Other suppliers are thinking about initiatives similar to the Twenty20 Beef Club, said Fergal O’Leary of the Competition and Consumer Protection Commission (CCPC) at last week’s Joint Oireachtas Committee on Agriculture, Food and the Marine debate on the future of the beef sector.
Isolde Goggin, chairperson of the CCPC, confirmed that the Commission has received a small number of complaints about the Twenty20 Beef Club arrangement, and is examining them carefully.
However, the CCPC does not have grounds to be concerned that a breach of competition law has occurred.
She said the Twenty20 Beef Club is a vertical agreement, an agreement between players at different stages in the food chain, and is generally permissible under Irish and European competition law.
“Specifically, there is the vertical block exemption regulation in European law which exempts from competition law scrutiny vertical agreements where the market share of both the buyer and the seller is under 30%”
In general, competition agencies are much more concerned about horizontal agreements, agreements between players at the same stage in the market.
“Agreements that cover a lesser part of the market are generally not considered to be a problem, unless there were three or four agreements that sewed up the entire market and nobody could come in at either level.
“Looking at the statistics in the Twenty20 Beef Club, if all the predictions and market share forecasts came true, they might get up to 5% in a few years, and that is not a level that would trigger our concerns.”
Mr O’Leary said: “It is not a concern at the moment, but the bigger it gets, the more attention it would get from us.”
The Twenty20 Beef Club was launched in April by Glanbia Ireland and Kepak Group, offering Glanbia Ireland supplier dairy farms a guaranteed market for their heifers and steers, with a predictable and transparent pricing formula at the time of slaughter. Glanbia Ireland and Kepak have plans to rapidly expand the programme to 50,000 calves per annum.
Members would benefit from an advanced cash flow payment of up to €770 per animal (interest charge of 3.75%).
All relevant farm inputs consumed by Club herds will be sourced and supplied by Glanbia Ireland.