Selling practices at saleyards
This chapter focuses on selling practices at livestock saleyards. It
considers the events at Barnawartha which, for many producers, served as a
significant example of the potential for the misuse of market power in the red
meat industry. The chapter also examines the perception that there is a culture
of collusion at saleyards, and what may amount to concerted practices.
Issues arising from events at Barnawartha
A number of submitters drew on the events at Barnawartha to highlight serious
concerns with the selling system at saleyards. They suggested that the
processors 'boycotted' the prime cattle sale in an effort to change the selling
practice from pre-sale weighing to post-sale weighing.
The Alpine Shire, where the Barnawartha saleyards is located, argued that the 'boycott'
demonstrated the power of buyers 'potentially colluding to gain a direct
For producers, the events were seen as 'a timely reminder that the buyers and
the processors have excessive market power in our industry'.
The Barnawartha saleyards, trading as the Northern Victoria Livestock
Exchange (NVLX) are located on the southern outskirts of Wodonga, Victoria.
According to evidence before the committee, the events unfolded as
On 30 January 2015, Regional Infrastructure Pty Ltd (RIPL), the
manager and operator of the Northern Victoria Livestock Exchange (NVLX) Wodonga
facility, sent correspondence to NVLX buyers stating that it would operate on a
On 12 February 2015, Teys Australia informed Regional Infrastructure
Pty Ltd (RIPL) that it would not attend NVLX sales if operations were conducted
on a pre-weigh basis.
On 17 February 2015, up to ten commission buyers (nominally
accounting for 45 per cent of normal purchases on a sale day) failed to attend
the sale, without warning.
The same day, the agents agreed to a post-weigh system of selling without 'consultation
with producers who pay all the sale yard fees'.
On 2 March 2015, a public meeting was held at the Barnawartha
Public Hall. The meeting was attended by over 250 farmers and ultimately led to
demands for a parliamentary inquiry.
One of the country's largest processors, JBS Australia, advised the
committee that it did not participate in any alleged boycott at Barnawartha,
and had no communications with other processors in regard to its attendance at
According to RIPL, JBS had informed NVLX management on 17 February 2015 that
their Dinmore plant had broken down and that it would not be attending the sale
Mr Bradley Teys from Teys Australia explained the timeline of his
company's decision not to attend the sale:
The decision we heard was that it was going to be post sale
and then when the sale started a week or two before we heard it was going to be
presale weighing, so that is when the decision was made.
When asked about the Barnawartha matter, Mr David Larkin from the
Australian Meat Industry Council (AMIC), the peak industry council representing
the meat processing sector, informed the committee that:
It is our understanding that a number of players, over
several months and a couple of years, indicated to the livestock sale yard
operator that if they changed that method of selling, they would not
commercially participate. So I do not believe that there was any collusion or
any decision made on that particular day other than the fact that a sale yard
operator potentially tried to force a change of which commercial operators had
indicated, in public and in writing, their view on that change.
However, along with the suggestion of an organised boycott, the events
at Barnawartha brought to the fore broader concerns regarding market
competition and the reporting of livestock sales. With consolidation and
rationalisation of the processing sector, fewer buyers are attending cattle
markets. Under such circumstances, and particularly in relation to smaller
saleyards, the non-attendance of processors at markets can have a significant
impact on the market price.
This factor was explained by the Australian Livestock and Property Agents
We believe that the misuse of market power could be as simple
as some buyers (not only processors) attending some saleyards and not attending
others, leaving it to their competitors to operate without their competition.
This may well be seen as collusive behaviour; however it could simply be
coincidental and have happened without either buyer talking to another buyer
about their attendance or non-attendance.
However, the statements by processors that there was no intentionally
organised boycott were questioned by many producers and producer groups. The
NSW Farmers' Association noted its scepticism and pointed to a number of factors:
including the number of processors who did not attend the sale, the timing of
the incident and its connection with the takeover of Primo.
In terms of the immediate impact of the Barnawartha events, producers
who sent their livestock to the saleyard on 17 February 2015 provided evidence
to the committee. Their contention was that the change from what was 'accepted
practice' regarding weighing saw $50 to $100 taken from beef producers on every
grown beast sold, with a price drop of between 20 to 30 cents per kilogram for
cattle on the day.
