Notice of ACCC Inquiry into the Australian dairy industry

Overview

The Australian Government, through the Treasurer, the Hon Scott Morrison MP, has directed the Australian Competition and Consumer Commission (ACCC) to undertake an Inquiry into the competitiveness of prices, trading practices, and the supply chain within the Australian dairy industry. This Inquiry was announced via the notice C2016G01465 (Gazette) on 27 October 2016, aiming to address issues related to the dairy industry's structure and market dynamics. The ACCC's role in this Inquiry is to comprehensively examine various aspects of the dairy supply chain, including competition between processors, retail pricing arrangements, and the effects of domestic and international prices on dairy producers and processors. This initiative seeks to enhance transparency and fairness in the industry, ensuring that all participants in the supply chain are treated equitably. The ACCC is mandated to submit its findings and recommendations to the Treasurer by 1 November 2017, providing a detailed analysis that could inform future policy decisions and regulatory actions in the sector.

Scope and Application

The Inquiry into the Australian dairy industry is a comprehensive examination mandated by the Treasurer and overseen by the Australian Competition and Consumer Commission (ACCC). This Inquiry applies to all entities and individuals within the dairy supply chain, including milk producers, processors, and retailers, as well as examining the overarching commercial relationships and market dynamics within this industry. Geographically, the Inquiry spans across Australia, considering both domestic and export markets, and their influence on the industry's competitiveness and pricing. Notably, the Inquiry does not target specific individuals but rather seeks to understand broader systemic issues within the industry. The ACCC is required to submit its findings by 1 November 2017, following the Inquiry which commenced on 1 November 2016. The scope of the Inquiry is deliberately broad, covering aspects such as the nature of competition, retail pricing, corporate structures, and the impact of domestic and international prices on dairy producers and processors. The Inquiry also considers the transparency of price determination mechanisms for raw milk, market information accessibility, and the role of collective bargaining. Additionally, the potential for anti-competitive conduct and its effects on the supply chain are examined, alongside other factors influencing farm profitability.

Key Provisions

The key provisions of the Notice (C2016G01465) issued by the Treasurer on 27 October 2016 mandate the Australian Competition and Consumer Commission (ACCC) to conduct an Inquiry into the Australian dairy industry. Section (2) of the Notice specifies the scope of the Inquiry, which includes the competitive practices between processors for acquiring raw milk and supplying processed milk and dairy products, the nature of retail pricing arrangements and their impact on the supply chain, and the effects of domestic and overseas prices and demand on dairy producers and processors. Additionally, the Notice requires consideration of the commercial relationships between dairy producers and raw milk acquirers, the mechanisms used to determine raw milk prices, and the availability and effectiveness of market price information. The Notice imposes several obligations on the ACCC, which is tasked with conducting the Inquiry. Section (3) requires the Inquiry to be impartial and not focused on any specific individual or entity. The ACCC must submit a comprehensive report to the Treasurer before 1 November 2017, detailing its findings and recommendations based on the matters outlined in the Notice. The ACCC is also encouraged to invite and consider written submissions from interested parties, as detailed in the Issues Paper published on the ACCC's website. In terms of legal consequences, the Notice itself does not explicitly outline offences or penalties for non-compliance. However, the outcomes of the Inquiry could lead to further legislative or regulatory actions by the government. The ACCC's findings may result in recommendations for policy changes or regulatory reforms aimed at improving competitiveness and fairness in the dairy industry. Non-compliance with any subsequent regulations or laws that may be enacted based on the Inquiry's findings could result in civil or criminal penalties, depending on the nature and severity of the breach. The maximum penalties for breaches of such regulations would be determined by the specific provisions of the resulting laws.