17 Mar 2016
The ACCC announces appeal in egg cartel case: the plot chickens!
by Douglas Thompson, Elizabeth Richmond
The ACCC's loss in the egg case is a practical example of the gap identified in the Harper Review between the current law in Australia in comparison to comparable overseas jurisdictions.
The Australian Competition and Consumer Commission (ACCC) will appeal the Federal Court's decision to dismiss its application for penalties against the Australian Egg Corporation Limited (AECL) and others in the egg industry for an alleged attempt to create a cartel to control the supply of eggs.
The case concerned a perceived oversupply of eggs, coupled with a meeting of egg producers and the industry body, the AECL. While the ACCC demonstrated in Court that participants at a so-called "crisis meeting" in January 2012 intended to take action to address the issue of an oversupply of eggs in the Australian market, the Court found the ACCC had not proved the conduct was an attempt to make an agreement or understanding that involved reciprocal obligations.
The ACCC has now appealed that decision.
This is not the first case brought by the ACCC that has come unstuck by the requirements for reciprocity or commitment in the context of a prescribed arrangement or understanding. ACCC Chair Rod Sims said in announcing the appeal that “[d]etecting and deterring cartel conduct continues to be a major focus for the ACCC. It is important that we seek clarity from the Full Court on issues of what will and will not constitute attempted cartel conduct, particularly in the context of conduct by a trade association interacting with its members”.
However, the case may have been decided differently had the Australian Government already acted upon recommendations from the Harper Review.
The Harper Review recommended the introduction of a new law to combat "concerted practices"; a concept recognised under European and UK competition law which includes various co-operative arrangements between firms in a market which fall short of an agreement, arrangement or understanding.
The most common example of a "concerted practice" is where competitors share information on a regular basis which allows them to co-ordinate their market conduct or avoid lossmaking competition, but without reaching any agreements on how they will behave.
In the Australian Government's response to the Harper Review, it supported this recommendation of the Harper Review. It will develop exposure draft legislation to repeal the price signalling provisions of the CCA and extend section 45 of the CCA to capture concerted practices that substantially lessen competition.
The ACCC's first instance loss in the egg case is a practical example of the gap identified in the Harper Review between the current law in Australia in comparison to comparable overseas jurisdictions (particularly Europe).
We, of course, will continue to watch this space with interest to see whether the ACCC is more successful in its case, second time round.
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