Given the significant transportation costs involved in trucking
livestock to the saleyard, coupled with the adverse impact of any additional
transport and handling on their stock, some producers were unable to withdraw
cattle from the sale on that day. They had no alternative but to accept a price
below previous markets. One affected producer, Mr Mark Wortmann expressed the
view that the situation highlighted the fact that:
...the farmer has very little influence on the system that he
is forced to sell his cattle under and is left at the mercy of the buyers and
the operators of the selling facility.
Mr Laurie Horne was offended by the behaviour of buyers at Barnawartha:
I could not believe that some processors could treat
producers with so little respect...Can you imagine a year's product sold at a
dramatic discount because of the buyers' wish to have their own way?
The Barnawartha matter highlighted the intricate three-way relationship
between producers, stock agents and buyers and the 'wider complicated web that
is the ownership, management and operation of saleyards'.
Mr Vin O'Neill argued that, whereas agents serve as the intermediary between
the buyer and seller, in the Barnawartha case, they opted to side with the
buyers to 'protect their financial position as agents of supply to the large
Livestock agents and buyers
The Barnawartha matter raised serious concerns regarding the selling
systems at saleyards. This section considers the selling system with particular
focus on the role of commission buyers.
The 'middlemen' in most cattle transactions are either:
stock agents such as TopX, Grant Daniel Long (GDL), Landmark,
Elders, Brodie and Co. When a sale is transacted, they receive commission from
the seller, based on a percentage of the sale prices; or
commission buyers who buy on a commission or per head basis,
remunerated by the buyer; or
meatworks buyers who buy cattle on property, over the phone, via
email or out of the saleyard. Their remuneration is paid for by the meatworks.
Livestock agents typically sell livestock on behalf of the
producer/vendor on a commission basis. Livestock agents are licenced under
state government regulations with requirements varying between jurisdictions.
While buyers are usually engaged directly by a meat processor or
retailer on a salaried basis or engaged as a commission buyer, according to the
department, there is no public information describing the operations of
However, according to Mr Wayne Osborne, Chief Executive Officer of NVLX, buyers
are included in state and national codes of practice for saleyards.
Some producers argued that while livestock agents work for the vendor –
the seller – in reality, they may capitulate to pressure from buyers to change
the rules in a selling system. According to Mr John Buxton, this was the case
at Barnawartha and other selling systems in Victoria where the 'code of
practice was overturned in the face of pressure from meat buyers'.
Evidence to the committee also went to instances whereby livestock
agents have operated on both sides of the transaction by representing both vendor
The committee was also informed of practices where individual buyers may be
buying for more than one meat company, sometimes multiple companies and at the
A number of submitters noted that, where such practices arise, the auction
system may be compromised and the true value of stock is not realised.
Mr Andrew Madigan, CEO of ALPAA, explained how commission buyers
Some commissioned buyers will turn up with only one order.
Some commissioned buyers will turn up with four orders. Some commissioned
buyers will turn up with a number of orders that are totally different, so they
do not create a lack of competition. For example, a commissioned buyer might
have an order to buy cows for a processor and he might also have an order to
buy feeder steers, so the two are not opposing one another. But it is when a
commissioned buyer turns up with three orders to buy feeder steers that there
is a problem.
However, evidence to the committee indicated that it was not uncommon
for commission buyers to buy for multiple clients including up to ten different
processor identities, which is likely to have a repressive effect on prices for
reasons including limited or even no competition.
As a case in point, Mr Stuart Morant suggested that in Wodonga in late 2014,
three commission buyers were purchasing for 14 different companies, 'resulting
in prices being driven down'.
In this regard, the Victorian Farmers Federation – Wangaratta Branch observed
that it was not aware of any other auction system whereby one bidder
represented more than one client for the same commodity.
Mr Derek Schoen, President of the NSW Farmers' Association explained the
issue with commission buyers:
If a commission buyer takes over the role of all the
processor buyers then it takes out that competition because, of course, they
have a duty to the person that is hiring them to get the stock at the cheapest
possible price and they will do whatever they can to achieve that.
