AUSTRALIA | Sunny Queen and 11 other egg producers and suppliers are alleged to have breached competition laws by coordinating egg production and supply in Australia, in civil proceedings the ACCC filed in the Federal Court.
It is alleged that since at least October 2020 key egg suppliers and producers coordinated on a range of business decisions including production volumes, distribution, expansion plans and culling to manage perceived oversupply, in a way that likely substantially reduced competition for many years.
The case includes concerted practice allegations. This is the first case the ACCC has brought with concerted practice allegations since the prohibition was introduced in 2017. A concerted practice involves cooperation between businesses that goes beyond them acting independently in response to market conditions.
The proceedings allege conduct by Sunny Queen Pty Ltd (Sunny Queen), Doug Hall Poultry Pty Ltd (Hall), Alpair Pty Ltd trading as McLean Farms (McLean Farms), Ellerslie Free Range Farms Pty Ltd (Ellerslie), and Kinross Farm Pty Ltd (Kinross).
Each of these entities is alleged to have engaged in cartel conduct and is also alleged to have engaged in a concerted practice with the purpose, effect or likely effect of substantially reducing competition.
“Our investigation has uncovered alleged widespread anti-competitive conduct in the egg industry that we allege has impacted the supply of eggs to Australian consumers since at least 2020. This alleged conduct is extremely serious, which is why we have commenced this Federal Court action,” said ACCC Chair Gina Cass-Gottlieb.
“Fair competition in the supply of fresh food such as eggs is extremely important. Anti-competitive conduct disadvantages Australian consumers, who can face reduced choice and higher prices, as well as those businesses seeking to compete fairly or who are seeking to enter markets to provide competing supply.”
The ACCC alleges that the egg industry is highly concentrated, with a small number of large suppliers and significant barriers to entry and expansion.
Eggs are an important consumer staple, with Australians consuming an average of over 250 eggs per person each year. The alleged conduct relates to the production and supply of eggs, including free-range, cage and organic eggs.
“These companies are alleged to have coordinated in a range of decisions about their business operations, including the retailers each business could supply, what volumes they could produce and when to cull birds to manage periods of perceived over-supply,” she said.
“We allege this coordination between Sunny Queen, Hall and McLean Farms extended to purchasing a property in Pittsworth, Queensland, for the purpose of preventing its acquisition by rival egg suppliers. We also allege this had the effect of substantially lessening competition. We also allege that Sunny Queen restricted how many eggs its rival Kinross could sell to customers, and prevented Kinross from selling its eggs to Coles, Woolworths, Aldi, Metcash or Costco.”
The ACCC has committed to protecting competition in fresh food supply chains so Australian consumers receive the benefits of businesses competing on price, and these proceedings remind businesses to make their production, supply, and pricing decisions independently.
The ACCC has also sought declarations, penalties, injunctions, costs and other orders.
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