The Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking from Cotton Seed Distributors (CSD) in relation to potentially anti-competitive provisions in its agreements with agents.
CSD is the sole supplier of cotton planting seed in Australia. CSD supplies cotton seed with a mandatory fungicide treatment and optional insecticide treatment from CSD-approved suppliers. CSD supplies cotton seed to growers via a network of agents.
CSD’s agency agreements prohibited agents from engaging in or facilitating ‘overtreatment’ of cotton seed for growers. Overtreatment involves the application of a seed treatment, typically insecticide, after seed has been purchased from CSD.
The ACCC stated that as a result of the prohibition on overtreatment, growers who wished to use seed that had been treated with insecticide, had little choice but to use a CSD-approved cotton seed insecticide applied by CSD.
The ACCC was concerned that this prohibition had the capacity to harm competition between CSD-approved suppliers and other suppliers of cotton seed insecticide.
CSD acknowledged that its conduct may have raised concerns in relation to its compliance with Australia’s competition laws, which ban anti-competitive agreements.
“The undertaking we’ve accepted ensures that agents and growers are free to deal with the insecticide supplier of their choice, during the current growing season and in future growing seasons,” ACCC deputy chair Mick Keogh said.
“Cotton is a major agricultural commodity and seed treatments are critical for growers to manage disease risks.
“We encourage people in the cotton industry to report any concerns they may have about anti-competitive behaviour to the ACCC,” Mr Keogh said.
CSD has acknowledged that its conduct may raise concerns as to its compliance with the prohibition on anti-competitive agreements in the Competition and Consumer Act.
A statement issued by the Board of Cotton Seed Distributors says CSD has fully cooperated with that investigation and is pleased with the outcome.
CSD chair Tony Quigley said CSD has entered into an enforceable undertaking with the ACCC, the effect of which is that for this season and going forward, CSD agents can facilitate the overtreatment of CSD seed with insecticide.
“CSD has always allowed growers to overtreat cotton seed with an insecticide of their choice. CSD has taken the further step now of allowing our authorised agents to facilitate the overtreatment of seed for growers”, Mr Quigley said.
CSD has also agreed with the ACCC to implement a competition law compliance program. It will also continue to assess warranty claims by growers concerning seed that agents and growers have treated after buying it from CSD, to establish whether there were quality issues at the time the seed was supplied.
“CSD has been supplying quality planting seed to the Australian cotton industry since our inception in 1967 and we are proud of our achievements in ensuring the Australian cotton industry is a world leader,” Mr Quigley said.
“We consider it good business practice to implement a competition law compliance program and are happy to do so.”
To address the ACCC’s concerns, CSD provided the ACCC with a section 87B undertaking that it will:
