Fowl play: Singapore chicken suppliers fined a record S$27m

Fowl play: Singapore chicken suppliers fined a record S$27m

SINGAPORE,. Thirteen fresh chicken suppliers have been fined a record S$27 million (RM81.47 million) for anti-competitive practices, as the Competition and Consumer Commission of Singapore (CCCS) wrapped up a four-year investigation on the industry.

The fine is the largest financial penalty imposed by the watchdog in a single case to date.

The CCCS issued an infringement decision against the suppliers for operating as a cartel – coordinating the amount and timing of price increases, as well as agreeing not to compete for each other’s customers.

The distributors supply more than 90 per cent of fresh chicken products in Singapore and their total annual turnover amounts to about S$500 million, said the CCCS in a media statement on Wednesday (Sep 12).

Their anti-competitive conduct had an impact on a large number of customers including supermarkets, restaurants, hotels, wet markets and hawker stalls, as well as end-consumers, the watchdog said.

The financial penalty imposed on each party ranged from about S$706,000 to more than S$11 million.

The distributors and their fines are:

Gold Chic Poultry Supply and its related company Hua Kun Food Industry — S$1,771,111

Hy-fresh Industries — S$705,939

Kee Song Food Corporation — S$2,689,065

Ng Ai Food Industries — S$1,910,897

Sinmah Poultry Processing — S$2,624,706

Toh Thye San Farm — S$2,267,465

Lee Say Group and its related companies, Hup Heng Poultry Industries, Prestige Fortune, Leong Hup Food — S$11,399,041

Tong Huat Poultry Processing and its related company Ban Hong Poultry — S$3,580,415

The fines took into account the annual turnover of each company, the duration of the infringement period, as well as other mitigating factors. Leniency discounts were given to Tong Huat Group, Sinmah, Kee Song and Hy-fresh for coming forward with information on the cartel after CCCS started investigations in March 2014.

CCCS assistant chief executive of legal, enforcement and consumer protection Lee Cheow Han declined to reveal the quantum of discounts given at a media briefing. The commission provides up to 50 per cent reduction in financial penalties for cartel members who come forward after investigations begin.

Investigations, which followed a tip-off from a former employee of a cartel member, showed the cartel started its anti-competitive behaviour as early as September 2007.

CCCS deputy director for business and economics Kong Weng Loong said that there were at least seven instances of prices increases — of between 10 cents and 30 cents per kg of fresh chicken — between September 2007 and August 2014.

The commission found that the distributors met several times between 2000 and 2014 to discuss these prices, as well as carry out these decisions accordingly. Some of these meetings were held at the Poultry Merchants’ Association, which some of the suppliers are members of.

During the period of infringement, there were times where Chiew Kin Huat, who is the owner of Sinmah Poultry Processing, was honorary secretary of the association.

Apart from financial penalties, CCCS has also tasked the suppliers to provide a written undertaking that they will refrain from using the association as a platform or front for anti-competitive activities.

Kong said their collusion limited customers’ ability to switch suppliers as they had fewer options.

The CCCS issued a proposed infringement decision in March 2016 and subsequently received more information of the distributors’ participation in price discussions and coordination of price increases. It decided to conduct further investigations and issued a supplementary decision last December.

Lee said a longer time was needed to investigate this case due to the number of parties involved as well as the duration of the infringement.

The suppliers have two months to file an appeal to the Competition Appeal Board.

Toh Thye San Farm and Tong Huat declined comment when contacted by TODAY, while Sinmah said it is awaiting instructions from its lawyers before deciding on further action.

TODAY has also reached out to the other suppliers.

The CCCS’ second-highest financial penalty of S$20 million was imposed on five capacitor manufacturers for price-fixing in January.

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

The average person consumes between 1kg and 20kg of other types of meat, such as fish, pork, beef and mutton per year. — TODAY