The Australian Competition and Consumer Commission has authorised members of the Canegrowers Organisation to collectively bargain cane supply and related contracts with mill owners and sugar marketers for ten years.
“This authorisation can provide an opportunity for growers, millers and sugar marketers to negotiate mutually beneficial contracts without breaching competition laws. It is up to the parties to decide the extent to which they take up this opportunity,” ACCC Commissioner Mick Keogh said.
“We believe the proposed arrangements are likely to save growers, mill owners and marketers time and money, and also facilitate more effective and timely grower input into negotiations with mill owners and marketers.”
Where growers have a right to choose a marketer for ‘grower economic interest’ (or GEI) sugar, the ACCC considers there are benefits available from growers collectively bargaining with mill owners and marketers over terms relating to cane supply and the marketing of GEI sugar.
“This is likely to facilitate grower choice, and therefore competition, when growers choose GEI sugar marketing services,” Mr Keogh said.
The ACCC considers the proposed arrangements are unlikely to result in significant public detriments given that collective negotiations are voluntary for growers, mill owners and marketers, and negotiations will continue to reflect regional differences.
“Any information sharing allowed under this authorisation is not likely to harm competition between mill owners as the arrangements do not stop negotiating parties continuing to implement appropriate confidentiality regimes to protect commercially sensitive information. The current incentives for mill owners to offer different terms and conditions within particular growing regions will also remain,” Mr Keogh said.
The ACCC’s authorisation does not provide immunity for growers to participate in collective boycott activities. It also does not impose an obligation on any party to participate in collective bargaining or provide a right for growers to be included in negotiations for (raw sugar) On-Supply Agreements between mill owners and sugar marketers.
Background
The Canegrowers Organisation, representing the interests of sugar cane growers in Queensland, sought authorisation for proposed collective bargaining conduct with millers and sugar marketers.
Since 1999, the Sugar Industry Act in Queensland has allowed cane growers to collectively bargain certain terms and conditions of their Cane Supply Agreements with their local mill without breaching competition laws. Canegrowers’ application seeks authorisation to collectively negotiate a broader range of terms and conditions of cane supply with millers and sugar marketers, including in relation to GEI sugar marketing terms, and to facilitate information sharing between growers across growing regions.
The mandatory Sugar Code of Conduct commenced on 5 April 2017. It regulates the conduct of growers, mill owners and marketers (of GEI sugar) in relation to their negotiation of cane supply and raw sugar on-supply agreements. The Code establishes processes for arbitration for cane supply agreements and raw sugar on-supply agreements where the parties dispute certain term(s). It also ensures supply contracts between growers and mill owners guarantee a grower’s choice of marketing entity for the GEI sugar manufactured from the cane they supplied. The introduction of this Code does not materially affect the analysis underpinning the ACCC’s assessment of this application for authorisation.
Notes to editors
Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.
About the authorisation process:
- Generally, the ACCC can grant authorisation if it is satisfied that the public benefit from the conduct outweighs any public detriment, including any lessening of competition.
- The ACCC is required to publish a draft decision (‘determination’) in relation to an application. This is usually 3–4 months after receiving an application.
- The ACCC will conduct public consultation with interested parties both before and after a draft determination.
- The ACCC will generally release its final decision (‘determination’) 5–6 months after receiving an application.