The consumer watchdog on Tuesday launched Federal Court action against Sunny Queen and 11 other egg producers and suppliers, alleging serious anti-competitive behaviour.
The companies allegedly shared information about future egg production and agreed on a common method to price eggs since at least October 2020, according to the Australian Competition and Consumer Commission's legal filing.
They are also accused of coordinating cullings during periods of perceived oversupply and declining wholesale prices.
Sunny Queen is alleged to have come to an agreement with a rival in January 2021 for the supply of its best produce.
Under the agreement, the rival could supply up to 15,000 dozen free range eggs per week to other buyers, but it was barred from selling to Sunny Queen's major retail customers Coles, Woolworths, Aldi, Metcash or Costco.
"The relevant market or markets are highly concentrated, with few large suppliers of shell eggs and significant barriers to entry and expansion," the watchdog's legal document said.
"The arrangements brought together substantial volumes of eggs that could otherwise have been supplied independently.
"Those arrangements substantially reduced the competitive rivalry that would otherwise have existed between the respondents."
Anti-competitive conduct can inflate prices at the check-out and decrease consumer choice, the commission's chair Gina Cass-Gottlieb said.
"We are committed to protecting competition in fresh food supply chains so Australian consumers receive the benefits of businesses competing on price," Ms Cass-Gottlieb said.
"These proceedings are a reminder that businesses must make their production, supply and pricing decisions independently."
The watchdog also alleged that Sunny Queen's major suppliers, who held shares in the company, arranged to buy a Queensland poultry farm in 2021 to prevent it being used by any competitors.
The farm at Yarranlea, near Toowoomba, had not been "used productively" by the companies by mid-2023, the legal document alleged.
In a statement, Sunny Queen said it denied the allegations and would defend the case.
"Sunny Queen was founded by Australian farmers and has been supplying Australian families with eggs for more than 50 years," the statement said.
"Over those five decades Sunny Queen has earned a reputation for ethical farming and consumer practices and remains committed to adhering to these high standards."
The watchdog is seeking penalties, injunctions and other costs and orders.
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