Poultry complaint gets go-ahead

Fri, 04 Jul 2008

The Competition Commission has referred the findings of its investigations into complaints of anti-competitive conduct by Astral Operations and Elite Breeding Farms to the Competition Tribunal, it said on Thursday.

Both companies operate in the poultry market.

"The Commission viewed this complaint seriously in light of our other investigations into staple food such as milk and bread," said Thulani Kunene, head of enforcements and exemptions at the Commission.

Astral Operations controls companies Ross Poultry, National Chicks and Meadow Feeds.

Elite Breeding Farms was a joint venture firm, based in KwaZulu-Natal, conducting its business as a partnership between Astral and Country Bird.

Astral controlled Elite – owning 82 percent – and Country Bird was one of the complainants in this matter. The joint venture was involved in the supply of parent breeding stock to the joint venture partners, i.e. Astral and Country Bird.

On 20 February 2007, Country Bird and Supreme Poultry lodged a complaint with the Commission against Astral and Elite.

The Commission said after investigation, it had found that both the Elite joint venture and the enforcement of its provisions by Astral and Elite had the effect of allocating markets and fixing trading conditions.

The Commission found that Astral was dominant in the poultry breeding market, which involved the provision of grandparent and parent stock. It found that Astral "abused its power by engaging in exclusionary conduct".

"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 particular the market for the production of broilers," the Commission said.

The exclusionary conduct had the effect of preventing Country Bird and Supreme from expanding in the market for the production and supply of broilers, and from entering or expanding into the breeder market.

The Commission found that Astral and Elite had contravened the Competition Act and asked the Tribunal to levy an administrative penalty of 10 percent of both the companies' annual South African turnover, as well as their exports from South Africa for the 2006/7 financial year.

Astral and Elite would file answering affidavits and thereafter the Tribunal will hold public hearings into the matter.

Sapa was unable to reach Astral for comment.