Murder most fowl - hens killed to inflate prices

The chickens have come home to roost for Korea’s poultry suppliers as the anti-trust body busted a fowl cartel that had fixed the supply and prices of breeding birds from 2013 to 2014.

The Fair Trade Commission (FTC) said Monday that it fined four breeding chicken suppliers - Samhwa, KGB, Sajo and Harim - a total of 326 million won ($281,000) for colluding to reduce the number of imported breeding chickens and kill existing stock, resulting in the price of a single bird more than doubling.

Breeding chickens - specifically grandparent stock - were targeted. Up to 6,000 commercial chickens can be produced from one grandparent stock, so reducing the supply of grandparents can dramatically reduce the supply of available birds.

According to the FTC, the four companies colluded to limit imports of chickens in February 2013 after prices for one breeding chicken fell to 2,500 won in December 2012 from 3,900 won a bird at the beginning of the year.

After the companies limited imports, one breeding bird cost 5,500 won in July 2015, also affected by a broader reduced supply of the birds due to an outbreak of avian influenza.

The FTC said that the four companies, which control the entire Korean breeding chicken market, agreed to import 23 percent fewer birds in 2013 compared to the previous year, and made another arrangement to maintain import levels in 2014. Prices gradually increased as one breeding chicken that cost 3,000 won in February 2013 reached 4,500 won in January next year.

The companies strictly followed the plan, even slaughtering 13,000 breeding chickens that had been imported in 2013 prior to the agreement made in February that year.

The anti-trust body added that the top two breeding chicken companies - Samhwa and KGB - also made a separate agreement to raise prices to 3,500 won in January 2013.

The FTC explained that the illicit deal between the two companies was intended to inflate prices faster, considering the time of around seven to eight months it takes for prices to change by reducing supply.

Samhwa, which controls 47.8 percent of the breeding chicken market as of last year, was fined 167 million won. KGB, which has a 25.9 percent share of the market, was fined 99 million won.

The anti-trust body said it expects the measures to help stabilize prices for food products and added that it will closely monitor for collusion in consumer products.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]