The committee was also informed that stock agents do nothing to report
or stop buyer collusion at the fat market because they fear the buyers will
boycott their run of cattle. Therefore, stock agents may comply with the
commission buyers wishes as to how the cattle are booked out and to how many
Submitters to the inquiry suggested that in some instances, buyers will
decide between themselves prior to the sale as to who will bid for what pen in
order that they don't compete with each other.
As a case in point, Mr David Evans indicated that during periods of oversupply,
lots of cattle may attract only one bid with different commission buyers
purchasing in turn. He suggested that this practice created a clear impression
that they were taking it in turns to purchase and leaving the vendor with a
choice of 'take it or leave it'.
In light of these concerns, some submitters suggested that commission
buyers should buy for one customer only and let other buyers participate in
sales. However, others made the point that limiting buyers to one customer
might exclude smaller buyers from the market such as local butchers or
small-scale farmers and others who don't have the time to attend a sale to
purchase a few head of cattle. Mr David Evans suggested that even excluding a single
commission buyer from acting for more than one major client processor might
operate to the disadvantage of competition.
However, others argued for the need to place a limitation on the number
of processors each buyer is permitted to represent.
Mr James Neary suggested that in order to ensure more competition at auction,
the larger buyers/processors who buy 20 or more animals should have only one
The NSW Farmers' Association supported a nominal limit of five per cent
of stock that a single buyer may be able to purchase on behalf of a number of
players. Such a limit would be set within a mandatory code of conduct which
could be negotiated between all respective stakeholders.
This recommendation was supported by others, including the Indigo Shire
Culture of collusion
The committee was informed of a number of buyer practices utilised to
influence the purchasing price and limit market competitiveness. It became
evident to the committee that there is a widespread belief amongst producers
that collusive practices occur routinely and have the effect of suppressing
In fact, the information provided by submitters and witnesses built up a
picture of practices and conduct specifically directed at influencing market
The evidence of Mr Vin O'Neill was typical in this regard:
Within the auction
system I'm sure there is some level of buyer collusion taking place, though it
is more likely to be in a falling market than in a rising market. The problem
is, it's very difficult to prove and from what I'm hearing from within the
industry, it's mostly the larger company's buyers working together that are
accused of this type of collusion. Within an open bidding system such as in a
saleyard situation there is always a danger of buyer collusion taking place
within it, though it's fair to say, any auction in any industry is exposed to
the dangers of buyer collusion.
The Australian Competition and Consumer Commission (ACCC) noted that in
order to prove collusion, what would have to be demonstrated is that a
particular contract between a buyer and an agent led to a substantial lessening
of competition as Mr Marcus Bezzi, ACCC Executive General Manager of
Competition Enforcement explained:
We would need to be able to prove that there was a
substantial lessening of competition in the market – not just in a particular
sale, but in the market.
Notwithstanding the fact that collusive practices are difficult to
prove, it was made clear to the committee that producers were reluctant to
provide evidence to the inquiry for fear of compromising their relationship
with processors and thereby jeopardising their livelihoods.
This concern was highlighted in the evidence of Councillor Bernard Gaffney,
Mayor of the Indigo Shire Council. In detailing his experience when in charge
of the Victorian Police Criminal Investigation Branch (CIB) livestock squad in
the late 1980s, Mayor Gaffney stated that:
I went to sales right across
Victoria. It was obvious that there was collusion and farmers, beef producers,
would complain about collusion. But, when it came to making a statement, they
were very concerned about their livelihood and that they would be blackballed
by the buyers.
These concerns were corroborated in producer feedback to the Cattle
Council of Australia which indicated that, while uncompetitive practices are
still occurring, producers are reluctant to report them for fear of commercial
retribution. This factor alone demonstrates the significant market power
yielded post the farm-gate.
