First-ever cartel case: Supreme Court upholds CCP’s findings against poultry association

ISLAMABAD: The Supreme Court of Pakistan upheld the findings of Competition Commission of Pakistan (CCP) against the Pakistan Poultry Association (PPA) in the first-ever cartel case. However, the apex court reduced the penalty amount imposed on the PPA from Rs100 million to Rs25.

In a statement issued on Friday, the CCP said that while deciding the first-ever cartel case, the Supreme Court of Pakistan decided the civil appeal filed on behalf of the Pakistan Poultry Association (PPA) against the judgment of the Competition Appellate Tribunal that upheld the CCP’s February 29, 2016 judgment with respect to price fixing in contravention of Section 4 of the Competition Act, 2010.

The CCP had imposed a fine of Rs100 million on the Pakistan Poultry Association (PPA) for the fixing of price of poultry products in violation of Section 4 of the Competition Act, 2010. The Supreme Court, to this extent, allowed the PPA’s appeal and reduced the penalty from Rs100 million, imposed by the CCP in its order, to Rs25 million, while taking into account that the said advertisements by the PPA were discontinued after a few days, such as “after two days for eggs and five days for poultry.”

The court directed the PPA to pay the penalty amount of Rs25 million within a period of 15 days from the date of the order. Moreover, it directed the CCP to “frame and notify relevant rules inter alia relating to the imposition of penalties.” Currently, there exist guidelines on the imposition of financial penalties. Under Section 57 of the Act, the Commission, with the approval of the federal government, has the power to make rules.

The Supreme Court proceedings pertained to the CCP’s order, wherein the competition commission found that the Pakistan Poultry Association had inter alia discussed and approved the advertisement of prices of certain poultry products (concerning broiler chicken and chicken eggs) in the national press, which was prohibited under the Competition Act. Against the CCP’s order, the first appeal was filed by the PPA before the Competition Tribunal and its decision was authored by the Member, Technical, Ahmed Owais Pirzada.

The Competition Tribunal held: “By advertising prices of the poultry products in the national press, the appellant has clearly restricted and reduced the competition within the relevant market, which is a clear violation of Section 4 of the Act.”

It was further observed that the findings recorded by the CCP were “based on proper appraisal of the relevant provisions of Competition Law as well as other material brought on record. The same are, therefore, maintained.” The PPA had filed an appeal against the said Competition Tribunal order before the Supreme Court.

The CCP has time and again highlighted collusive/anti-competitive practices in the poultry sector. In 2010, the CCP issued show cause notices against 25 poultry association members and imposed a fine of Rs50 million on the PPA for contravention of Section 4 of the Competition Act. In 2021, the show cause proceedings against the said poultry association members also resumed after the Honourable Islamabad High Court had set aside the stay order(s) granted after a period of over 10 years.

The CCP also concluded two inquiries in 2021 concerning possible collusive and anti-competitive practices in various market categories in the poultry sector, including the market for broiler meat, eggs, day-old broiler chicks and various poultry feed segments.

The first inquiry report revealed that inter alia the poultry feed mills collectively fixed the price of poultry feed and, in the other inquiry, it was concluded that inter alia the hatcheries/poultry companies collectively discussed and decided on prices of day-old broiler chicks, which are in prima facie violation of Section 4 of the Competition Act.