Poultry Association Fined

PAKISTAN - The Competition Commission of Pakistan (CCP) has imposed a penalty of 50 million rupees (PKR) on the Pakistan Poultry Association (PPA) for operating like a cartel.
calendar icon 17 August 2010
clock icon 3 minute read

The action was taken after an inquiry which found that the PPA had issued directives to reduce production in order to increase prices, reports Dawn of Pakistan. The inquiry was based on documents impounded during raids on PPA's offices in Islamabad, Lahore and Karachi.

The PPA did not deny that production was being controlled to manipulate prices. The association's representative said the industry could have done nothing else to prevent losses. They clarified that the grandparent and parent stocks were not meant for sale as meat before they became infertile.

The CCP said the PPA had been unable to rebut the evidence presented in the inquiry report regarding collusion over pricing, production and sale of broiler chicken.

It also observed that PPA's feed mill wing had met to take decisions regarding the price of poultry feeds.

The PPA had said that prices of perishable products like feeds could not be manipulated because their stocks could not be stored.

The CCP said in its order that collective decisions taken on economic aspects, as practised by the PPA, were against the concept of competition, negated the idea of a free market and substantiated the existence of a cartel.

It added that despite a fair performance in terms of economic growth during the current decade, Pakistan had fallen behind most nations in terms of fair competition. Cartel formation may allow higher profits but consumers suffer direct and indirect losses because of artificial caps on the supply or price hikes. Thus there is a loss in the total economic surplus and firms also experience efficiency losses because of under-utilisation of their capacity.

A bad state of competition eroded competitiveness in the economy, resulted in productivity losses and led to, or accelerated, economic decline, the CCP order said.

The decision was taken by a bench comprising CCP chairperson, Rahat Kaunain Hassan, Member (cartels, mergers and trade abuses) Abdul Ghaffar and Member (policy, research and international affairs) Dr Joseph Wilson.

The Competition Ordinance of 2010 expired yesterday (16 August) and is not likely to be re-promulgated before mid-September because none of the houses of parliament is scheduled to meet during Ramazan.

Dawn reports a CCP official saying that the commission will continue its internal work in the meantime. "Work on inquiries and reports will continue," the official said.

However, he added that decisions taken by the commission between February 2008 and 16 August this year would be void during the period when the CCP remained legally redundant. The Competition Ordinance has been approved by the Senate and its approval by the National Assembly is awaited. The CCP is facing over 150 appeals in various courts against its decisions.

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