The Competition Commission of Pakistan (CCP) has issued Show Cause Notices to 18 poultry feed mills for prima facie engaging in cartelization and collusive price fixing practices prohibited under Section 4 of the Competition Act 2010 (the ‘Act’). The feed mills which have been issued show cause notices include: Kausar Feeds (Pvt.) Ltd, Big Feed (Pvt.) Ltd, Punjab Feeds (Pvt.) Ltd, Lahore Feed (Pvt.) Ltd, Pak Feed Industries (Pvt.) Ltd, Islamabad Feeds (Pvt.) Ltd, Supreme Feeds (Pvt.) Ltd, Hi- Tech Feed (Pvt.) Ltd, Shahzor Feeds (Pvt.) Ltd, Asia Poultry Feeds (Pvt.) Ltd, Sharif Feeds (Pvt.) Ltd, Chakwal Feeds (Pvt.) Ltd, Punjnad Feeds (Pvt.) Ltd, National Feeds (Pvt.) Ltd, Crescent Feeds (Pvt.) Ltd, S.B Feeds (Pvt.) Ltd, Kashmir Feeds (Pvt.) Ltd, Premium Feeds (Pvt.) Ltd. The poultry feed mills have been asked to submit their written arguments within fifteen days, and to appear before the Commission on 23 and 24 November 2010. All these mills are members of Pakistan Poultry Association (PPA). These Show Cause Notices come in the aftermath of the recent PKR 50 million fine imposed by CCP on the PPA for cartelizing the poultry industry. Earlier the CCP undertook investigation of the Pakistan’s poultry industry based on news reports pertaining to ligh prices of day-old chicks and exorbitant increase in the prices of poultry feed. The news reports claimed that the increases were the result of cartelization among the poultry hatcheries owners and the poultry feed manufacturers, respectively. Upon preliminary investigation, the CCP observed that Pakistan Poultry Association served as the nerve-center that connected the different sectors of the poultry industry, including feed manufacturers, breeders, hatcheries and broiler and layer farms. The CCP Enquiry Committee discovered that information relating to rates of various poultry products, such as chicken meat, eggs, feed etc, was being displayed on the official website of PPA and that these rates were being updated on the website on regular basis. The website also contained circulars relating to price of poultry feed and minutes of meeting relating to increase in prices of day old chicks. Based on the preliminary observations of the Enquiry Committee and the initial evidence, the Commission authorized search and inspection of PPA’s offices in Islamabad, Lahore and Karachi which were conducted on 24 and 25 May 2010. During the search and inspection, the CCP officials impounded important documents for further investigation. The documents prima face indicated that PPA, its committees, and their members regularly engaged in discussions and deliberations regarding production and pricing of poultry products and took decision on those matters. In its Show Cause Notice, CCP has stated that based on its prima facie findings, the poultry feed mills appears to have entered into an agreement amongst themselves and with other PPA members with regards to pricing, production and sale of poultry feed which prima facie violates Section 4 of the Ordinance. Pakistan’s poultry industry comprises several sectors that are interconnected, with each having a stake in each other. The different sectors include feed manufacturers, breeders, hatcheries, broiler farms and layer farms. Feed manufacturers use agri-based produce and by-products to make various feeds which are fed as diet to chickens bred by breeders, hatcheries and farmers. Breeders use grandparent pure-line stock strains to produce parent stock strains of chickens, which in turn supply eggs to hatcheries. Hatcheries use eggs provided by breeders to produce day-old chicks, which are then raised on farms for their meat and eggs and are sold to broiler and layer farms. Broiler farms purchase day-old chicks from hatcheries and raise a breed of chicken, known as the broiler, which is meant for chicken meat production. Layer farms, on the other hand, purchase day-old chicks from hatcheries and raise a breed of chicken known as the layer, which lays eggs for dietary consumption.
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