The Australian Competition and Consumer Commission has today granted authorisation* to allow collective negotiations between Victorian chicken growers and their individual processors in light of proposed industry deregulation.
"The ACCC has consulted closely with the processors, growers and the Victorian Government and considers the authorisation, which is subject to a number of conditions, achieves an outcome that provides opportunities for the industry to move forward", ACCC Chairman, Professor Allan Fels, said today.
"The authorisation will allow growers contracted to each processor to negotiate collectively and give effect to standard growing contracts with their processor in accordance with minimum standards and conditions outlined in a proposed Code of Conduct.
"The application for authorisation was lodged in anticipation of industry deregulation. The authorisation granted by the ACCC will smooth the transition from a regulated to a deregulated environment and will help to ensure that the interests of growers are protected while also ensuring the benefits of deregulation are realised.
"The application for authorisation is unusual in that the current industry arrangements are underpinned by state legislation that has not yet been repealed by the Victorian Government. In 1999, a National Competition Policy Review of the Broiler Chicken Industry Act recommended that the legislation be repealed. The NCP Review also suggested that the legislated arrangements may be in breach of the anti-competitive provisions of the Trade Practices Act 1974. The Victorian Government is still considering its response to the NCP Review. However, the Government has expressed its preference for ACCC authorisation to allow collective negotiation at a processor enterprise level. The Minister for Agriculture has stated that the development of an authorisation that will provide for the on-going stability of the industry is a key plank of the Victorian Government's response to the NCP Review.
"The application was lodged by Marven Poultry Pty Ltd for itself and on behalf of the five other chicken meat processing companies operating in Victoria and their respective growers who choose to operate under the proposed arrangements. The authorisation does not compel any party to participate in the proposed arrangements but provides immunity against prosecution under the Trade Practices Act for the conduct covered.
"The ACCC considered that while the proposed collective negotiating arrangements may reduce the scope for competition over rates of payment and other terms and conditions between growers, the nature of the arrangements and industry structure limit the anti-competitive detriment. Whilst it has the potential to limit competition between each individual processor's growers, the authorisation will allow for greater competition between processors than has been the case under existing regulatory arrangements.
"To the extent that there is likely to be any detriment, the ACCC considered that this detriment was outweighed by a number of public benefits flowing from the proposed collective arrangements and Code of Conduct. The public benefits identified by the ACCC include time and labour savings in contract negotiations and facilitating the transition to deregulation". The ACCC has authorised the proposed arrangements for five years.