The Livestock Saleyards Association of Victoria (LSAV) informed the
committee that its members had occasionally reported issues related to buyer
competition at their sales. It noted that these issues arose particularly in
relation to smaller, less-frequented selling centres which are generally
attended by fewer buyers. LSAV continued:
These issues include
suspicion of collusion, the use of contract buyers purchasing on behalf of
multiple end users and the number of buyers who actually attend each sale. It
is difficult to provide any concrete evidence that collusion does occur but
suffice to say that interest is raised when small numbers of buyers attend
Mr Rob Atkinson made the point that if collusion exists, it is because:
some buyers mix in the same circles and know each other well –
creating an impression that buyer collusion could be a factor;
some agents or buyers will operate on behalf of multiple clients
or processors which decreases competition; and furthermore
as the number of buyers decreases, it will be easier to
manipulate the system.
The NSW Farmers' Association explained that saleyard integrity had been
called into question over a variety of practices in relation to price at
saleyards. It suggested that there were common examples of poor practice which
undermine the integrity of the sale process.
The point was made to the committee that while proving collusion is one
thing, the fact remains that it is open to occur.
Witnesses repeatedly emphasised the underlying problem as a lack of transparency
throughout the supply chain and market tension at the saleyards. Without such
transparency, the spectre of collusion, for which there is anecdotal evidence
spanning a 25 year period, will remain.
ACCC investigation into Barnawartha events
In December 2015, the ACCC released the findings of its inquiry into the
allegations of boycotting at Barnawartha. In a media release, the ACCC stated
The investigation found that there was uncertainty before the
sale about whether the Barnawartha saleyard would use a pre or post weigh
selling method. It was also clear that certain processors strongly opposed the
The evidence obtained by the ACCC did not demonstrate that the
processors had reached an agreement not to attend the sale. ACCC Chairman, Mr
Rod Sims noted that:
Although it was clear that processors communicated about the
sale, the evidence did not demonstrate that any of the processors entered an
arrangement or reached an understanding not to attend the sale, which is required
to establish a breach of the Act.
However, the ACCC did identify some 'competition concerns in its
It was confirmed that representatives of some of the competing nine processors
communicated with each other on a regular basis. On this matter, Mr Sims made
the following observation:
There is a fine line
between social discussions about industry issues on the one hand, and
exchanging information in circumstances that may constitute an understanding between
competitors on the other.
At the committee's hearing on 5 April 2016, Ms Sims noted that the ACCC
did not have adequate proof of collusion under the standard required by the Competition
and Consumer Act 2010 Act (CCA Act). That is, the evidence obtained did not
establish that there was some 'meeting of the minds'.
Defining collusion under Australian law
The CCA Act prohibits collusive behaviour, defining such conduct as both
civil and criminal offences. The ACCC holds the statutory authority to
investigate and penalise alleged conduct in breach of the CCA Act. Section
44ZZRA provides a simplified outline of collusion or 'cartel conduct'. The
section states that:
cartel provision is a provision relating to:
- price-fixing; or
restricting outputs in the production and supply chain; or
allocating customers, suppliers or territories; or
parties that are, or would otherwise be, in competition with each other.
The ACCC advised the committee that there are two types of collusive
activity. 'Hard-core cartel activity' involves collusion such as price-fixing,
agreements to limit supply and bid-rigging. These forms of collusion are
criminal offences and can result in up to 10 years imprisonment.
In contrast, 'soft cartel activity' involves a wide range and spectrum
of collusive conduct, such as concerted practices in which parties act
consciously in an identical or similar way.
Soft cartel activity is not necessarily illegal, depending on the type of
conduct involved. The ACCC noted that while acts of soft collusion, such as
concerted practices, do not require reciprocity between colluding parties,
hard-core cartel activity or collusion does require such an understanding.
Section 46 of the CCA Act is also relevant in considering collusion
under the law. It prohibits the misuse of market power by corporations for the
purposes of eliminating or substantially damaging a competitor, preventing
others entering the market, or deterring or preventing others from engaging in
Section 44ZZRF of the CCA Act makes it a criminal offence for a
corporation to make a contract, agreement, or come to an understanding, which
contains a cartel provision. It is also an indictable offence.
