Keeping Business Honest

Rotten Eggs

It is a truism that in the heart of every merchant lurks a craven monopolist.  Given the merest chance monopolist conspiracies will arise in the throat like nauseous bile to hobble competitors and corrupt the market.  We believe strongly that civil courts must be open, accessible, and vigilant to break up such conspiracies--whether upon the unsuspecting customer, or competitors, or upon regulators.  The civil courts need to be vigilant to prosecute with alacrity all forms of fraud, deception, theft, and false weights and measures.  The civil courts must be accessible to plaintiffs and inexpensive. 

Unfortunately, due to the ceaseless flood towards centralised government, none of this is the case.  Civil courts have long since languished into a very weak and expensive and anaemic relation of justice, whilst central government rules and regulations flood websites and exhaust printing presses.  Which suits the monopolists just fine.  They have sufficient funds, industry associates, and cabals of fellow merchants to massage and morph regulations to suit their own interests.  The consumer consequently becomes a well gnawed carcass.

The egg industry in New Zealand is certainly oligopolistic in structure if not virtually monopolistic. 
  The dominant egg producers have shown every sign of every monopolistic device and trick known to man.  One classic has been the market struggle between caged birds versus free range--and latterly, barn--hens.  The oh-so-wise regulators eventually decide that caged birds represents inhumane treatment and with glacial speed moved to regulations requiring larger cages.  In response the monopolist egg producers almost overnight start to produce "barn eggs" and "free range eggs". They crammed so many birds into a shed, with twenty-four hour locked doors, that the amount of bird space is about what the birds formerly "enjoyed" in cages.  But, suddenly, supermarkets are flooded with "barn" eggs.  The consumer feels happy, thus deceived  The monopolist protects his margins with grubby, rubbed hands.  Deception triumphs.

In Australia the centralised consumer regulator has been prodded awake.  It is now focusing its attention upon the same rort.  Whilst we believe the proper administration of civil courts is by far the better model, the centralised bureaucratic regulator in Australia is finally acting in the egg industry.

This from the Sydney Morning Herald:

Free range claims land egg producers in court

December 10, 2013 - 4:49PM
Jared Lynch
Business reporter

Consumer watchdog the ACCC has launched court proceedings against two of Australia’s biggest egg producers, claiming they falsely labelled product as "free range".  Two separate actions have been lodged in the federal court against NSW-based Pirovic Enterprises and Western Australia’s Snowdale Holdings. . . . 

Australian Competition and Consumer Commission chairman Rod Sims accused Snowdale and Pirovic of misleading and deceiving shoppers by making ‘false representations’ on cartons and websites. Mr Sims said an ACCC investigation cast doubt on the companies’ claims that their eggs were laid by chickens free to roam, finding the hens were housed in crowded barns and they we’re not able to move freely.

"Credence claims such as free range, organic, place of origin or country of origin are all powerful tools for businesses to distinguish their products," Mr Sims said.  "But misleading consumers who pay a premium to purchase such products damages the market and is unfair to competitors."

Mr Sims is politely suggesting that Snowdale and Pirovic are guilty of fraud, deploying false weights and measures to steal from consumers and more honest competitors.    

The court proceedings form part of an ongoing ACCC investigation into the egg industry. In April this year, the ACCC issued substantiation notices to several egg processors, demanding they prove their free range claims.  The ACCC has several criteria to test if eggs are free range, including what time of day and how frequently barns are opened, whether the chickens have been trained to remain indoors and whether the size of the outdoor area is adequate and has shade, food and water available.

Mr Sims said it was not the ACCC’s role to determine which farming practice – free range, barn laid or cage – was appropriate.  ‘‘The ACCC’s concern is simply to ensure that the labelling of eggs accurately reflects the particular farming practices of the producer and the expectations of a consumer making choices based on those representations.’’

We note that no such similar action has been undertaken by the Commerce Commission in New Zealand, despite the NZ egg industry being more monopolistically concentrated than Australia's.  It's likely our sleepy Commerce Commission has a heartfelt belief that such practices would never occur in New Zealand. 

We, after all, do not tolerate underarm bowling.  Nothing to see here.  Move along.  Which serves as a perfect illustration of why centralised competition regulators are easy pickings for corrupt businessmen acting within oligopolies, duopolies or monopolies--which pretty much characterises most economic activity in New Zealand.