Cosatu's collusion shock

Mon, 07 Jul 2008

The Congress of SA Trade Unions on Friday expressed shock at what it termed the "collusion scandal" in the poultry industry.

"This latest scandal in the food industry proves that it has become a norm for companies to connive to make profits by robbing the poor," Cosatu said.

This followed an announcement by the Competition Commission on Thursday that it had referred the findings of its investigations into complaints of anti-competitive conduct by Astral Operations and Elite Breeding Farms to the Competition Tribunal.

The trade union federation repeated its call for the investigation of all firms involved in food production and the retailing chain.

It also supported the Commission's recommendation of a 10 percent administrative penalty on both companies' annual turnover and exports for the financial year 2006/07.

Astral Operations controls companies Ross Poultry, National Chicks and Meadow Feeds. Elite Breeding Farms is a joint venture firm, based in KwaZulu-Natal, conducting its business as a partnership between Astral and Country Bird.

Astral controls Elite, owning 82 percent — and Country Bird was one of the complainants in the 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 February 20 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 added.