Section 44ZZRJ applies a civil penalty to the same conduct. Penalties for
criminal offences or civil breaches for corporations will be the greater of:
Three times the total value of the benefits obtained by one or more
persons which are reasonably attributable to the commission of the offence or breach;
If a court cannot determine the value of the benefits stated above – 10%
of the corporation's annual turnover during the 12 month period ending at the
end of the month when the corporation committed, or began committing, the
Individuals found to be guilty of cartel conduct could face potential
criminal or civil penalties such as up to 10 years of imprisonment, fines of up
to $360,000 per criminal charge, and a pecuniary penalty of up to $500,000 per
The ACCC informed the committee that for a contravention of the CCA Act
to occur, an agreement between buyers, perhaps involving the agent, to
essentially rig the bidding at an auction must be proven.
Government response to Harper
In late 2013, the Australian Government announced a review of
competition policy. The Competition Policy Review (or Harper Review) final report
which was released in March 2015, contained 56 recommendations for reform in
In November 2015, the Australian Government released its response to the
Harper Review, committing to reforming and updating the competition provisions
in the CCA Act, including the introduction of a prohibition on concerted
practices and simplifying cartel laws.
In response to Harper Review Recommendation 30 concerning the misuse of
market power, the Australian Government stated its intention to consult on
options to reform the provision. The Harper Review had recommended a reframing
of section 46 to simplify the provision by introducing an 'effects test'.
Then on 16 March 2016, the Australian Government announced that it would
amend section 46 of the CCA Act in line with the Harper Review recommendation
to introduce changes which will penalise businesses with market power if the
'effect' or 'likely effect' of their actions is, or would be, to substantially
lessen competition. The Prime Minister, the Hon. Malcolm Turnbull MP, explained
that under a new section 46(1):
[A] corporation that has substantial degree of power in a
market shall not engage in conduct if the conduct has the purpose or would have
or be likely to have the effect, the effects test, of substantially lessening
competition in that or any other market.
Mr Bezzi noted the ACCC's support for the Harper Review recommendation
which the government will now implement:
We certainly strongly support the view of the Harper
committee to get rid of the take advantage element of section 46 and bring the
provision into line with sections 45, 47 and 50, which focus on conduct for the
purpose or with the effect of substantially lessening competition. We think
that that would be a significant improvement in the law.
In terms of impact, Mr Bezzi noted that it would require 'people who
have a substantial degree of market power to think a little bit more carefully
about whether what they are doing could have an anti-competitive effect or
might be for an anti-competitive purpose'. He noted in this regard that they
might be deterred.
While the ACCC did not obtain evidence of collusion as defined under the
CCA Act in relation to the Barnawartha events, Mr Sims highlighted the ACCC's concerns
regarding the behaviour of processors. To this end, the ACCC did find that
there were 'signals sent to the market about attitudes to pre-sale weighing'.
According to Mr Bezzi:
Those signals probably gave comfort to some of the smaller
processors that the bigger processors were not going to turn up. 
The ACCC informed the committee that such behaviour was much closer to
that of a 'concerted practice' rather than collusive behaviour as defined by
the CCA Act. Mr Bezzi explained:
A concerted practice is, essentially, where competitors share
confidential information, with each other, without any expectation that the
other party will do anything reciprocal.
What distinguishes collusion from a concerted practice is the matter of
the understanding between the parties. Collusion occurs when there is an
understanding and expectation generated by the sharing of information. According
to the ACCC, the Barnawartha matter did not amount to collusion because it involved
the sharing of information about sensitive matters between the parties but
without 'mutuality' or an understanding and expectation generated that such
information would be acted upon.
Mr Sims explained a concerted practice:
The classic one is...in any market where people are exchanging
information about how they are going to price. They are not asking you what you
are going to do but they are, equally, letting each other know how they are
going to price.
Mr Sims informed the committee that in most other jurisdictions, there
are laws regarding concerted practices whereby signals are sent which amount to
a substantial lessening of competition.
Such laws are applicable to circumstances which are close to collusion but
where information is given, usually privately but also potentially publicly,
which has the purpose or effect of substantially lessening competition, but
without the element of 'mutuality'.
However, in Australia, there are no laws regarding such practices applicable to
the cattle and beef industry.
Defining a concerted practice
The Harper Review recommended that the price signalling provisions in
the CCA Act should be removed and replaced, by extending section 45 governing
contracts, arrangements and understandings that affect competition to also
cover concerted practices that have the purpose, effect or likely effect of
substantially lessening competition.
