NINE meat processors who boycotted the Barnawartha cattle saleyards last February had their phone records seized during the Australian Competition and Consumer Commission’s subsequent collusion investigation.
Details of the ACCC’s interrogation were disclosed during a hearing of the Senate Rural and Regional Affairs and Transport References Committee’s inquiry into the red meat processing sector, in Canberra on Tuesday.
The boycott in north-east Victoria ignited the Committee’s inquiry that’s due to report on May 5 and make significant recommendations like a potential code of conduct for sale yard practices that impact competition.
The ACCC also investigated whether national competition laws were breached by the “Barnawartha nine” but could not prove collusion.
The ACCC will also examine competition, fair trading, transparency and other related competition issues in the beef and cattle supply chain through a market study to be conducted by its newly implemented Agriculture Enforcement and Engagement Unit.
Victorian Nationals Senator Bridget McKenzie questioned the ACCC’s information gathering process during its investigation of the Barnawartha boycott and how it reached a conclusion that existing competition laws were not breached.
ACCC Enforcement and Compliance Executive General Manager Marcus Bezzi said the ACCC’s inquiry found market signals about attitudes to pre-sale weighing were made - but deliberate collusion amongst the nine cattle buyers was not proven.
“I should say those signals probably gave comfort to some of the smaller processors that the bigger processors weren’t going to turn up - that’s how I would put it - but it’s not enough to establish a breach in the law,” he said.
Mr Bezzi said during the investigation process, the ACCC obtained phone records that indicated which of the nine processors had communicated with each other, via mobile phone.
But he said the ACCC did not have the capacity to obtain further evidence about the actual content of the conversations.
“We could see that there were discussions but we had to interrogate the people concerned to ask them what the discussions were about,” he said.
Senator McKenzie asked if any individual processor had a higher rate of phone calls compared to the others but the ACCC said it was unable to say.
ACCC Chair Rod Sims said if that evidence was there, if would have indicated “further things”.
Mr Bezzi said the ACCC was however surprised by the volume of communication that had occurred among the processors but they “did have some plausible explanations as to the communications”.
“For example, some had common buyers – so common buyers for some processors –and that gives them a legitimate reason for having discussions,” he said.
“There were also long term acquaintances - long term friendships between people - and that was given to us as the reason for the discussions.”
Mr Bezzi said the initial stage of the ACCC’s investigation last year involved identifying the inquiry target which was the nine processors who were likely to have turned up at the sale.
He said all documentary material in the possession of the nine targets, potentially relevant to their decision not to attend the sale was then obtained.
The ACCC also looked for broader contextual material that might explain why they may have taken a particular position in relation to the sale, he said.
Mr Bezzi said once all documents were obtained, the ACCC then analysed all of the material and decided it was appropriate to conduct oral examinations of several witnesses.
He said the compulsory oral examinations were held under oath where the ACCC essentially examined and cross examined witnesses to test the veracity of what they might say.
“We explore issues that might come up in the course of our analysis of the documentary material; it’s a private examination but it’s a fairly rigorous process,” he said.
“The use of our compulsory powers is something that we do very carefully.
“We try and do it in a way that provides people with fair opportunity to respond in a reasonable time-frame so we try and not be too oppressive about it.
“They often ask for extensions of time – and we do have to accommodate those – but then the process of setting up oral examinations also takes time.”
The ACCC also used external counsel, with expert cross-examination skills, to assist the examinations while some processors involved in the oral examination used lawyers.
Senator McKenzie asked the ACCC to advise the Committee - through a question on notice - which of the processors used lawyers during the oral examinations.
She also asked if people were willing to give evidence during interviews and cooperate with the ACC or, like the Committee’s inquiry had found, a culture of fear and intimidation existed.
Mr Bezzi said it was “a bit of both” but witnesses didn’t have any choice other than to speak, when issued with a compulsory notice.
Senator McKenzie asked the ACCC which of the nine processors spoke voluntarily and which gave evidence after being served with a compulsory notice, with the question also taken on notice.
Mr Bezzi said the ACCC also spoke to people in sale yards, buyers and a range of other people in the market, during its investigation.
He said essentially what the ACCC discovered in the investigation process was that it was clear a number of communications were held between the parties.
Mr Bezzi said Teys had made its position on pre-sale weighing very clear to the whole market.
He said four buyer/processors didn’t attend the sale, due to their objection to pre-sale weighing, and four others claimed they didn’t have any need for cattle.
“We tested this claim out and we accepted that it was true,” he said.
Mr Bezzi said one processor – JBS - said that they had a mechanical breakdown and had no need for the cattle while the final one stated they had a pre-arranged meeting to purchase machinery, as an excuse for not attending.
“We tested these excuses out and as you’ll understand, if we were to run a case we need to be able to prove it, either on the balance of probabilities if we run a civil case, or beyond reasonable doubt if it’s a criminal case,” he said.
“In the end we were unable to go beyond or unable to get to a point with the evidence that would satisfy us that we could have taken the matter forward.”