Second-biggest vegetable supplier admits to price-fixing produce sold to Aldi

• Australia’s second-largest vegetable supplier has admitted to engaging in cartel conduct by fixing the price of its vegetables sold to discount supermarket Aldi.
• Perfection Fresh admitted to the conduct following an investigation by the Australian Competition and Consumer Commission (ACCC).
• The ACCC alleges Perfection Fresh fixed the prices of broccoli, cauliflower and iceberg supplied to Aldi in New South Wales.

Australia’s second-largest fresh vegetable supplier has admitted to engaging in cartel conduct by fixing the prices of produce that it sold to discount supermarket Aldi.

Perfection Fresh has agreed to jointly submit to the Federal Court, along with the Australian Competition and Consumer Commission (ACCC), that it should be ordered to pay a penalty of $12 million over the conduct.

Following an investigation, the ACCC alleged that Perfection Fresh engaged in cartel conduct by fixing the prices of broccoli, cauliflower and iceberg lettuce supplied to Aldi in New South Wales.

The consumer watchdog alleges that the prices were fixed on eleven occasions between 2019 and 2020.

There is no suggestion of wrongdoing by Aldi, only that it was sold produce that had its market price undermined by the supplier.

“Cartel conduct undermines competition and can increase prices, harming consumers and raising the cost of doing business,” ACCC Commissioner Luke Woodward said in a statement.

“Enforcing cartel laws and protecting competition in the supply of fresh food are ongoing priorities for the ACCC.”

Perfection Fresh owns and operates farms across Australia, supplying a broad range of produce, including cauliflower, broccoli, iceberg lettuce, Brussels sprouts, broccolini and celery, to all states and territories.

The Federal Court will decide if the $12 million is appropriate.

Subscribe here for our FREE Tuesday and Thursday newsletter

Email address

Subscribe

A spokesperson for Perfection Fresh told The Money Edition that the conduct should not have happened.

“We take full responsibility for what occurred and acknowledge it should not have happened. We deeply regret any impact it may have had on our relationships and are working hard to rebuild trust with our stakeholders,” the spokesperson said.

“We have fully co-operated with the ACCC since becoming aware of the issue and have taken significant steps to strengthen our leadership, governance and compliance systems.”

What is cartel conduct and how does it affect you?

Mention a cartel and most people’s minds drift to the South American drug trade.

But here in Australia, especially under consumer law, the reality of cartel conduct is often far more mundane.

In short, it is illegal for businesses to agree to act together as a “cartel”.

For example, imagine you were in a small outback town that had two tyre shops. Both tyre shops knew that in order to make a good profit margin, they needed to sell tyres at $150 a wheel.

One tyre shop could sell tyres at $120 per wheel, and scoop all the business. Or the two tyre shops could meet and agree to both sell tyres at $160 a wheel.

This is known as cartel conduct.

By agreeing on a price (known as “price fixing”), the tyre shops are effectively short-changing the consumers of the Aussie town by reducing competition and slowly raising prices over time.

Cartel conduct hurts consumers, prevents newcomers from establishing a market, and ultimately makes goods and services more expensive for everyone.

Occasionally, you may see a business match the price of a winning competitor. As long as this decision has been made independently, this is not illegal.