Preliminary view to authorise collective bargaining

23 November 2017

Preliminary view to authorise collective bargaining for the Waikato - Bay of Plenty Chicken Growers Association

The Commerce Commission has released its draft determination which would allow members of the Waikato - Bay of Plenty Chicken Growers Association Incorporated to collectively bargain with Inghams Enterprises (NZ) Pty Limited.

The Association, on behalf of members, asked for authorisation to collectively negotiate the terms and conditions under which its members supply chicken growing services to Ingham's.

The collective bargaining proposed by the Association would interfere with the normal competitive process of allowing individual growers to independently negotiate their supply terms with Ingham's.

The Commission’s preliminary view is that there is a real chance that the proposed collective bargaining arrangements would lessen competition. However, any detriment as a result of a reduction in competition is likely to be outweighed by the public benefits, including reducing the transaction costs of multiple individual growers arranging supply contracts with Ingham's. Growers would be able to opt out of any collective arrangements and contract individually with Ingham's if they wished.

Interested parties are welcome to make submissions on the draft determination. Submissions are due by8 December 2017 and can be sent to registrar@comcom.govt.nz with the reference Waikato - Bay of Plenty Chicken Growers Application in the subject line of the email.

A copy of the draft determination can be found here.

Background
Waikato - Bay of Plenty Chicken Growers Association
All of the members of the Association are farmers providing chicken growing services to Ingham's. The Association, on behalf of its members, is seeking authorisation to collectively bargain on the terms and conditions under which its members supply chicken growing services to Ingham's. The Association is not seeking authorisation for any collective boycott activity.

Ingham's
Ingham's is one of the largest chicken processors in New Zealand. It outsources its chicken growing requirements to contract growers located in close proximity to its processing plant near Ngarua. Ingham's has never obtained growing services from a grower who was not a member of the Association or who was located outside of the Waikato or the Bay of Plenty regions.

Authorisation requirements
The Commission may grant authorisation under section 58 of the Commerce Act for certain arrangements that may otherwise breach section 27 of the Act if satisfied that the public benefits of the arrangement outweigh the detriments arising from the loss of competition. The granting of this type of authorisationprotects the applicant from court action under the Commerce Act by the Commission and private individuals.

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