Commerce Commission Authorises New Zealand Tegel Growers Association To Engage In Collective Bargaining

The Commerce Commission (Commission) has granted authorisation to allow the New Zealand Tegel Growers Association Incorporated (TGA) to collectively negotiate on behalf of its members the terms of its members’ supply of chicken growing services to Tegel Foods Limited (Tegel) for a ten year period.

The Commission may authorise an arrangement such as collective bargaining if, despite any potential detriment from the arrangement, the arrangement will nonetheless likely result in a benefit to the public.

After consulting on its draft determination, the Commission reached the view that the benefits of collective bargaining in this case are more likely than not to outweigh the detriments. The benefits of collective bargaining include lower costs to the parties to negotiate and reach agreements, and more efficient agreements.

Commissioner Sue Begg says, “Under the Commission’s provisional authorisations, Tegel and TGA have been able to engage in collective negotiations while the Commission assessed the application for authorisation. These negotiations have resulted in savings for the parties by lowering the cost of negotiating.”

A copy of the Commission’s determination, which includes its reasons for granting the authorisation, will be available on the Commission’s case register shortly.

Background
TGA is an industry association. Its membership consists of three regional industry associations. The regional associations represent growers in the greater Auckland, Taranaki and Canterbury regions who supply chicken growing services to Tegel, one of the largest chicken processors in New Zealand. In this way, TGA currently represents approximately 75 growers to Tegel.

A public version of TGA’s authorisation application is available on the Commission’s case register.

Tegel 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 three processing plants in Auckland, New Plymouth and Christchurch. Tegel provides the growers with day-old chicks to be reared according to certain specifications.

Authorisation requirements
The Commission may grant authorisation under sections 58 or 65AA of the Commerce Act for an arrangement that may otherwise breach the Act if it is satisfied that the arrangement will be likely to result in a benefit to the public that would outweigh any lessening in competition, or such that the conduct should be permitted.

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