Poultry suppliers accused of price collusion share ownership links
Reuters file photo
SINGAPORE — A check into Accounting and Corporate Regulatory Authority (ACRA) records has turned up an intricate web of links among the fresh chicken distributors accused of colluding on prices for at least seven years.
Among the 13 companies, which account for more than 90 per cent of market share, nine of them have directors, shareholders or secretaries who hold an interest in at least one other firm.
For example, several directors of Lee Say Group — understood to be the market leader — sit in three other firms: Hup Heng Poultry Industries, KSB Distribution and Prestige Fortune (S). On KSB’s website, the firm declares that it became a wholly-owned subsidiary under another firm belonging to Lee Say Poultry Industrial in November 2012.
Ban Hong Poultry and Tong Huat Poultry Processing Factory have the same five individuals on both management teams, and share a secretary with Sinmah Poultry Processing (S). Both Gold Chic Poultry Supply and Hua Kun Food Industry have similar management figures.
No overlaps in management or shareholders were found in ACRA records of the remaining four — Toh Thye San Farm, Ng Ai Muslim Poultry Industries, Kee Song Brothers Poultry Industries and Hock Chuan Heng Farm.
The 13 companies, which have a total turnover of about half a billion dollars annually, were cast in the spotlight on Tuesday when the Competition Commission of Singapore (CCS) issued a notice that the firms had “expressly coordinated” the price increases of fresh chicken products sold here and agreed not to compete for one another’s customers from at least 2007 to 2014.
The distributors have six weeks to make their case against the CCS’ findings. The maximum penalties for such violations is up to 10 per cent of annual turnover, for up to three years.
While common shareholding among businesses is not prohibited under the Competition Act, the Consumers Association of Singapore (CASE) and lawyers interviewed said these companies should not be holding discussions on prices. “Different companies have different cost structures, be it labour cost, land cost. There’s no reason why they should set the price for every subsidiary. They are different entities altogether and they’re supposed to operate independently as far as pricing is concerned,” said CASE executive director Seah Seng Choon.
The fresh chicken industry in Singapore has two components — slaughtering and distribution. Distributors import live chickens from Malaysian farms — some of which they own — and slaughter them here before supplying them to restaurants, supermarkets, hotels and other customers. A source in the industry said the bosses of the companies in the industry keep in touch regularly. For instance, all of them take their employees to a gathering during the Seventh Lunar Month, where live poultry is auctioned. Mr Daniel Chia, a partner at Morgan Lewis Stamford, said: “You can’t have the management of a particular subsidiary checking back with the head management of the entire group to ask, ‘What price should we fix our products at?’ Because that effectively forms a cartel.”
Mr Andrew Riseley, a competition law expert at WongPartnership, said it is difficult to avoid flouting competition laws if competitors share senior management.
“If you are regarded by competition laws as independent enterprises and you are presenting yourselves to customers as separate businesses, then the competition authorities expect you to compete. This means that you need to be extremely careful about sharing commercially sensitive information about prices and markets.”
