CSD heeds ACCC concerns over agent agreements

Grain Central, August 2, 2023

CSD’s headquarters at Shenstone, Wee Waa, NSW. Photo: CSD

COTTON Seed Distributors has provided a court-enforceable undertaking to address Australian Competition and Consumer Commission concerns about potentially anti-competitive terms in its agreements with agents.

CSD is Australia’s sole supplier of cotton-planting seed which it sells with a mandatory fungicide treatment and optional insecticide treatment from CSD-approved suppliers to growers via a network of agents.

CSD’s agreements with agents previously prohibited them from applying an insecticide treatment to seed after it had been purchased from CSD, or assisting growers to do so.

As a result, growers who wished to use seed that had been treated with insecticide had little choice but to use a CSD-approved insecticide applied by CSD.

The ACCC was concerned 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.”

CSD has undertaken 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’s agency agreements have prohibited agents from applying an insecticide treatment to seed after purchase, or assisting growers to do so, since 2018.

Reduced competition in the market for the supply of insecticide treatments for cotton seed may result in growers facing higher prices for and/or receiving lower performance from the insecticides they purchase.

It may also lead to reduced innovation in cotton seed insecticides over time, including to deal with new pests, which could result in lower cotton yields.

Co-operation from CSD

In a statement, CSD said it has been the subject of an extensive ACCC investigation over many months, and the upshot was that 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 chair Tony Quigley said.

“CSD has taken the further step now of allowing our authorised agents to facilitate the overtreatment of seed for growers.”

CSD has also agreed with the ACCC to implement a competition law compliance program.

“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.

“We consider it good business practice to implement a competition law compliance program and are happy to do so.”

Source: ACCC, CSD


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