An agreement between most beef processors in Ireland to rationalise the industry is anti-competitive and will lead to higher beef prices, the Competition Authority has claimed in High Court proceedings which opened yesterday.
The authority claims that the agreement, if implemented, will prevent, restrict and distort competition and will ultimately harm consumers, as its intended effect will be to raise prices for beef in Ireland.
The action was opened yesterday by Denis McDonald SC, for the authority, before Mr Justice Liam McKechnie. It is against the Beef Industry Development Society Ltd (Bids) and Barry Brothers (Carrigmore) Ltd and may run for three weeks.
The case arises after Bids was set up in May 2002 to "rationalise" the beef industry. The principal beef processing companies, accounting for some 93 per cent of beef processors, are members of Bids.
They claim that the beef processing sector is facing such a problem of overcapacity that some degree of co-operation should be permitted. The authority claims that the members of Bids have reached an agreement to eliminate 25 per cent of beef slaughtering capacity here or plants which process some 420,000 animals a year.
The rationalisation plan is to be implemented through a compensation system under which the beef processors who leave the industry for a two-year period and who decommission their premises and assets for a five-year period will be paid by those companies who continue in the industry.
Payments by the latter will be based on agreed levies to be paid for each animal killed.
These levies, the authority claims, will result in higher prices for beef as they eliminated any threat of entry. It claims that such an exit agreement from the industry has already been agreed between Bids and Barry Brothers.
Instead of allowing ordinary market forces to apply, which would see the least competitive plants leave the market, the Bids plan puts in place an artificial scheme under which competition between existing beef processors would be effectively restricted, it is claimed.
