Allegations by a white meat poultry farm
operator that prices for white meat chicks were being manipulated
Chinese Taipei
case:
Allegations by a white meat poultry farm operator that prices for white meat
chicks were being manipulated.
Key Words:
Concerted price fixing
Reference:
Fair Trade Commission Decision of June 7, 2000 (the 448th Commissioners'
Meeting); Letter of 19 June 2000 (89) Kung Yi Tzu No. 8814089-013
Industry:
Poultry raising (0133)
Relevant Laws:
Article 14
of the Fair Trade Law
Summary:
The Fair Trade Commission (the "Commission") received a letter of
complaint from the operator of a white meat poultry farm. According to the complainant,
the prices for white meat chicks in the past had been set by the market to reflect
costs. In recent years, however, the Poultry Association of Chinese Taipei [sic]
("Poultry Association") had engaged in concerted action to control
the prices by collecting funds for a foundation through its White Meat Chick
Group.
The Commission reviewed and investigated the poultry production and trading
process, the pricing of chicks in recent years, and the causes of fluctuations
and trends therein. The Commission also investigated whether poultry operators
had collected funds from one another. The Commission also solicited the opinions
of the competent authority for agriculture in a written request for further
information. The case was decided at the 448th Commissioners' meeting on 7 June
2000 as follows:
- The Commission's investigation failed to find material evidence that violation
of the Fair Trade Law had occurred for the following reasons:
(1) Pricing in this sector roughly conforms to what economists call the "Web
Theory." This product is seasonal with the current price in a given period
determined by the number of chicks raised and produced in the previous period.
According to a letter received from the Council on Agriculture, prices for
white meat chicks between 1997 and 1999 ranged from a high of NT$16.07 in
September 1998 and NT$6.60 in June 1997. Price fluctuation was thus approximately
143 percent. Moreover, the average price was less than NT$12 during the 18
months between January 1997 and June 1998. Thus the complainant's claim that
the price of white meat chicks had never been lower than NT$12 was inaccurate.
(2) The Commission investigated members of the Poultry Association including
hatchery operators and the operators of poultry farms. Because the interests
of these operators conflict, the Poultry Association would have been unlikely
to have favored one side or the other. Further, the suspects and victims identified
by the complainant stated that the Poultry Association could not have engaged
in the acts in question. The Poultry Association also argued that poultry
operators' dissatisfaction with chick prices was related to the fragmented
nature of Chinese Taipei's [poultry] industry. The Poultry Association also
denied having accepted funds for a foundation. In its subsequent investigation,
the Commission failed to find evidence that the Poultry Association had collected
foundation funds or acted in concert to jack up chick prices.
(3) During the Commission's investigation, the poultry operators under suspicion
denied having engaged in the acts in question and asserted that because competition
in the chick market is intense and the operators have conflicting interests,
the operators would not have been willing to contribute to a fund that would
benefit their competitors. They also stated that pricing of chicks was determined
by market supply and demand. Chick prices were high in 1999 because of the
affect on the poultry industry of the first phase of the liberalization of
chicken imports. This development made incubator operators pessimistic about
chicken prices and caused most operators to reduce production. Another contributing
factor was the efforts of the Council on Agriculture to discourage farmers
from raising livestock [including poultry] which led smaller operators to
pull out and caused a shortage of chicks and rising prices. This explanation
tallied with the figures for chick production in 1998 and 1999 provided by
the Council on Agriculture. It was also consistent with the Council's explanation.
Despite multiple investigations, the Commission was unable to obtain material
evidence that the Poultry Association had violated the Fair Trade Law.
- Also, according to the Animal Husbandry Law and the provisions of other
relevant laws and regulations, the production, sale, and pricing of animal
husbandry products falls under the jurisdiction of the competent agency for
agriculture. Consequently, the Council on Agriculture was invited to join
the disposition of this case.
Summarized by Yang Hsiu-yun
Supervised by Lin Yu-ch'ing
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