It provided the following explanation of 'concerted':
The word 'concerted' means jointly arranged or carried out or
co-ordinated. Hence, a concerted practice between market participants is a
practice that is jointly arranged or carried out or co-ordinated between the
participants. The expression 'concerted practice with one or more other persons'
conveys that the impugned practice is neither unilateral conduct nor mere
parallel conduct by market participants (e.g., suppliers selling products at
the same price).
The Harper Review made it clear that such conduct would only be
prohibited if it can be shown that the concerted practice has the 'purpose,
effect or likely effect of substantially lessening competition'. Further:
It would include the regular disclosure or exchange of price
information between two firms, whether or not it is possible to show that the
firms had reached an understanding about the disclosure or exchange.
The CCA Act currently contains price signalling provisions which, by
regulation, only apply to the banking sector. The provisions prohibit the private
disclosure of pricing information to a competitor on a per se basis and the
general disclosure of information where the purpose of the disclosure is to
substantially lessen competition in the market. The Harper Review recommended
the repeal of these provisions, while proposing the introduction of a
prohibition on engaging in a concerted practice if it has, or is likely to have,
the effect of substantially lessening competition.
In its response to the Harper Review, the Australian Government noted
its support for the recommendation (number 29) and committed to developing
exposure draft legislation to repeal the price signalling provisions of the CCA
Act and to extend section 45 of the CCA Act to capture concerted practices that
substantially lessen competition.
Competition in the marketplace
It should be noted that a number of stakeholders who gave evidence to
the committee (including processors and Meat and Livestock Australia (MLA)) did
not share the view that collusion-type practices occur, while Teys Australia
emphatically rejected the claim. Teys argued that:
There is no established basis for attributing volatile
livestock prices to industry consolidation or collusion among Australian
producers, processors or retailers.
Mr Peter Hall from the Cattle Council of Australia agreed with Teys
Australia, stating that:
Sales are supply and demand
situations. That is very often what creates the impression that there is
collusion there when it is not the case. It is just the supply and demand
situation creating that atmosphere on the day.
However, the point was made that any reduction in the number of
individual buyers reduces competition and has a negative impact on the return
to the producer.
The NSW Farmers' Association explained that with the consolidation of the
processing and retailing sectors, and fewer sale options available to
producers, saleyard integrity had become a critical issue, as producers are increasingly
dependent upon the saleyard method of sale to realise value.
As noted by the Australian Livestock and Property Agents (ALPA), misuse
of market power could be as simple as some buyers (not only processors)
attending some saleyards and not others, leaving their competitors to operate
without their competition. ALPA continued:
[T]hrough market consolidation in any industry there is a
real possibility for misuse of market power. This can happen with or without
buyer collusion. Misuse of market power has been proven in the dairy industry
to have an adverse impact on producer returns and we don't see any difference
in the red meat industry.
Producers argued that this has been brought about by a power imbalance
between producers and buyers whereby the producer is the 'price taker' and the
buyer the 'price maker'.
This power imbalance has resulted not only in the potential to use market power
at saleyards but also in relation to grading, weighing, trimming, the use of
by-products and with regard to discounting practices.
The outcome for producers is that there is no mechanism of price
discovery. While the choice of where to sell livestock is ever-diminishing for
many producers, in light of ongoing consolidation of the processing sector, concerns
were raised that producers will consistently achieve a low price.
Ultimately, therefore, the system lacks competition and fairness.
ACCC market study on the cattle and beef industry
In light of the ACCC's concerns in relation to the Barnawartha
investigation and the cattle and beef industry more broadly, the ACCC has
announced that it has initiated a market study focused on the cattle and beef
industry. The key areas of focus for the ACCC in relation to the market study
are expected to include competition issues and in particular, competition
between buyers: including buying agents working for more than one buyer,
transparency issues and market power in the supply chain.
The ACCC made clear that the conduct of buyers and agents was one of the
key issues for consideration in its market survey, particularly given that this
issue has not been dealt with in any of the case law to date.
