Cattle and Beef Market Study Launched by ACCC

In a recent ACCC Media Release, it was announced by ACCC Chairman Rod Sims, that the Australian Competition and Consumer Commission (ACCC) has released an Issues Paper for its Cattle and Beef Market Study.

The ACCC has been provided with additional funding of $11.4 million over four years to establish an Agriculture Enforcement and Engagement Unit that will conduct investigations and engagement in rural and regional areas.

Background to the Study

The ACCC has chosen to conduct a market study of the cattle and beef sector which will be carried out by the Agriculture Unit. This market study is in response to a number of issues raised by stakeholders in this industry in 2015.

Some issues of concern to the ACCC regarding Australia’s beef industry included:

• In early 2015, the ACCC reviewed the proposed acquisition of Australian Consolidated Food Investments Pty Ltd (Primo Smallgoods) by JBS USA Holdings Inc. The ACCC decided not to oppose this acquisition, as it was considered unlikely to substantially lessen competition; and
• The ACCC also considered allegations that nine meat processors collectively boycotted the prime cattle sale at the Barnawartha saleyard on 17 February 2015. However, the evidence obtained by the ACCC did not demonstrate that the processors had reached an agreement not to attend the sale.

The purpose of the ACCC’s market study is to:

• examine competition and transparency in the supply chain; and
• consider whether there are impediments to competition and efficiency at various stages of the supply chain in cattle and beef markets.

Key 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 multiple buyers;
• 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.

The selection of these issues is based on both the ACCC’s previous interactions with the industry and issues raised during the recent Senate Inquiry. The ACCC encourages interested parties to raise other relevant issues. In particular, the ACCC encourages market participants who are experiencing similar issues in other red meat markets (for example, sheep or goat) to contact the ACCC during this market study.

Comment from the ACCC

The ACCC Chairman Rod Sims said:

Timeline for Preliminary Findings

The ACCC will analyse information collected from submissions and forums and will publish draft findings for further comment, likely in September 2016. The ACCC will then release a final report, likely in late November 2016.

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ACCC releases issues paper for cattle and beef market study – ACCC Release MR 44/16
ACCC launches market study into cattle and beef industry – ACCC Release MR 41/16