ACCC urges egg industry to review free range claims

13 November 2014

ACCC urges egg industry to review free range claims; also discusses national champions and advocates important changes to collective bagaining

The Australian Competition and Consumer Commission today called on egg industry participants to take heed of the recent Pirovic Enterprises Federal Court decision.

In September, the Federal Court handed down a $300,000 penalty against Pirovic after finding, by consent, that its 'free range' egg representations were false or misleading.

Addressing the Australian Farm Institute Conference in Melbourne, ACCC Chairman Rod Sims said the ACCC will be writing to egg suppliers this week.

“We are encouraging them to consider whether they should review the words and images used on their free-range egg cartons and any advertising claims about their free range eggs.

“Some have expressed concern that there is no government standard that producers need to meet to be a free range producer. We see no need for any standard.”

“In the Pirovic case the court ruled that free range means the birds can and do go outside on most days. It is up to producers to determine how to meet this common sense definition.”

“Any prescriptive standard beyond this would likely have requirements that are not relevant to what consumers understand free range to mean.”

Mr Sims also outlined areas where Australian agriculture can benefit from better competition policy and measures that can make markets work.

He said privatisation, road transport, shipping and water are areas where the agricultural sector stands to benefit from reforms proposed as part of the Harper Competition Review.

“I urge you to engage strongly with this reform agenda, and to push for other reforms that can improve how markets work to your benefit,” Mr Sims said.

Drawing on findings from a recent Productivity Commission report on the dairy industry, Mr Sims warned against having governments promote ‘national champions’.

“The argument is a contradiction: if you cannot beat your rivals at home how can you hope to do so overseas?”

“Interventions by governments to restrict competition with the aim of designing an ‘ideal’ market structure are fraught with risks and difficulties,” Mr Sims said.

“While the intention may be noble, history tells us that such interventions typically entrench inappropriate market structures and create a dependency on government assistance.”

In the context of the Harper Competition Review, Mr Sims also outlined some proposed changes to competition laws which are relevant to farmers.

In particular, he said three sets of improvements are needed around the collective bargaining and notifications process.

“First, there is a need to make collective boycott action possible; this is where, say, farmers could legally collectively withhold their produce from sale until they gain a purchase contract they are satisfied with.”

“Second, we are conscious that small businesses do not use the simpler and faster notification process to seek protection under the Act as frequently as they use the authorisation process. We believe this is because of the lack of flexibility of the notification process.”

“Third, we consider the maximum threshold to notify a collective bargaining arrangement should be reviewed to ensure that it is not restricting participation by small business,” Mr Sims said.

He also discussed misuse of market power, unconscionable conduct, use of industry codes of conduct, credence claims and access to infrastructure.

The speech: The future of competition policy and its implications for Australian agriculture

Release number: 
MR 277/14
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