It is now public knowledge that the Competition Commission recently gazetted the final terms of reference for the poultry market inquiry (PMI).
This is one of the last steps before a market inquiry officially starts. Contrary to some media reports, the PMI – just like other market inquiries – does not investigate the conduct of a particular firm; its intention is to investigate the poultry industry value chain.
The commission is investigating the poultry industry value chain because we have reason to believe that there are features in the poultry market that may impede, distort or restrict competition. This matters because undermining the purposes of the Competition Act 89 of 1998 (as amended) may have material implications for the poultry industry in SA, and ultimately consumers.
The terms of reference, both draft and final versions, provide an outline to industry participants, the public, and associations explaining the initial scope of the market inquiry. This scope is, however, not exhaustive and only sets out the parameters currently envisaged, as additional matters may arise during the course of the inquiry.
Engagement with stakeholders remains vital throughout the market inquiry process. Therefore, before the final terms of reference were gazetted, we published a draft version for stakeholders to review and comment on. When preparing the final terms of reference, the commission engages with the comments submitted by stakeholders and reviews submissions from additional industry experts and the department of trade, industry & competition.
This consultative process supports the holistic approach the commission takes during and even after a market inquiry concludes.
It is, however, important to delve into what exactly the inquiry will seek to achieve. The main objectives of the inquiry into the poultry value chain (chicken, meat and eggs) are to, among others, assess whether market features distort competition across the value chain.
These market features may range from pricing and access to key inputs such as genetic stock, feed, fertile eggs, abattoirs, cold-chain logistics, and barriers to entry and expansion for market entrants.
The commission will also assess the role of retailers, quick-service restaurants, and food processors in facilitating new entry and access to markets by large and independent producers, including small to medium enterprises and historically disadvantaged persons, along with the international competitiveness of the local poultry industry and the impact of imports on domestic competition, including the impact on local producers, consumers, and broader concerns such as employment. The complete terms of reference is available on our website, www.compcom.co.za
Equally important is to highlight the potential outcomes of this inquiry. In terms of section 43C of the Competition Act, where the commission finds an adverse effect on competition, it must determine the actions required.
Specifically, it must consider whether to make recommendations to any minister, regulator, or affected firm to remedy, mitigate, or prevent the adverse effect and what specific action should be taken. Based on information obtained during the inquiry, the commission may also: Initiate a complaint and enter into a consent order with any respondent, with or without further investigation; and Initiate a complaint against a firm for further investigation.
The commission may also initiate and refer a complaint directly to the Tribunal without further investigation; take any other action within its powers under the act, as recommended in the inquiry report; or take no further action.
Readers can find more details about and follow the progress of the inquiry on our website.
- Makunga is spokesperson for the Competition Commission of SA
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