13 Singapore fresh chicken distributors fined $27m for price fixing, anti-competitive behaviour

(PHOTO: Getty Images)

Thirteen fresh chicken distributors in Singapore have been fined a total of almost $27 million for engaging in price fixing and other anti-competitive behaviour.

In a statement on Wednesday (12 September), the Competition and Consumer Commission of Singapore (CCCS) issued an infringement decision against the businesses, which include the Lee Say Group’s seven companies and Toh Thye San Farm.

They were penalised a total of $26,948,639 for their offences – the highest total financial penalty imposed by the CCCS in a single case to date.

The other companies involved are: Gold Chic Poultry Supply, Hy-fresh Industries, Kee Song Food Corporation, Ng Ai Food Industries and Sinmah Poultry Processing.

CCCS said that the 13 companies had agreed to coordinate the amount and timing of price increases, and not to compete for each other’s customers. This followed an investigation that commenced in March 2014 after it received information from a whistleblower.

The commission’s investigations revealed that, from at least September 2007 to August 2014, the companies engaged in discussions on prices and expressly coordinated the amount and timing of price increases of certain fresh chicken products sold in Singapore.

During these discussions, they also agreed to not compete for each other’s customers.

“(Their) collusion restricted competition in the market and likely contributed to price increases of certain fresh chicken products in Singapore. By agreeing not to compete for each other’s customers, the Parties restricted the choices available to customers,” said the CCCS statement.

“The coordinated price increases further reduced customer choice as it limited options for customers to switch to more competitive distributors.”

Chicken the most consumed meat in Singapore

Chicken is the most consumed meat in Singapore, with more than 30kg of chicken consumed per person annually. (Infographic by CCCS)

According to CCCS, fresh chicken distributors import live chickens from farms in Malaysia and slaughter them in Singapore. Thereafter, the distributors sell the fresh chicken products to customers such as supermarkets, restaurants, hotels, wet market stalls and hawker stalls.

Chicken is the most consumed meat in Singapore, with more than 30kg of chicken consumed per person annually. In 2016, approximately 49 million live chickens were slaughtered in the country.

The total turnover of the 13 companies, which collectively supply more than 90 per cent of fresh chicken products in the country, amounts to approximately half a billion dollars annually.

In light of this, their “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”.

In levying the financial penalties, CCCS took into account factors such as the relevant turnovers of the companies and the nature, duration and seriousness of the infringement.

“(The) large size of the industry, the high market shares of the Parties, the seriousness and the long duration (of about seven years) of the cartel conduct contributed to CCCS imposing the highest total financial penalty in a single case to date,” said the CCCS.