Federal Court Finds Australian Egg Corporation and egg producers did not attempt to induce a cartel arrangement

10 February 2016

The Federal Court of Australia has found that Australian Egg Corporation Limited (AECL), Farm Pride Foods Ltd (Farm Pride) and Ironside Management Services Pty Ltd (trading as Twelve Oaks Poultry) (Twelve Oaks Poultry) did not attempt to induce a cartel arrangement, as alleged in proceedings brought by the Australian Competition and Consumer Commission.

The Court also found that Mr James Kellaway, the managing director of AECL, and Mr Jeffrey Ironside, a director of AECL and Twelve Oaks Poultry, did not attempt to induce egg producers to engage in cartel conduct.

The proceedings concerned allegations by the ACCC that AECL, Farm Pride, and Twelve Oaks Poultry attempted to induce egg producers who were members of AECL to cull hens or otherwise dispose of eggs, for the purpose of reducing the amount of eggs available for supply to consumers and businesses in Australia.

The Court found that while the ACCC had established that the respondents intended that egg producers should take action to address and correct an oversupply of eggs, it did not establish that this action was intended to be pursuant to an agreement or understanding involving reciprocal obligations by competing producers.

“The ACCC took this action because it was concerned that the actions of AECL, Farm Pride, and Twelve Oaks Poultry, if successful, could have reduced the production or supply of eggs and ultimately increased the price to consumers and other businesses,” ACCC Chairman Rod Sims said.

“The ACCC will carefully consider the judgment.”

Background

The ACCC instituted proceedings in May 2014 alleging that AECL and the five other corporate and individual respondents attempted to induce egg producers who were members of AECL to engage in cartel conduct.

AECL is an industry corporation that collects levies for promotional activities and research and development activities from member egg producers. At the relevant time, AECL had between 100 and 150 egg producer members.
 

Release number: 
MR 9/16
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