Competition Commission refers poultry breeders
03-07-08
PRESS STATEMENT
3 July 2008
Competition Commission refers poultry breeders’ anti-competitive conduct to Tribunal
The Competition Commission has referred the findings of its investigations into complaints of anti-competitive conduct by Astral Operations Limited and Elite Breeding Firms which operate in the poultry market to the Competition Tribunal.
Astral Operations Limited, based in Cape Town, controls companies involved in the breeding of chickens, namely Ross Poultry (Pty) Ltd, National Chicks (Pty) Ltd, and Meadow Feeds (Pty) Ltd. Elite Breeding Farms is a joint venture firm, based in KwaZulu-Natal, conducting its business as a partnership between Astral and Country Bird (Pty) Ltd (now listed on the JSE as Country Bird Holdings Ltd (CBH). Astral controls Elite – it owns 82% - and Country Bird is one of the complainants in this matter. The joint venture is involved in the supply of parent breeding stock to the joint venture partners, i.e. Astral and Country Bird.
The Commission found that Astral and Elite have contravened the Competition Act and has asked the Tribunal to levy an administrative penalty of 10% of both the companies’ annual South African turnover as well as their exports from South Africa for the 2006/7 financial year.
Background and Findings
On 20 February 2007, Country Bird and Supreme Poultry (Pty) Ltd lodged a complaint with the Commission against Astral and Elite.
The Commission investigated the complaints and found that the Elite joint venture and the restrictions which flowed from it and the enforcement of its provisions by Astral and Elite has the effect of allocating markets and fixing trading conditions in contravention of section 4 (1)(b)(i) and (ii) of the Act.
The Commission found that Astral is dominant in the poultry breeding market, which involves the provision of grandparent and parent stock and abused its power by engaging in exclusionary conduct in contravention of section 8(c) and (d)(i) of the Act.
The conduct involves various strategies, all of which are intended to protect Astral’s dominance in the upstream breeding market and entrench its position in the downstream market through inhibiting effective competition in the market, in particular the market for the production of broilers.
The exclusionary conduct had the effect of impeding Country Bird and Supreme from expanding within the market for the production and supply of broilers and from entering or expanding into the breeder market.
Astral and Elite will file answering affidavits and thereafter the Tribunal will hold public hearings into the matter.
“The Commission viewed this complaint seriously in light of our other investigations into staple food such as milk and bread,” concluded Thulani Kunene, Head of Enforcements and Exemptions at the Commission.
ENDS
Prepared by: FD Beachhead
Dani Cohen 082 897 0443 / dani.cohen@fd.com
Jennifer Cohen 082 468 6469/ jennifer.cohen@fd.com
Senzi Dlamini 073 494 0030 / senzi.dlamini@fd.com
On behalf of: The Competition Commission
Further info:
Thulani Kunene, Head of Enforcements and Exemptions
012 394 3255 / 084 734 4179 / thulanik@compcom.co.za