QLD:Farmers demand help in milk price war

AAP General News (Australia)
04-14-2011
QLD:Farmers demand help in milk price war

Eds: embargoed to 0600 (AEST) Thursday, April 14

By Kym Agius

BRISBANE, April 14 AAP - The competition watchdog needs to investigate if Coles engaged
in predatory pricing and deceptive conduct by starting a milk price war, the Queensland
Dairyfarmers' Organisation (QDO) says.

A Senate inquiry is under way after Coles dropped the price of its home-brand milk
to $1 a litre on Australia Day, with competitors quickly following suit.

QDO president Brian Tessmann said the cut-throat discounting has already hurt farmers.

"Milk cheques for many dairy farmers have already dropped," he said in a statement.

"Coles executives have dug their heels in, so it is now time for the government to
stand up for farmers and consumers."

The Australian Competition and Consumer Commission (ACCC) announced last month they
were examining "all aspects of the (milk) supply chain" but refused to be specific, even
during evidence to the Senate inquiry on March 10.

QDO lodged 10 recommendations last week to the Senate inquiry and will hand them to
shadow agriculture spokesman John Cobb on Thursday.

Their recommendations focus on what they want the ACCC to investigate.

"We didn't want to leave anybody in doubt what were asking for," a spokesman told AAP.

The recommendations call for the federal government to direct the ACCC to examine Coles
for potential breaches of the Competition and Consumer Act by engaging in predatory pricing
as well as purchasing goods with the intention of selling them below their cost.

Ongoing price, cost and marketing surveillance of the fresh milk supply chain also
needs to be undertaken, the QDO says.

It says legislation should be strengthened to prohibit the abuse of a dominant position
in the market, as well as directly or indirectly imposing unfair purchase or selling prices.

Another recommendation says an independent study is needed of the economic impact of
supermarket store-brand milk procurement, marketing and pricing practices, and calls for
a mandatory code of conduct for relations between dairy farmers, processors, distributors/vendors
and retailers.

Mr Cobb has introduced a motion to federal parliament calling on the ACCC to "immediately
examine the big supermarkets and milk wholesalers ... to ensure they do not have too much
market power and are not anti-competitive".

Debate was adjourned and the motion is expected to be voted on next month.

A spokesman for Mr Cobb and a spokesman for the parliamentary secretary to the Treasury,
David Bradbury, said the motion has bipartisan support.

But Mr Bradbury's spokesman said that the motion would in some ways be just a gesture
of goodwill, as the government did not have the power to direct the ACCC on what it should
investigate.

"To maintain the independence of the ACCC, the Competition and Consumer Act prevents
the government from giving it a specific direction in relation to the enforcement of the
competition law," the spokesman said.

The ACCC's chief executive Graeme Samuel told AAP: "We conduct our investigations independently,
vigorously and free from any political interference".

AAP ka/jl/nb

KEYWORD: MILK (EMBARGOED)

� 2011 AAP Information Services Pty Limited (AAP) or its Licensors.