Australian egg farmers planned to kill millions of hens prematurely and bury their eggs as part of an industry-wide strategy to boost their profits, the Federal Court has been told.

The farmers, who were facing a ''catastrophic'' oversupply that would swamp the market, drew up the plan to create a false shortage and increase consumer demand to keep their profits intact.

Cartel claims: The Australian Egg Corporation Ltd has been accused of attempting to manipulate egg prices. Credit:Andrew De La Rue

The Australian Competition and Consumer Commission has accused the industry's most powerful body, the Australian Egg Corporation Ltd, of attempting to create a cartel to manipulate egg prices for both grocery shoppers and businesses.

It is taking court action against the corporation, its managing director James Kellaway, and two directors Jeffrey Ironside and Zelko Lendich, as well as Ironside Management Services, trading as Twelve Oaks Poultry, and Farm Pride Foods.