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4th May - HSI hopeful justice will be done in egg cartel case appeal after former Australian Egg Corporation director fined $120      

HSI hopeful justice will be done in egg cartel case appeal after former Australian Egg Corporation director fined $120,000

4th May, 2016

Humane Society International (HSI) is delighted that so far, justice is being done, following news that Zelko Lendich, a former director of the Australian Egg Corporation (AECL), was ordered to pay a $120,000 fine by the Federal Court for attempting to induce a cartel arrangement between competing producers. 

The Australian Competition and Consumer Commission (ACCC) alleged that AECL attempted to set up a cartel designed to control the number of eggs being sold, amid fears an oversupply could push prices down.  The case targets AECL’s managing director, James Kellaway, and AECL board member and Queensland egg producer Jeffrey Ironside, and a former director of AECL and former Farm Pride director, Zelko Lendich.  If found guilty AECL could face a fine of millions and individuals up to $500,000 each.  The ACCC have lodged an appeal to consider that Mr Kellaway and Mr Ironside were also involved in the arrangement.

HSI Director Verna Simpson said, “We are greatly encouraged by the $120,000 fine awarded to Mr Lendich and with the appeal underway, we wait in anticipation for further good outcomes.  AECL seemed to be breaking every rule in the book trying to force customers to pay more, with little regard for the welfare of the birds or the egg producers.  We remain hopeful that the appeal will result in larger penalties for Mr Kellaway and Mr Ironside as they must be held to account.”

The ACCC’s media release dated 28 May 2014 stated that, “The ACCC alleges that AECL and the other corporate and individual respondents attempted to induce egg producers who were members of AECL to enter into an arrangement to cull hens or otherwise dispose of eggs, for the purpose of reducing the amount of eggs available for supply to consumers and businesses in Australia.”  It continues, “The ACCC alleges that from November 2010, in AECL member publications, the AECL board (which included Mr Kellaway, Mr Ironside and Mr Lendich) encouraged its members to reduce egg production, in order to avoid oversupply which would affect egg prices.”  HSI gives huge credit to the ACCC for their thorough and comprehensive work bringing these cases before the Courts.

This case falls at the conclusion of the controversial debate over a national free range egg definition which recently bowed to industry pressure, allowing farms stocking huge numbers of up to 10,000 hens per hectare to be labelled ‘free range’.  CSIRO recommends this figure be 1500 hens per hectare, as dictated through the 2002 Model Code, and in line with the majority of Australian consumer expectations as well as international standards. 

From the start, AECL CEO James Kellaway pushed for the free range stocking density to be increased to allow up to 20,000 birds per hectare, and in 2012 AECL Communications Manager, Kai Ianssen admitted that, “29% of free range egg production in Australia is sourced from farms that currently stock free range hens at densities greater than 2 birds per square metre (20,000 per hectare) and do comply to the Model Code of Practice. The egg industry wishes to address this erroneous situation.”  This again demonstrates the lengths AECL are willing to go to deceive consumers for profit.


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