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Competition Commission Investigates Industry

16 July 2010

PAKISTAN - The Competition Commission of Pakistan (CCP) has issued a show cause notice to the Pakistan Poultry Association (PPA) for engaging in practices prohibited under the Competition Ordinance (2010).

Based on consumer e-mails and news reports of high prices of day-old chicks and exorbitant increase in the prices of poultry feed, the CCP undertook an investigation of the Pakistan’s poultry industry, according to Daily Times of Pakistan. The news reports and complaints claimed that the increases were the result of a cartel between poultry hatcheries owners and the feed manufacturers.

Pakistan's poultry industry comprises several sectors that are interconnected and have stakes in each other. The different sectors include feed manufacturers, breeders, hatcheries, broiler farms and layer farms. Feed manufacturers use agri-based produce and by-products to make various feeds, which are fed as diet to chickens bred by breeders and hatcheries. Breeders use grandparent pure-line stock strains to produce parent stock strains of chickens, which in turn supply eggs to hatcheries. Hatcheries use eggs provided by breeders to produce day-old chicks, which are then raised on farms for their meat and eggs and are sold to broiler and layer farms. Broiler farms purchase day-old chicks from hatcheries and raise a breed of chicken, known as the broiler, which is meant for chicken meat production. Layer farms, on the other hand, purchase day-old chicks from hatcheries and raise a breed of chicken known as the layer, which lays eggs for dietary consumption.

Daily Times reports that the CCP observed that prima-facie PPA served as the nerve-centre that connected the different sectors of the poultry industry, including feed manufacturers, breeders, hatcheries and broiler and layer farms. The CCP inquiry team discovered that information relating to rates of various poultry products, such as chicken meat, eggs, feed etc, was being displayed on the official web site of PPA and that these rates were being updated on the web site on regular basis, at times even daily, that indicated towards an arrangement to fix the prices of poultry products, by misusing the platform of PPA. Such an arrangement for collective price fixing, if it exists, has the object and effect of preventing, restricting or reducing competition in the relevant market, which is a violation of Section 4 of the Competition Ordinance, 2010.

On the recommendation of the inquiry committee, the commission deemed it appropriate to conduct search and inspection of the offices of PPA located in Islamabad, Lahore and Karachi under the power granted to it by Section 34 of the ordinance in order to collect any evidence regarding the suspected violations of Section 4 of the ordinance.

Based on the materials and documents impounded during the search and inspection of PPA's offices, the information available on PPA's web site and the documents and information received from PPA, Poultry Research Institute and the undertakings involved in poultry business, the inquiry committee concluded in the inquiry report that there is, prima facie, a cartel in all markets of day-old chicks, poultry feed, broiler chicken, eggs and grandparent stock in violation of Section 4(1) of the ordinance, according to Daily Times.

ThePoultrySite News Desk



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