SINGAPORE: Thirteen fresh chicken distributors that engaged in price fixing and market sharing have been fined a total of S$26.9 million – the highest financial penalty meted out by the Competition and Consumer Commission of Singapore (CCCS) for a single case.
For nearly seven years, the suppliers had discussed and coordinated the amount and timing of price increases ranging from 10 cents to 30 cents per kg on at least seven occasions. They also agreed not to compete for each other’s customers, said the CCCS on Wednesday (Sep 12).
Supplying more than 90 per cent of fresh chicken products in Singapore, the 13 companies have a total turnover of about S$500 million annually.
CCCS said the “seriousness and long duration” of the cartel conduct, alongside other factors such as the distributors’ high market share and the large size of the industry, contributed to the heavy fines.
The distributors have also been asked to provide a written undertaking that they will refrain from using The Poultry Merchants’ Association or any other industry association as a platform for anti-competitive activities.
The 13 distributors are Gold Chic Poultry Supply and its related firm Hua Kun Food Industry; Hy-fresh Industries; Kee Song Food Corporation; Ng Ai Food Industries; Sinmah Poultry Processing; Toh Thye San Farm; as well as the affiliated companies of Lee Say Group and Tong Huat Group.
Among them, four submitted leniency applications after investigations begun, and were eventually given reductions in their financial penalties for coming forward with information and evidence about the cartel activities. These include Tong Huat Group, Sinmah, Kee Song and Hy-fresh.
CCCS declined to reveal the reduction that was given to each distributor under its leniency programme.
Investigations into the fresh chicken distribution industry, which refers to chickens slaughtered here as opposed to frozen ones imported into Singapore, began in March 2014 after the CCCS received information from a secret complainant.
The complainant was a former employee at one of the 13 suppliers, said CCCS’ deputy director of business and economics Kong Weng Loong during a media briefing.
The companies were found to have held meetings – some at The Poultry Merchants’ Association that the suppliers are members of – from at least Sep 19, 2007 to Aug 13, 2014. They had “expressly coordinated” the amount and timing of price increases of certain fresh chicken products, such as whole fresh chickens, sold in Singapore, said CCCS.
Prices were increased by 10 cents to 30 cents per kg on at least seven instances, including July 2008, May 2009, August 2010, January 2011, March 2011, January 2013 and January 2014.
Meanwhile, the 13 suppliers also agreed not to compete for each other’s customers – a move that CCCS described as restricting choices made available to customers.
Together with the coordinated price increases, customers had “limited option” to switch to more competitive distributors, added CCCS.
“In view of the high combined market shares of the parties and as chicken is the most commonly consumed meat in Singapore, the parties’ anti-competitive conduct impacted a large number of customers including supermarkets, restaurants, hotels, wet market stalls and hawker stalls, and ultimately, end-consumers of these fresh chicken products,” said the commission.
The CCCS issued a Proposed Infringement Decision (PID) to all 13 suppliers on Mar 8, 2016, but decided to conduct further investigations in September when new information emerged.
Last December, CCCS issued a supplementary PID against the parties, and received further written and oral representations.
CCCS said it carefully considered all the representations in reaching its findings.
Its chief executive Toh Han Li said: “Price fixing and market sharing are considered some of the most harmful types of anti-competitive conduct. Such conduct is particularly harmful when the products affected are widely consumed in Singapore, such as in this case.”
He added: “CCCS will continue to take strong enforcement action to ensure that cartels do not negatively impact Singapore markets and harm businesses and consumers.”