Exercising its powers under Section 34 of the Competition Act 2010, the Competition Commission of Pakistan (CCP) today carried out search and inspection of two major poultry feed mills based in Rawalpindi and Lahore to impound the proofs of their suspected involvement in collusive activities and collective fixing of poultry feed rates.
Two authorized teams of CCP conducted the inspections and successfully impounded the relevant record including computer-stored information. During inspections, both companies fully cooperated with the CCP teams and handed over the required information.
The CCP initiated the enquiry of the suspected collusive activities in the poultry feed sector after taking notice of a concurrent increase in feed prices. Data gathered from market sources showed that there was indeed a simultaneous increase in price by poultry feed mills and the average quantum of increase in prices also appeared to be similar, which raised suspicion of collusive decision making and a violation of Section 4 of the Competition Act.
The prices of broiler feed witnessed an increase of over Rs. 550 per 50kg bag during the last 18 months or so, whereas, the average increase in prices of layer feed was over Rs. 530 per 50kg bag during the same period. It was observed that the prices of Chicken Farm Broiler increased by more than 100% (from Rs 103/kg to Rs 225/kg – figures obtained from PBS website) during the same period, which can be linked with the increase in prices of broiler feed.
The reason provided by the poultry feed mills that the increase in prices was due to a rise in the cost of production, i.e. input cost, currency devaluation, & general inflation, etc. could not be substantiated. Moreover, information was also received from multiple sources that some of the top poultry feed mills were involved in collectively fixing poultry feed rates through their meetings at various locations.
Through its various enforcement orders, the CCP has warned companies and industry associations against indulging in anti-competitive and collusive activities. The rule of thumb is that the associations are not allowed to discuss, deliberate, or share sensitive commercial information and take collective business decisions that may allow its members, who are competitors, to co-ordinate business policy or discussion on economic aspects.
The CCP, as part of its statutory mandate under the Competition Act, strives to eradicate anti-competitive practices in all sectors of the economy.