ACCC allows national dairy farmer collective bargaining arrangements to continue

The Australian Competition and Consumer Commission today granted interim authorisation* allowing groups of dairy farmers to continue to collectively negotiate terms of supply for raw milk with dairy processors.

"Interim authorisation will allow groups of dairy farmers that have a 'shared community interest' to form collective bargaining groups through which they may collectively negotiate terms of supply, including pricing, with a dairy processing company that each member of the group wishes to supply", ACCC Chairman, Mr Graeme Samuel, said today.

Interim authorisation will also allow dairy farmers and dairy processors to continue to give effect to negotiations and contracts already entered into under the Australian Dairy Farmers' authorisation.

"The ADF arrangements were authorised by the Australian Competition Tribunal in 2002, following a similar decision by the ACCC earlier that year.

"The immunity granted to dairy farmers by the Tribunal is due to expire on 1 July 2005. ADF has argued that the collective bargaining arrangements result in win-win outcomes for dairy farmers and their processors and that the arrangements should be allowed to continue.

"The effect of interim authorisation is to provide continuing immunity for dairy farmers to engage in collective bargaining while the ACCC considers the request by ADF for the arrangements to be re-authorised until 1 July 2010.

"The ACCC considers that interim authorisation will provide certainty to dairy farmers and processors, such that they will be able to continue their negotiations without undue disruptions. Submissions received from interested parties in relation to interim authorisation have not identified any substantial concerns with the arrangements and the decision by the ACCC simply maintains the status quo".

The ACCC is currently seeking submissions from interested parties in relation to the Australian Dairy Farmer arrangements, submissions can be made to: The General Manager, Adjudication Branch, Australian Competition and Consumer Commission, PO Box 1199, DICKSON  ACT  2602
Submissions can also be lodged by email at adjudication@accc.gov.au

Background

*The ACCC has the function, through the authorisation process, of adjudicating on certain anti-competitive practices that would otherwise breach the Trade Practices Act 1974. Authorisation provides immunity from court action, and is granted where the ACCC is satisfied that the practice delivers a net public benefit. Interim authorisation allows the parties to engage in the conduct prior to the ACCC considering the substantive merits of the application. The ACCC's decision in relation to interim authorisation should not be taken to be indicative of whether or not final authorisation will be granted by the ACCC.

In 2001, the Australian Dairy Farmers Federation (now known as Australian Dairy Farmers) sought authorisation from the ACCC to enable dairy farmers to collectively bargain with dairy processors.

Authorisation was granted by the ACCC, and subsequently the Australian Competition Tribunal, in 2002. The immunity granted to dairy farmers was subject to a number of conditions which were intended to limit the possible anti-competitive effect of the arrangements and also to ensure that consumer prices were not adversely affected by the arrangement.

The conditions imposed by the ACCC and the Tribunal included:
a. prohibitions on the use of common bargaining agents
b. requirements that groups be formed upon a basis of a 'shared community of interest'
c. restrictions on the formation of cross regional groups and
d. ensured that participation by processors and dairy farmers in the collective negotiations remained voluntary.

The interim authorisation granted by the ACCC has maintained the conditions that were imposed by the Tribunal in 2002.