The Australian Competition Tribunal has issued a decision denying authorisation* to members of the Victorian Farmers Federation. The Tribunal's decision replaces the conditional authorisation which had been granted to the VFF by the Australian Competition and Consumer Commission.
"The VFF sought authorisation to allow its members to engage in collective bargaining with the processors to whom they provide chicken growing services", ACCC Chairman, Mr Graeme Samuel, said today. "The VFF also sought authorisation to allow each of these groups to collectively withdraw their services (that is boycott) their respective processors in certain circumstances.
"The ACCC granted conditional authorisation to the collective bargaining and collective boycott arrangements in March 2005.
"In granting authorisation the ACCC expressed strong concern as to the possible detriments which could arise if a boycott was engaged in, noting that such actions had the potential to disrupt the supply of chicken meat to retailers and, ultimately, consumers.
"The ACCC considered however that, under certain, restricted circumstances, the proposed collective boycott arrangements could result in benefits to the public. On balance the ACCC considered that it was appropriate to authorise the collective boycott but only because it had imposed strict safeguards".
The Victorian chicken meat processors subsequently sought review by the Tribunal of the ACCC's decision to authorise the VFF's collective boycott arrangements. The chicken meat processors did not seek Tribunal review of the collective bargaining arrangements and a number of agreements have now been reached under this authorisation.
While recognising the market power of chicken meat processors and the effect that this would be likely to have on contract negotiations, the Tribunal was nonetheless concerned that the outcome of a collective boycott, noting its potential to inflict harm, was too uncertain to be able to say whether that outcome could be in the public interest. Accordingly the Tribunal has denied authorisation to the VFF's collective boycott arrangements.
"The Tribunal's decision highlights the concerns of many market participants – collective boycotts, even when subject to a number of constraints, have the potential to inflict significant damage upon the target of the boycott, its employees, consumers and, also, the boycotters themselves. The Tribunal also identified that the threat of a boycott – even without it ultimately being engaged in – is likely to come at a high cost to society.
"What this decision means for parties considering seeking authorisation of a collective boycott proposal is that the benchmark against which it will be measured is high", Mr Samuel said. "Consistent with this, two recent proposals seeking authorisation of a collective boycott have been opposed by the ACCC as the parties were unable to satisfy it that there was such a benefit to the public that the boycott should be permitted. It is clear that parties seeking immunity for a proposed collective boycott arrangement bear a heavy onus".
Victorian chicken growers have been able to engage in collective bargaining for some time now (since June 2004) and the ACCC understands that many growers have successfully negotiated contracts with their respective processor. The ACCC expects the parties to continue to engage in collective negotiations as permitted by the remaining aspects of the ACCC's 2005 authorisation.