Australia’s competition regulator has launched legal action against some of the country’s biggest egg producers, alleging “cartel conduct” and other anti-competitive behaviour.
Sunny Queen, the largest egg supplier in Australia, and 11 other producers and suppliers are alleged to have breached competition laws by coordinating on the production and supply of eggs since 2020.
The Australian Competition and Consumer Commission (ACCC) filed civil proceedings in the Federal Court today, alleging the companies had coordinated on a range of decisions.
The ACCC alleges that since at least October 2020, the egg suppliers and producers coordinated on a range of business decisions, including buying a property in Queensland to stop a rival supplier acquiring it.
The legal filing comes more than a year since the ACCC launched court action against several large vegetable producers, alleging they formed a price-fixing cartel in supplying supermarket Aldi.
Producers and suppliers named
The ACCC alleges the egg suppliers and producers coordinated on decisions about production volumes, distribution, expansion plans and culling to manage perceived oversupply in a way that likely “substantially reduced competition for many years”.
ACCC chair Gina Cass-Gottlieb said eggs were an important household staple, and the alleged behaviour could result in less competitive prices for consumers.
“When you have good functioning competition then you have more choice, you also have price competition, so lower prices,” she told Victorian Country Hour.
“Our concern is that when parties are not competing and they start working together … consumers can ultimately miss out.
Gina Cass-Gottlieb says the ACCC is concerned consumers could miss out on lower prices. (Four Corners: Rob Hill)
“This alleged conduct is extremely serious.”
Sunny Queen is Australia’s largest wholesale egg supplier, holding about one-third of the market for supply of eggs to retailers such as Woolworths, Coles, Metcash, Aldi and Costco.
The company has warehouse and distribution facilities in Queensland, New South Wales, Victoria, South Australia and Western Australia.
The proceedings involve allegations against entities including Sunny Queen, Doug Hall Poultry Pty Ltd, Alpair Pty Ltd trading as McLean Farms, Ellerslie Free Range Farms Pty Ltd and Kinross Farm Pty Ltd along with seven other companies.
Farm sale examined
The ACCC alleges Sunny Queen, Hall and McLean Farms’s coordination extended to purchasing a property in Pittsworth, Queensland, to prevent rival egg suppliers acquiring it.
“We also allege this had the effect of substantially lessening competition,” Ms Cass-Gottlieb said.
The competition regulator also alleged 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.
A spokesperson for Sunny Queen denied all allegations.
“Sunny Queen has cooperated fully with the ACCC throughout the course of its investigation,” the spokesperson said.
“Sunny Queen denies the allegations and intends to defend the proceedings.”
The company said the allegations related to the terms of its agreements with its shareholders and main egg suppliers in Queensland and Victoria. It said it would remain “business as usual” while the matter was before the courts.
Doug Hall Poultry, McLean Farms, Kinross Farm, Yallamundi Farms and Ellerslie have been contacted for comment.
Sunny Queen is one of 12 egg producers named in the Federal Court matter. (Supplied)
Anti-competitive conduct
It is the first case the ACCC has brought involving 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.
“It can involve competitors coordinating their behaviour in ways that harm competition, even if there’s no formal agreement,” Ms Cass-Gottlieb said.
“It can involve communication between competitors, as we allege here, a regular exchange of information … in ways that reduce independent decision-making.”
The ACCC alleges the egg industry is highly concentrated, with a small number of large suppliers and significant barriers to entry and expansion.
Eggs are a household staple, with Australians eating an average of more than 250 each a year, according to the ACCC.
