The Competition Commission of Pakistan (CCP) has unearthed cartelisation in the market for one-day-old broiler chicks.
“The CCP found collusion and price fixing of day-old broiler chicks by a prima facie cartel of eight hatcheries from 2019 to June 2021,” the anti-trust body said in a statement.
The CCP initiated an inquiry after receiving complaints from broiler farmers through the Pakistan Citizens Portal, alleging cartelisation behind rising prices in the sector.
In this regard, the CCP conducted inspections in June this year on the premises of Pakistan Poultry Association (PPA) and a company involved in the sale of day-old broiler chicks.
The evidence, seized from these premises, revealed that an official of the hatchery played a leading role in the cartel by working as the focal person to announce mutually agreed prices of day-old broiler chicks.
The rates were conveyed to other hatcheries and PPA daily through the short messaging service (SMS) and other online messengers, the statement said. Discussion on pricing was also made through the same medium.
“The rate announced after mutual discussion between competitors is the one that actually prevailed in the market and the rate of day-old broiler chicks is the same for all hatcheries,” the CCP said.
PPA was also found violating Section 4 of the Competition Act, as its official was also part of the group (online messenger) in which the rate announcements were made. He was “aware of the pricing discussions and announcements”.
“It appears that the companies are making a collective decision on prices which culminates in the announcement of a single price by a designated official,” said the CCP.
“This prima facie price fixing arrangement between competitors clearly violates Section 4 of the Competition Act 2010,” it added.
It is observed that month-wise average prices of day-old broiler chicks fluctuated widely during the year 2020-21, in the range of Rs20.46 to Rs79.74, and the share of day-old broiler chicks in the total cost changed accordingly.
Most of the hatcheries involved in the cartel are vertically integrated and involved in the entire poultry supply chain, from breeding to the production of poultry feed.
The commission will issue show-cause notices to these poultry companies for violation of Section 4 of the Competition Act, as per the statement.
Published in The Express Tribune, December 10th, 2021.