Chilean poultry companies fined for collusion

The Free Competition Defense Court of Chile (TDLC) is to penalise companies Agrosuper S.A, Ariztía S.A and Don Pollo Limited, with fines accumulating US$60 million for collusion.

The agency also ordered the dissolution of the Poultry Producers Association of Chile (APA), which acted as coordinator of the cartel.

Through a statement, the TDLC said a unanimous decision upheld the requirement filed in November 2011 by the National Economic Prosecutor (FNE), stating that the companies colluded by agreeing to limit the production of chicken meat offered to the domestic market and allocated market shares of production and marketing of the product for at least 10 years, “breach of Article 3, letter a) of Decree No. 211, as the current text after modification incorporated by Law No. 20,361, with costs.”

The agreement held between the poultry companies, which account for 80% of the chicken meat supply nationwide, was to project future demand for chicken and allocate production shares. Also, it gave ground that the APA had an important role in coordinating, implementing and monitoring compliance with the agreement.

The TDLC said there is abundant evidence that poultry companies sanctioned operated by demand, developed projections in conjunction with the APA, and pursued a range in which it was intended that prices for chicken meat fluctuated, coordinated by a certain level of production. This last exercise constituted collusion clearly understood as an agreement on the amount to be produced, in order to reach certain prices or price ranges, restricting or eliminating competition among its stakeholders. During each year, the agreement was controlled or adjusted by loading suggestions, sacrificing chickens or other policies or coordinated mechanisms.

The judgment convicted Agrosuper and Ariztía to pay the maximum fine established by Chilean law, ie 30,000 Annual Tax Units (ie, about US$ 25 million each), while Don Pollo was fined Annual Tax Units 12,000 (about US$ 10 million).

The National Consumer Service (SERNAC) is analysing the verdict ruled by the Free Competition Defense Court of Chile (TDLC), with the purpose that if the verdict is ratified by the Chilean Supreme Court, they will be able to initiate the actions that Law empowers to obtain compensation for consumers who were affected by the collusion of three companies that sell chicken meat.

According to economic reports commissioned by the National Economic Prosecutor (FNE) in the context of the case, the sign generated a loss of at least US$ 1,500 million.

Through a press release, National Economic Prosecutor, Felipe Irarrázabal, assessed fines established by the Free Competition Defense Court of Chile (TDLC) against three companies producing chickens and said that this is the biggest cartel has been thwarted in history in the system of free competition.

“We are extremely satisfied with the ruling of the TDLC. This has been, in our view, the biggest cartel that the free market system has tried to derail in Chile, since its inception in 1959,” he said.

All the accused have said they will appeal to the Supreme Court, except for Don Pollo which declined to comment.