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ACCC Makes a Monopoly Kosher

Published: 10 Mar 2006

by Joe Lederman
© FoodLegal, March 2006.

It is unusual for government agencies to meddle in religious affairs. But in the context of food, it appears that the Australian Competition and Consumer Commission  (‘ACCC’) has become muddled.

The ACCC made a decision on 17 February 2006 to allow legal immunity from prosecution under Section 47 of the Federal Trade Practices Act (‘the Act’) of the NSW Kashrut Authority (‘KA’), which had lodged a Notification under Section 93 of the Act regarding its policy of approving the supply by kosher caterers of kosher meat in NSW. The ACCC acknowledged that this policy “has restricted caterers and restaurants wishing to obtain KA certification to two suppliers of poultry and one supplier of red meat” in NSW.

The decision of the ACCC effectively provides the KA with immunity from legal action from breaching anti-competitive laws.

The KA can thus implement its policy of only providing certification to NSW restaurants and caterers if the KA has overseen the entire supply chain of the meat, including the slaughtering process, or otherwise given its permission. The KA policy discriminates against restaurants or caterers who wish to buy kosher meat from Melbourne-based suppliers, despite the fact that the Melbourne kosher market is considerably larger than the Sydney market and that Melbourne kosher meat prices are more price competitive than Sydney kosher meat prices.

The ACCC stated in its decision that, while the anti-competitive effects of the KA policy were of concern, the ACCC had difficulty in balancing “the benefit in allowing the KA to undertake its religious functions with the anti-competitive detriments that clearly arise from the policy”.

The KA’s position was that no kosher certifying agency could issue a certificate where part of the supply chain was supervised by another kosher certification authority. The KA’s refusal to recognise interstate certification agencies reduces the extent to which NSW caterers and restaurateurs can source kosher meats from Melbourne.

The ACCC acknowledged that this policy meant that there would be monopolistic price distortions occurring in the NSW market, given that the KA passed its monopoly power to the only Sydney-based butcher supplying kosher meats. As noted in a submission dated 14 July 2005 to the ACCC by the New South Wales Jewish communal lay umbrella organisation, the NSW Jewish Board of Deputies:

‘[The KA’s meat policy] leverages the monopoly power of the KA in the New South Wales market for certification services into the wholesale market for the supply of meat to caterers and restaurateurs by effectively prohibiting caterers from acquiring
meat from a competitor of the New South Wales based butcher supported by the KA … That must have the potential to distort pricing outcomes, as the New South Wales butcher is thereby free to charge whatever price it likes to the caterer, and the KA is at liberty to charge whatever it pleases to that butcher, with that charge being passed on as an input cost to the caterer acquiring meat from the butcher and ultimately to the consumers of the caterer’s services.’

While it might not be unusual for a body such as the ACCC, as Australia’s consumer protection watchdog, to intervene in matters where misleading or deceptive conduct might occur in breach of section 52 of the Trade Practices Act (such as a hypothetical case of someone selling as kosher meat a meat that was not kosher), it is a different matter altogether for the ACCC to confer a monopoly on one religious authority.

The ACCC may well have exceeded its powers by refusing to accept that there is more than one acceptable religious authority within the broader Australian Jewish community. Kosher caterers in Sydney are supervised by the KA on condition that meat will only be purchased from the ACCC-approved KA monopoly. This is despite the existence of acceptable kosher meat suppliers from Melbourne who are now being precluded by the ACCC decision from being allowed to compete in the Sydney kosher catering market.

Given that kosher consumers generally demand that kosher meat requires certification by a religious authority, the ACCC decision means that a NSW caterer or restaurant who wants to provide kosher food cannot meet consumer demand for kosher food without certification by the KA.

In making its decision, the ACCC has legitimated the monopoly of a religious authority to the detriment of the law against anti-competitive trade practices. Just as importantly, the added cost resulting from the institutionalization of a monopoly over religious practice could potentially have detrimental effects on adherence to the religious practice itself.

The ACCC has put itself into a strange position.