Other issues to be covered by the study include:
competition between buyers of cattle, and suppliers of processed
meat to downstream customers;
the implications of saleyard attendees bidding on behalf of
impediments to greater efficiency, such as bottlenecks or market
power at certain points along the supply chain;
differences in bargaining strength, and the allocation of
commercial risk between cattle producers and buyers;
the transparency of carcass pricing and grading methods;
seeking information on the share of profits among the cattle and
beef production, processing and retailing sectors; and
barriers to entry and expansion in cattle processing markets.
A final report on the study is expected to be released in late November
Provision of evidence to the ACCC
The ACCC informed the committee that it was mindful of the need to
protect the commercial interests of those who want to provide evidence to its
market study. Given these concerns, the ACCC announced that it would accept
anonymous and confidential submissions.
It should also be noted that the ACCC also runs a cartel immunity
hotline for members of the public who wish to report instances of collusion. Mr
We take allegations of collusion around price-fixing, bid
rigging, market sharing or agreements concerning supply very seriously. They
carry penalties of up to 10 years imprisonment. So they are very serious
offences. Anyone who is aware or has evidence relating to collusion, we really
ask them to bring that evidence to us and to our team. If you are actually
involved in collusion, under our immunity policy we have a capacity to grant
immunity on a conditional basis to the first person who reports the collusion
to us. We encourage people to contact our cartel immunity hotline if they feel
they may be in that situation. Or they can e-mail firstname.lastname@example.org.
Many producers advocated for significant regulatory and industry change
to prevent collusive practices and any misuse of market power. The majority of
these suggestions were aimed at strengthening legislative protections against
anti‑competitive behaviour. Many also highlighted the need for reform to
the industry to improve transparency and fairness.
A number of submitters recommended reform to both the ACCC and the CCA Act.
The recent introduction of an 'effects' test and appointment of a Commissioner
with specific responsibilities for agriculture was supported in evidence to the
committee as a first step.
The Sheepmeat Council of Australia advocated a series of additional measures
to address the power imbalance between producers and processors, including:
an increased role for the ACCC in regulating the red meat
processing industry, including oversight of mergers and improved investigatory
powers regarding incidents of uncompetitive market behaviour; and
greater emphasis on providing a competitive market and
transparency in order to protect the interests of producers.
The NSW Farmers' Association suggested a range of measures designed to
counter collusive practices starting with an ACCC investigation into the impact
of commission buyers' agreements on competition. The NSW Farmers' Association
also recommended that a commitment be sought from commission buyers and major
buyers by way of a section 87B undertaking accepted by the ACCC not to enter
into agreements that provide for multiple representations which would result in
the acquisition of over five per cent of livestock at a saleyard in a day.
Mandatory code of conduct
The NSW Farmers' Association advocated for the introduction of a
mandatory code of conduct.
It suggested that such a code provide for:
transparency as to the stock available at a saleyard, the stock
purchased and price outcomes;
a requirement that in yards where over a certain number of head
are traded at one time, commission buyers must not represent multiple buyers
that would result in the acquisition of over five per cent head of livestock in
any given day;
consistent maximum curfew periods and weighing without
unnecessary delay; and
a requirement that buyers' agents disclose the buyers that they
represent at a saleyard before the fall of the hammer.
Mr John Dunn, Policy Director with NSW Farmers' Association argued that:
All these things we are talking about—whether it is curfew
times, pre or post-sale weighing, or commissioned buyers acting on behalf of
multiple people—go to the integrity of that system, that economic transaction.
The only way we can sort that out is through a mandatory code of conduct.
The PGA WA also supported the establishment of an industry code, which
would establish methods of compensation for producers in situations regarding
collusion or misuse of power. However, it differed from the NSW Farmers'
proposal to the extent that it recommended that the scheme be voluntary.
As an alternative, the Indigo Shire Council suggested that a system involving
registration for buyers may be a solution.
The ACCC noted that cost-benefit should be considered when introducing
rules for markets and that a cost-benefit analysis is usually easily met when
considered in relation to transparency. The ACCC suggested that when people
have to declare on whose behalf they are buying, such a mechanism would pass
any such cost‑benefit test.
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