Draft Determination On New Zealand Tegel Growers Association’s Application To Engage In Collective Bargaining

The Commerce Commission (Commission) has reached a preliminary view that it should allow the New Zealand Tegel Growers Association Incorporated (TGA) to collectively negotiate on behalf of its members the terms and conditions of its members’ supply of chicken growing services to Tegel Foods Limited (Tegel) for a ten year period.

The Commission’s preliminary view is based on its assessment of the likely benefits and detriments. The Commission considers that the potential benefits of collective bargaining in this case are more likely to outweigh the potential detriments than not. The benefits of collective bargaining include the potential to reduce transaction costs and reach more sophisticated agreements.

A copy of the Commission’s determination is available on the Commission’s case register here.

Submissions can be sent by email to registrar@comcom.govt.nz with the reference “NZTGA Authorisation Application”. Any submissions by Tegel and other interested parties should be received by 18 May 2022, with cross-submissions due from TGA by close of business on 25 May 2022.

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.

Authorisation requirements
The Commission may grant authorisation under sections 58 or 65AA of the Commerce Act (the Act) for agreements that may otherwise breach the Act if it is satisfied that the agreement 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.

The Commission’s Authorisation Guidelines explain when anti-competitive agreements that may lessen competition will be authorised under section 58 of the Act, and our process for determining such authorisation applications.

The Commission’s Guidelines on Approach to Authorisations under the COVID-19 Response (Further Management Measures) Legislation Act explain when the Commission will authorise agreements that might contain a cartel provision under Part 5 of the Act, and our process for determining such authorisation applications.

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