Cosatu shocked by latest collusion scandal
Patrick Craven, spokesperson for the Congress of South African Trade Unions (Cosatu), said on Friday that the union was shocked to hear about another “collusion scandal” in the food industry—this time among chicken companies.
Craven noted that the Competition Commission had found that chicken companies Astral Operations and its subsidiary Elite Breeding Farms colluded to allocate markets and fix trading conditions.
The commission further found that Astral had abused its market dominance.
“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,” Craven said. “Cosatu repeats its call for the investigation of all the firms involved in food production and the retailing chain.”
Craven added that Cosatu supports the commission’s recommendation of a 10% administrative penalty on both companies’ annual turnover and exports for the 2006/07 financial year.
The trade unions, he said, will continue to call for chief executives of companies found involved in restrictive practices to be held personally liable.
Astral Operations said on Thursday that it disagreed with the Competition Commission’s findings.
The company will raise, “at the appropriate time, substantial factual and legal issues material to the matter which have not been dealt with by the commission in its referral”, it said.
Astral said its answering papers will be filed with the Competition Tribunal “in due course”.
Thulani Kunene, head of enforcements and exemptions at the commission, said earlier: “The commission viewed this complaint seriously in light of our other investigations into staple food such as milk and bread.”
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%—and Country Bird was one of the complainants in this matter. The joint venture is involved in the supply of parent breeding stock to the venture partners, Astral and Country Bird.
On February 20 last year, Country Bird and Supreme Poultry lodged a complaint with the commission against Astral and Elite.
The commission said that, 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.—Sapa, I-Net Bridge