newsCO.com.au | Energy cartel laws waived by ACCC for food processors desperate to reduce costs – ABC Rural

November 23, 2017

@newsCOflash

2017-11-23 03:20:00

In the face of skyrocketing energy prices, Australia’s competition regulator the ACCC is allowing a group of agribusinesses to jointly buy electricity and gas across an 11-year period.

Laws prohibit this type of cartel behaviour, but an exemption is granted if the benefit outweighs the detriment to the public.

Eight businesses have so far joined the Eastern Energy Buyers Group, including the large Rivalea pig farm, Australian Lamb Company, CSF Proteins, Diamond Valley Pork, Gathercole Group, Greenham and Sons, MC Herd Pty Ltd, Ridley Agripoducts, and Turi Foods and Farming.

One lamb processor told the ABC the plant’s energy costs have skyrocketed this year alone, despite investments in solar power.

“With both electricity and gas we’ve seen prices double since the beginning of 2017 and in real dollar terms that equates to almost $3 million to our bottom line,” said Dale Smith, the chief financial officer with the Australian Lamb Company which has two lamb processing plants at Sunshine and Colac.

“Early indications are we should be able to save 20 per cent, but the group will now start to shop around for the best energy deal.”

Mr Smith said the company could not pass the higher power prices on to consumers — not at supermarkets nor overseas.

He said the Federal Government needs to make more progress on energy policy.

The competition regulator said the group represents just one per cent of Victoria’s energy consumption.

“We have given them permission to increase the size of their group to up to 10 per cent of Victoria’s electricity and gas demand,” said Roger Featherston, commissioner at the ACCC.

“Cartel laws are very strict. If you are competing with another company and you reach an agreement to set prices or limit production, or divide-up the market between yourselves, that automatically breaches the law.

“But in this case, buyers are getting together [choosing] the supplier and the price they’ll get electricity and gas from.”

Earlier this year, the ACCC authorised 27 South Australian mining, manufacturing and malting businesses to jointly buy electricity for the next decade.

The SA group’s electricity demand equates to 16 per cent for the state of South Australia.

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