Application from Tegel Growers Received by The Commerce Commission

Seeking authorisation on behalf of its members to collectively negotiate the terms and conditions of its members’ supply of chicken growing services to Tegel Foods Limited (Tegel), the Commerce Commission has received an application from the New Zealand Tegel Growers Association Incorporated (TGA). TGA seeks authorisation for a period of ten years.

TGA is an industry association. Its membership consists of three regional industry associations. The regional associations represent growers in the greater Auckland, Taranaki and Canterbury regions who supply chicken growing services to Tegel. In this way, TGA currently represents approximately 75 growers to Tegel. 

Tegel is one of the largest chicken processors in New Zealand. It outsources its chicken growing requirements to contract growers located in close proximity to its three processing plants in Auckland, New Plymouth and Christchurch. Tegel provides the growers with day-old chicks to be reared according to certain specifications. 

TGA considers that any lessening of competition as a result of its members collectively negotiating with Tegel would be outweighed by the public benefits that are likely to arise. According to TGA, these benefits include a likely reduction in the costs of negotiating the terms and conditions of supply and various efficiency benefits. 

A public version of the authorisation application is available on the Commission’s case register.

Background

The Commission may grant authorisation under sections 58 or 65AA of the Commerce Act (the Act) for agreements that may otherwise breach the Act if it is satisfied that the agreement will in all the circumstances result, or be likely to result, in such a benefit to the public that the conduct should be permitted.

The Commission’s Authorisation Guidelines explain when anti-competitive agreements that may lessen competition will be authorised under section 58 of the Act, and our process for determining such authorisation applications. 

The Commission’s Guidelines on Approach to Authorisations under the COVID-19 Response (Further Management Measures) Legislation Act explain when the Commission will authorise agreements that contain a cartel provision under Part 5 of the Act, and our process for determining such authorisation applications.

In 2017, the Commission granted authorisation to the Waikato - Bay of Plenty Chicken Growers Association Incorporated to collectively negotiate the terms and conditions of its members’ supply of chicken growing services to Inghams Enterprises (NZ) Pty Limited.