The competition watchdog is attempting to smash open an alleged egg cartel, claiming farmers in the $1.7bn industry were encouraged to manipulate profits by artificially decreasing supply.
The Australian Competition and Consumer Commission has alleged an overt plot to prematurely kill hens or bury their eggs as part of a coordinated industry plan. ACCC chairman Rod Simms says he views the conduct “very seriously” despite the fact the arrangements were not successfully implemented.
The ACCC has instituted proceedings against the industry’s peak body, the Australian Egg Corporation (AEC), three of its directors and several other egg companies over the alleged scheme.
In proceedings lodged with the Federal Court, the ACCC alleges the cartel conduct took place between November 2010 and February 2012.
It claims that in November 2010, the AEC encouraged farmers to kill hens two weeks prematurely until mid 2011 to avoid flooding the market and incurring a catastrophic commercial return.
In February 2012, AEC managing director James Kellaway is alleged to have encouraged producers to fast-track slaughter dates, donate eggs or dispose of eggs via “dumping/burying”. Farmers were informed that production had peaked the previous September at 33 million dozen eggs and was set to continue unless supply was reduced in a coordinated manner.
The AEC released a statement saying it had co-operated with the watchdog’s investigation and would remain co-operative throughout the legal proceedings. However, it declined to comment on the substance of the case.
The other directors targeted by the watchdog include Jeffrey Ironside and Zelko Lendich. The ACCC is seeking to have Mr Kellaway banned from running a company for two years with one year bans for Mr Ironside and Mr Lendich.