The ACCC has today commenced civil proceedings in the Federal Court against four suppliers and three senior executives for alleged price fixing while supplying fresh vegetables to ALDI, in breach of Australia's cartel laws.
The alleged cartel conduct involved price fixing in the supply of fresh produce, including broccoli, cauliflower, iceberg lettuce, cucumber, Brussels sprouts and zucchini, to ALDI stores in New South Wales, Victoria and Queensland between 2018 and 2024.
The ACCC alleges cartel conduct by each of:
- Perfection Fresh Australia
- Hydro Produce (Aust)
- Veli Velisha Fresh Produce and Velisha National Farms, its Director and Chief Executive Catherine Velisha, and its Senior Sales Manager Kaushik Vora
- M. Fragapane & Sons, and its General Sales Manager Roberto Nave.
"Cartel conduct, whether by coordinating prices or agreeing on terms of bids with competitors, is anti-competitive, and is illegal," ACCC Chair Gina Cass-Gottlieb said.
"Businesses acting together instead of competing can drive up prices and harm consumers, while disadvantaging other businesses that are seeking to compete fairly."
"In this instance, we allege that price fixing conduct involving some essential household vegetables took place across three states," Ms Cass-Gottlieb said.
"Protecting competition in our fresh food supply chains is extremely important to drive price competition for the benefit of Australian consumers."
The ACCC alleges that on 28 occasions, two or more of the suppliers made, or attempted to make, arrangements or understandings that had the purpose, effect or likely effect of fixing, controlling or maintaining the price of broccoli, cauliflower, iceberg lettuce, cucumber, Brussels sprouts or zucchini.
The ACCC also alleges that on 48 occasions, one or more of the suppliers then submitted prices to ALDI in accordance with these arrangements or understandings.
"The ACCC continues to prioritise investigating allegations of cartel behaviour and will bring enforcement action where appropriate," Ms Cass-Gottlieb said.
The ACCC is seeking declarations, civil penalties, compliance orders and costs against the businesses, and declarations, civil penalties, disqualification orders, non-indemnification orders and costs against the individuals.
Background
Perfection Fresh Australia Pty Ltd is a fresh produce wholesaler based in New South Wales. Perfection Fresh is the second largest fresh vegetable supplier in Australia, supplying a broad range of produce, including cauliflower, broccoli, iceberg lettuce, Brussels sprouts, broccolini and celery, to all states.
Hydro Produce (Aust) Pty Ltd is a fresh produce wholesaler and grower based in New South Wales, with farms in every state. It supplies a broad range of produce, including cauliflower, broccoli, iceberg lettuce, kale, sweet potato and celery, to all states.
Veli Velisha Fresh Produce Pty Ltd was a grower and supplier of fresh produce based in Victoria. It ceased operations around June 2019 when its business was sold to Velisha National Farms. It supplies a broad range of produce including cauliflower, cucumber, broccoli, iceberg lettuce, zucchini, spring onion and Brussels sprouts.
Velisha National Farms Pty Ltd is a fresh produce wholesaler and grower of a limited range of produce based in Victoria. It supplies produce to at least Victoria, New South Wales, Queensland, South Australia and Tasmania. It supplies cauliflower, cucumber, broccoli, iceberg lettuce, zucchini and spring onion.
M. Fragapane & Sons Pty Ltd (trading as Fragapane Farms) is a fresh produce grower and supplier based in Victoria. It supplies cauliflower, broccoli, iceberg lettuce, and celery to at least Victoria, New South Wales, Queensland, South Australia and Western Australia.
The supply of fresh produce to ALDI is divided into three categories:
- Agile
- Standard
- Fixed cost
Agile pricing is the most flexible, with suppliers required to submit weekly quotes. ALDI uses agile pricing for vegetables including broccoli, cauliflower and iceberg lettuce.
The price fixing allegations in this case are predominantly in relation to agile supplying.
Note
A cartel exists when businesses agree to act together instead of competing with each other.
More information about different types of cartel conduct can be found on the ACCC's website at Cartels.
The ACCC works to detect alleged cartels including through education programs, proactive intelligence gathering and data assessment and working with overseas counterparts to identify alleged cartels that operate on a global level.
Anyone who thinks they may be involved in alleged cartel conduct is urged to call the ACCC Cartel Immunity Hotline on (02) 9230 3894. More information about the immunity process is available on the ACCC website at Cartels. They can also report alleged cartel conduct by using the anonymous cartel portal.
For conduct that occurred before 9 November 2022, the maximum civil penalty that may be ordered by the Court against businesses for each breach is the greater of:
- $10 million;
- if the court can determine the total value of the benefits that have been obtained by one or more persons and that are reasonably attributable to the act or omission - three times the total value of the benefits; or
- if the Court cannot determine the total value of the benefits, 10 per cent of the annual turnover (as defined) of the body corporate during the 12 months ending at the end of the month in which the act or omission occurred.
The maximum penalty for individuals is $500,000 for each contravention.
For conduct that occurred after 9 November 2022, the maximum civil penalty that may be ordered by the Court against businesses for each breach is the greatest of:
- $50 million;
- Three times the value of the "reasonably attributable" benefit obtained from the conduct, if the court can determine this; or
- If a court cannot determine the benefit, 30% of adjusted turnover during the breach turnover period.
The maximum penalty for individuals is $2.5 million for each contravention.
