Chicken price shock: Bulk of suppliers accused of price-fixing
Live chickens are for sale at a wholesale meat market. Bloomberg file photo
SINGAPORE — In one of the worst anti-competitive cases involving an industry here, 13 fresh chicken distributors, who collectively account for more than 90 per cent of the fresh chicken market share, have been accused of coordinating price hikes and agreeing not to compete for each other’s customers for at least seven years.
These acts were aimed at distorting the prices of fresh chicken products here and they reduced customer choices, said the Competition Commission of Singapore (CCS) on Tuesday (March 8). “The coordinated price increases further reduced customer choice, as it provided few options for customers to switch distributors,” a spokesperson added.
The 13 distributors allegedly involved have a combined turnover of approximately half a billion dollars annually, and include Lee Say Poultry Industrial, Hup Heng Poultry Industries and Ng Ai Muslim Poultry Industries. It is the first time such findings have been made against the fresh chicken industry.
Price-fixing is illegal here. Under the Competition Act, business entities are not allowed to enter into any agreement that prevents, restricts or distorts competition. The CCS has issued a written notice called a proposed infringement decision to the distributors.
The notice sets out the facts on which the CCS made its assessment and the reason for its decision.
The distributors have six weeks to submit their arguments to the CCS before a final decision is taken on whether there has been an infringement of competition rules. If so, the CCS can impose a financial penalty of up to 10 per cent of a company’s turnover for each year of infringement, up to a maximum of three years.
In response to queries on Tuesday, the CCS said it received a complaint about alleged price-fixing among fresh chicken suppliers in late 2013. In March the following year, it started investigations.
Their findings showed that the distributors engaged in discussions from at least 2007 to 2014 and had “expressly coordinated” the price increases of fresh chicken products sold in Singapore. During these discussions, the distributors also agreed to not compete for each other’s customers. Their anti-competitive conduct ceased in 2014, based on the CCS’ investigations.
Among the companies singled out that TODAY reached, Kee Song Brothers Poultry Industries denied the charge that the company had coordinated price hikes with the other distributors. Rather, prices were adjusted from time to time because of changing demand and supply, as well as the increasing cost of operations, such as chicken feed, said the company’s group marketing manager James Sim.
Prices also varied during the festive season, he added.
A spokesperson of a popular restaurant chain that orders fresh chicken products from Sinmah Poultry Processing said they noticed that prices had increased from about S$3.50 per kilogram almost a decade ago to about S$4.80 per kilogram today.
“I’m under the impression that every one of them was selling at the same price, but I didn’t know this equates to price-fixing because they have an association,” said the spokesperson, who declined to name his company.
There have been similar findings made against other industries by the CCS. In 2014, 11 freight forwarders along with their Singapore subsidiaries were found to have engaged in cartel activities to fix prices of air freight services for shipments from Japan to Singapore. In 2012, two ferry operators allegedly exchanged confidential information on their ticket prices.
In 2009, ticketing agent SISTIC was also accused of abusing its dominant position in the ticketing service market via exclusive agreements and was issued a PID. ADDITIONAL REPORTING BY ASYRAF KAMIL
