Livestock companies fined over $3 million

Issued 22 December 2015
Release no. 77

Livestock companies fined over $3 million in price fixing case

PGG Wrightson and Rural Livestock have been fined $2.7 million and $475,000 respectively in separate penalty hearings in the Auckland High Court for price fixing in connection with the introduction of the National Animal Identification Tracing Act 2012 (NAIT Act). PGG Wrightson has also agreed to pay $50,000 towards the Commission’s investigation costs.

The Commerce Commission launched an investigation into livestock companies fees related to the implementation of NAIT after receiving a complaint from a Northland farmer in 2012.

The investigation found that members of the New Zealand Stock and Station Agents Association (NZSSAA), including PGG Wrightson and Rural Livestock, entered into three anti-competitive agreements to set fees. The agreements were that:
saleyards would charge a minimum fee of $25 for the tagging of any cattle, and $10 for any calves, presented to a saleyard without the ear tag required by the Act. Agents would pass that fee on to farmers
agents would charge farmers a radio frequency identification device (RFID) administration fee of $1.50 per head of cattle (split equally between the vendor and purchaser), to register saleyard based cattle movements
saleyards would increase existing yard fees by $1.50 per head of cattle (split equally between the vendor and purchaser).
It was agreed the new fees would apply from 1 July 2012, when the Act took effect. The livestock companies and saleyards promoted the fees as justifiable surcharges to recover the additional costs they incurred in complying with the new livestock monitoring legislation.

PGG Wrightson and Rural Livestock both implemented the new fees from that date. Both companies subsequently admitted their conduct breached the Commerce Act and reached separate settlement agreements with the Commission.

The Commission filed court proceedings in August 2015 making similar allegations against Elders New Zealand and five individuals. Settlements have not been agreed in those proceedings, which remain before the courts.

The Commission also considers that a number of other livestock companies and the industry association are likely to have breached the Commerce Act. The Commission has therefore issued warnings to:
Allied Farmers Limited
Peter Walsh & Associates Limited
CRT Livestock Limited
L.I Redshaw Limited
Central Livestock Limited
Hazlett Rural Livestock Limited
Southstock Limited
the New Zealand Stock and Station Agents’ Association.

As court proceedings remain ongoing in this case, the Commission cannot comment any further at this time.

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