CCPC Concludes Examination Of Beef Industry Complaints

The Competition and Consumer Protection Commission (CCPC) has today written to over 200 individuals, including the Independent Farmers of Ireland, the Beef Plan Movement, and the Irish Farmers Association, regarding the outcome of an extensive examination of reported issues within the beef sector. Following an extensive review and assessment of all the information gathered on foot of the complaints received, the CCPC has formed the view that there is insufficient evidence of a breach of competition law to warrant taking any further action at this time.

The CCPC’s role is to investigate allegations of anti-competitive behaviour and to determine whether there is sufficient evidence of a breach of competition law to warrant the initiation of court proceedings.  The CCPC does this, on foot of a complaint or on its own initiative, by first making inquiries and assessing whether or not there is evidence to suggest that a breach of the law has occurred or is occurring. If there is evidence suggesting that a breach of the law has occurred or is occurring, the CCPC may initiate an investigation and/or seek remedial action from the parties to bring the conduct to an end. If there is no evidence to suggest that a breach of the law has occurred or is occurring, the CCPC will close its inquiries without affecting the right of complainants from taking private action.

In 2019, the CCPC received a significant number of complaints about the beef sector and as a result commenced a detailed and extensive examination. The majority of these complaints related to five core issues;

  • the similarity in base price per kilo offered by processors to beef farmers across all beef processing plants which was indicated as evidence of the existence of a cartel operated by beef processors;
  • dissatisfaction with the qualitative criteria for the payment of “in-spec” bonuses applied by beef processors;
  • the importing of foreign beef;
  • the operation of feedlots distorts competition; and
  • the impact of a reported monopoly on offal processing.

In addition to assessing the information provided to us the CCPC took various steps to obtain further information from other sources in order to assess the concerns raised in the complaints and to determine if there is evidence of a breach of competition law to enable the CCPC to open a full investigation. These steps included conducting extensive research and open-source intelligence gathering, meeting with some beef farmers and their representatives as well as a number of public bodies and industry experts, including Teagasc, Bord Bia and the Department of Agriculture, Food and the Marine (DAFM). The CCPC also consulted with the European Commission to discuss market conditions across the EU.

An overview of the issues examined

In relation to allegations that a cartel is in operation in the industry, in order to prove the existence of a cartel the CCPC needs to have tangible proof of an agreement between competitors to coordinate their activity, such as written agreements between competitors to fix prices to show that a cartel exists. Information showing that beef processors charge similar prices does not, in itself, constitute evidence that a cartel is in existence.  Despite considerable engagement with various beef industry stakeholders, the CCPC found no evidence of a cartel agreement between beef processors in the State.

The CCPC also found no evidence to show that the criteria applied by beef processors for the payment of “in-spec” bonuses breaches competition law. Currently, over 90% of Irish beef is exported and many overseas customers require assurances in relation to traceability and animal health. The various cuts of beef from a single carcass are exported to multiple customers located in different countries. In most instances, the standard set by the most demanding customer sets the standard for all beef cuts from a carcass. The CCPC also understands that a review of the current customer requirements with respect to the “in-spec” bonus criteria is currently underway as part of the Beef Task Force’s work.

A number of complainants stated that beef imports from other EU Member States were suppressing beef prices. Ireland exports the vast majority of its beef production with approximately 37% of all beef exports sold to other EU Member States. Similarly, Ireland also imports beef from other countries. Imports are not in themselves anti-competitive and do not come under the remit of competition law.

The CCPC also examined the practice of feedlots following allegations that beef processors were procuring cattle from feedlots to put downward pressure on beef prices at certain times of the year. Feedlots are an alternative source of supply for beef processors and they provide security of supply at certain times of the year.  They are owned by beef processors or by farmers who have supply contracts in place with beef processors which guarantee a set price for cattle which meet agreed carcass specifications. The information available to the CCPC indicates that feedlots represent only a small proportion of total national beef production and are therefore unlikely to raise material concerns.

Finally, the CCPC examined concerns that a single firm holds a dominant position in the rendering and offal sectors. For competition law purposes, a firm is in a dominant position if it has the ability to behave independently of its competitors, customers, suppliers and, ultimately, the final consumer.  It is not illegal for a firm to hold a dominant position. However, a firm in a dominant position which engages in abusive conduct is considered to have breached competition law.

The process of rendering and harvesting offal are distinct activities from beef processing. The use or disposal of all Animal-By-Product (“ABP”), including offal for human consumption, is strictly regulated in the interests of public and animal health by DAFM, the Food Safety Authority of Ireland and the Environmental Protection Agency.

The CCPC has identified a number of specialist operators active in the processing of ABP and offal in Ireland. Based on the information currently available to the CCPC, these operators do not appear to share a common ownership structure. The CCPC has not found any evidence of conduct by these operators that would raise suspicions that they have engaged in anti-competitive behaviour.

Examination closure

The CCPC has completed its assessment of all the issues raised. Given the level and nature of the concerns expressed the CCPC has written to all complainants detailing the outcome of this assessment.  Complainants have also been advised that the CCPC’s decision does not preclude any person from lodging a fresh or related complaint with the CCPC in respect of an alleged breach of competition law.  The CCPC’s decision is without prejudice to any action it may decide to take in future on foot of the receipt of any new complaint or new information relating to an alleged breach of competition law in the beef sector.  The CCPC will consider any such complaint and any relevant competition concerns on a case-by-case basis.