demand for producers’ eggs. The ACCC is concerned that the alleged attempt sought to obtain agreement by egg producers to reduce supply, which if successful could have impacted on egg prices paid by consumers,” ACCC chairman Rod Sims said.
“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.”