CCP springs into action against poultry feed mills


The Competition Commission of Pakistan (CCP) has moved against 18 poultry feed mills for their involvement in cartelisation and collusive price manipulations which is prohibited under the Section 4 of the Competition Act 2010.
The feed mills, to which show cause notices, have been issued include: Kausar Feeds, Big Feed, Punjab Feeds, Lahore Feed, Pak Feed Industries, Islamabad Feeds, Supreme Feeds, Hi- Tech Feed, Shahzor Feeds, Asia Poultry Feeds, Sharif Feeds, Chakwal Feeds, Punjnad Feeds, National Feeds, Crescent Feeds, SB Feeds, Kashmir Feeds and Premium Feeds.
The poultry feed mills have been asked to submit their petitions within fifteen days, and to appear before the Commission on 23 and 24 November 2010.
All these mills are part of the Pakistan Poultry Association (PPA). The Rs 50 million fine, imposed earlier by CCP on the PPA, is now being regarded as the first salvo in a campaign against the cartelisation of the poultry sector.
Initially, the media drew attention to alleged distortions in the market and collusion among the poultry hatcheries owners and the poultry feed manufacturers, respectively. The CCP, springing into action, undertook an investigation of the Pakistan’s poultry industry. Particular emphasis was laid upon the high prices of day-old chicks and exorbitant increase in the price of poultry feed.
Upon completion of preliminary investigation, the CCP concluded that the PPA served as the nerve center that connected the different sectors of the poultry industry, including feed manufacturers, breeders, hatcheries and broiler and layer farms.
The CCP Enquiry Committee discovered that information relating to rates of various poultry products, such as chicken meat, eggs, feed etc, was being displayed on the official website of PPA and that rates were updated on a regular basis. The website also contained circulars relating to price of poultry feed and details of meetings conducted by the office bearers of the association.
Based on preliminary inquiries of the CCP and initial evidence gathered, the Commission authorized the search and inspection of PPA’s offices in Islamabad, Lahore and Karachi which were conducted in May 2010. During the raids, the CCP officials confiscated important documents for further investigation.
The documents indicated that PPA, its committees, and their members regularly engaged in discussions pertaining to production and pricing of poultry products and manipulated the supplies of products. The CCP maintains, that based on its prima facie findings, the poultry feed mills appears to have entered an agreement with other PPA members which clearly indicates collusion.
Pakistan’s poultry industry comprises several sectors that are interconnected, with each having a stake 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 form the diet of chickens bred by breeders, hatcheries and farmers.
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 designed 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 for the production of eggs.