13 fresh chicken distributors hit with S$26.9m fine

Singapore

THIRTEEN distributors of fresh chicken have been fined S$26.9 million for price-fixing and agreeing not to compete for customers in the largest total financial penalty in a single case to date, said the Competition and Consumer Commission of Singapore (CCCS) in a statement on Wednesday.

Such distributors import live chickens from farms in Malaysia and slaughter them in Singapore, selling the fresh chicken products to customers such as supermarkets and restaurants. These distributors collectively supply more than 90 per cent of fresh chicken products in Singapore, with an annual combined turnover of about S$500 million.

They were each fined between S$705,939 and S$11.4 million, depending on their respective turnover, the nature, duration and seriousness of the infringement, aggravating and mitigating factors such as cooperation with the CCCS, as well as the representations they made.

The large industry size, high market shares of the parties, seriousness and long duration of cartel conduct contributed to CCCS imposing such a high total penalty, said the competition watchdog.

The CCCS began investigations in March 2015, after a tip-off from a secret complainant. It found that, from September 2007 to August 2014 at least, the distributors had discussed prices and coordinated the amount and timing of price increases for certain products, while also agreeing not to compete for customers.

Said the CCCS: "The parties' collusion restricted competition in the market and likely contributed to price increases of certain fresh chicken products in Singapore.

"By agreeing not to compete for each other's customers, the parties restricted the choices available to customers. The coordinated price increases further reduced customer choice as it limited options for customers to switch to more competitive distributors."

On March 8, 2016, the CCCS issued a proposed infringement decision (PID). This gave the parties an opportunity to make written and oral representations, in the course of which further information was provided to CCCS of price discussions and co-ordinated price increases.

On Sept 27 that year, the CCCS notified the parties of further investigations, and received applications from some of the parties for lenient treatment.

A supplementary PID was issued last Dec 21, with the CCCS receiving further representations.

The CCCS has also directed the parties to provide a written undertaking that they would refrain from using The Poultry Merchants' Association, Singapore - of which all of them are members - or any other industry association as a platform or front for anti-competitive activities.

Chicken is the most widely-consumed meat in Singapore.

Said CCCS chief executive Toh Han Li: "Price-fixing and market sharing are considered some of the most harmful types of anti-competitive conduct. Such conduct is particularly harmful when the products affected are widely consumed in Singapore, such as in this case."

The 13 suppliers are: Gold Chic Poultry Supply, Hua Kun Food Industry, Hy-fresh Industries, Kee Song Food Corporation (S) (formerly Kee Song Brothers Poultry Industries), Lee Say Poultry Industrial and its sole proprietor Lee Say Group, Hup Heng Poultry Industries, Leong Hup Food (formerly KBS Distribution) and its holding company ES Food International, Prestige Fortune (S), Ng Ai Food Industries (formerly Ng Ai Muslim Poultry Industries), Sinmah Poultry Processing, Toh Thye San Farm, Tong Huat Poultry Processing Factory and Ban Hong Poultry.