The Australian Competition and Consumer Commission today issued a draft determination proposing to deny authorisation* to arrangements proposed by Dairy WA.
Dairy WA has sought to establish a milk negotiating agency which would collectively bargain on behalf of dairy farmers with milk processors, retailers and service providers on a range of terms and conditions (including price).
It also sought authorisation to allow dairy farmers, under certain circumstances, to engage in a collective boycott of milk processors by withholding the supply of raw milk.
"The ACCC has a strong record of supporting collective bargaining arrangements in the rural sector, including arrangements in the dairy industry", ACCC Chairman, Mr Graeme Samuel, said today.
"However the ACCC is concerned that Dairy WA's proposal sits at the extreme end of collective bargaining arrangements and would be a backward step from hard gains made since dairy deregulation began on 1 July 2000.
"The ACCC's assessment of the proposed collective bargaining/collective boycott arrangements has been hampered by the limited nature of the information provided by Dairy WA concerning the proposed arrangements.
"This is despite a number of requests made by the ACCC for Dairy WA to provide additional materials to it.
"While it has been difficult for the ACCC to assess the arrangements proposed by Dairy WA, at this point it seems that they would be likely to have a significant, negative, impact upon competition in the Western Australian dairy industry".
Aspects of Dairy WA's proposal which are of particular concern to the ACCC include:
- the potential for the arrangements to result in 'winners' and 'losers' - with the losers being the many Western Australian dairy farmers who have improved their businesses in recent years
- the potential for the arrangements to have a significantly detrimental impact upon dairy processors in Western Australia, in particular the smaller local processors
- the potential for the arrangements to sever the long established commercial relationships between dairy farmers and processors, and
- the potential for the arrangements to stymie future investment in the Western Australian dairy industry by dairy farmers and processors.
Dairy farmers in Western Australia can currently engage in collective bargaining under an authorisation previously granted to Australian Dairy Farmers Limited**. The ADF arrangements are quite different to those proposed by Dairy WA, and in the ACCC's view, provide important benefits to dairy farmers, processors and importantly to the public without significant competitive detriment.
More information regarding the Dairy WA application and the authorisation process is available from the ACCC's website
The ACCC is seeking submissions from interested parties in relation to its draft determination. Submissions can be made to:
The General Manager
Adjudication Branch
Australian Competition and Consumer Commission
P O Box 1199
DICKSON ACT 2602
Submissions can be lodged by email at adjudication@accc.gov.au.