The Australian Competition and Consumer Commission has granted interim authorisation to allow chicken growers contracted to Inghams in South Australia to commence collective negotiation of new growing contracts.
"This interim authorisation allows growers contracted to Inghams' chicken meat processing operations in South Australia to negotiate new contracts on a collective basis without fear of being in breach of the Federal Trade Practices Act", ACCC Chairman, Professor Allan Fels, said today.
Inghams growers in South Australia have been operating under authorised arrangements, similar to those in the new application, since 1997.
"The ACCC is aware that the growing contracts negotiated under the old authorised arrangements are about to expire", Professor Fels said. "The ACCC recognises that, should interim authorisation not be granted now, it may lead to significant disruption to the marketplace. The ACCC considers that maintenance of the status quo is preferable while the ACCC consults and considers the merits of the application".
Interim authorisation allows the parties to engage in the conduct while the ACCC considers the merits of the substantive application. A decision to grant interim authorisation does not mean that the ACCC will necessarily grant final authorisation.
"It would be prudent for growers and Inghams to consider possible alternatives to collective negotiation, such as individually negotiated long-term contracts, which could operate if final authorisation is not granted", Professor Fels said.
The ACCC recently received an application for authorisation* seeking to allow Inghams contract chicken growers to collectively negotiate contracts in accordance with a Code of Practice and Minimum Contract Guidelines. The ACCC granted a similar authorisation (A90595) in 1997. The ACCC has contacted a large number of interested parties seeking comments on the application for authorisation, and will issue a draft determination outlining whether it proposes to grant or deny full authorisation, and its reasons for its decision, in due course.
This interim authorisation does not compel any party to participate in the proposed arrangements but will provide immunity against prosecution under the TPA for the conduct covered.
*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 offsetting public benefits. 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. Applications for authorisation (and interim authorisation) are considered on a case by case basis. The onus is on the applicant to demonstrate that there is public benefit arising from the conduct and that the public benefit outweighs any public detriment. Authorisation, once granted, does not compel parties to participate in the proposed arrangements.