New Delhi: The antitrust regulator has directed a probe into Venkateshwara Hatcheries Group and its affiliates for alleged abuse of markdominance and other anti-competitive practices in the poultry sector on a complaint filed by People for Animals (PFA), a non-governmental organisation founded by Maneka Gandhi.
In an order on Wednesday, the Competition Commission of India (CCI) has ordered its director general (DG) to investigate if the group’s business practices adversely impact competition in the market and submit a report in 90 days.
The complaint has alleged that the group’s broiler breeder agreements and layer breeder agreements restrict contract breeders from distributing their own products, among other issues.
The broiler breeder agreement also allegedly prohibits the sale of commercial chicks and hatching eggs to any “unauthorised person”, which has been broadly defined to include any competitors, overseas buyers and persons dealing with any breed other than the Vencobb broiler breed.
For its part, Venkateshwara group has refuted allegations of violating any competition rule.
Prima facie case of violation
After assessing the complaint and the responses, the regulator said the group and its affiliates maintain a substantial portion of the overall poultry business by operating in an integrated model.
“The vertical agreements in the nature of territorial allocation and exclusive distribution are likely to primarily cause appreciable adverse effect on competition by restricting competition, leading to higher prices, reduced consumer choice, and market foreclosure,” the CCI said in the order.
Eggs and meat consumers may be paying higher prices for relevant products “because of such tight control of contract farmers” by the opposite parties (Venkateshwara Hatcheries Group and its affiliates), the regulator said.
“These vertical agreements often limit competition by preventing breeders/farmers from selling outside assigned territories or competing with others, which can further strengthen the corporate group’s market power, prima facie causing appreciable adverse effect on competition,” the regulator said in the order.
The Commission also said if the DG comes across anticompetitive conduct of any other entity on top of those mentioned during the course of the investigation, he will be at liberty to investigate it as well.
The DG is also asked to investigate the role of the persons or officers “who were in-charge of, and were responsible for the conduct of the businesses of the parties at the time the alleged contravention”.
However, the Commission also made it clear that nothing stated in this order will be “tantamount to a final expression of opinion on the merits of the case and the DG shall conduct the investigation without being swayed in any manner whatsoever by the observations made herein”.
