You are here
Fowl play: 13 chicken suppliers fined record S$26.9m for price-fixing, non-compete pacts
THIRTEEN distributors of fresh chicken have been fined S$26.9 million for price-fixing and agreeing not to compete for customers, the largest total financial penalty in a single case to date, the Competition and Consumer Commission of Singapore (CCCS) said in a media statement on Wednesday.
Fresh chicken 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. The 13 distributors collectively supply more than 90 per cent of fresh chicken products in Singapore, with an annual combined turnover amounting to about half a billion dollars.
The 13 suppliers were fined between S$705,939 to S$11.4 million, taking into account relevant turnovers; the nature, duration and seriousness of the infringement; aggravating and mitigating factors, such as cooperation with the CCCS; and representations made.
"Particularly for this case, the large size of the industry, the high market shares of the parties, the seriousness and the long duration (of about seven years) of the cartel conduct contributed to CCCS imposing the highest total financial penalty in a single case to date," said the CCCS.
The CCCS began investigations in March 2015 after receiving 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 fresh chicken 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 that further investigations would be conducted, and received applications from some of the parties for lenient treatment. A supplementary PID was issued on Dec 21, 2017, with the CCCS receiving further representations.
The CCCS has also directed the parties to provide a written undertaking that they will 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. CCCS will continue to take strong enforcement action to ensure that cartels do not negatively impact Singapore markets and harm businesses and consumers."
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.
The biggest fine of S$11.4 million was slapped on Lee Say Group, which has four firms under it, followed by S$3.58 million on the Tong Huat Group and S$2.69 million on Kee Song Food Corporation (S).