CCP issues show cause notices to 19 feed companies for cartelisation

Staff Reporter

The Competition Commission of Pakistan (CCP) has issued Show Cause Notices to 19 feed companies for collusive activities and, prima facie, entering into prohibited agreement in violation of Section 4 of the Competition Act, 2010.

The CCP took a suo motu notice of the concerns and complaints regarding a concurrent increase in feed prices and initiated an enquiry.

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 enquiry observed that from December 2018 to December 2020, the feed mills colluded to raise the poultry feed prices by Rs. 825 per 50kg bag, thus making the feed 32% costlier for the poultry farmers.

Moreover, data from the Pakistan Bureau of Statistics (PBS) for September 2020 shows that chicken prices rose by 18.31% and eggs by 5.2%.

The rise in these prices coincided with an increase in feed prices by almost Rs. 100 per bag.

In October 2020, after another price increase by poultry feed mills (by Rs.125 on layer and 175 on broiler feed), the chicken prices rose by 26.62% and eggs by 23.81% as compared to the previous month.

In November 2020, poultry feed prices rose again by Rs. 150 per bag, and the prices of chicken and eggs rose by 20.76% and 5.23%.

In December 2020, another price increase in poultry feed by Rs.250 per bag caused prices of chicken and eggs to rise by 3.21% and 14.08%, respectively.