CCI orders probe into Venkateshwara Hatcheries on complaint by Maneka Gandhi's NGO

The Competition Commission of India (CCI) has ordered an investigation into Venkateshwara Hatcheries Group (Venky’s) and its affiliated entities on a complaint filed by Maneka Gandhi's NGO People for Animals (PFA) alleging anti-competitive practices in India’s poultry sector.

The CCI has asked its investigative arm, the Director General (DG), to examine whether the group’s business arrangements with poultry farmers impose restrictive conditions that limit competition in the market.

"The Commission is of the opinion that there exists a prima facie case in the present matter, which requires an investigation by the DG," the CCI said.

The complaint alleged that the Venky’s group, through its vertically integrated operations and standard form agreements with poultry breeders, imposed restrictive conditions that limit competition.

The complaint flagged Broiler Breeder Agreements (BBAs) and Layer Breeder Agreements (LBAs) which allegedly restrict farmers from selling chicks and hatching eggs freely and from dealing with competing poultry breeds.

It also alleged that the group exercises significant influence over industry bodies such as the National Egg Coordination Committee (NECC), potentially affecting pricing and supply in the sector

Venky's denied the allegations, contending that the claims lack factual and legal basis and do not demonstrate any harm to competition.

They submitted that vertical integration is a standard industry model that improves coordination, biosecurity and product quality, and results in efficiencies for consumers.

The Commission rejected these objections and held that the present case involves distinct allegations and is not barred by earlier proceedings

The Commission examined the BBAs and LBAs and noted that they contain clauses restricting breeders from selling chicks or hatching eggs to “unauthorised persons,” including competitors or entities dealing with other breeds.

It also found that breeders are prohibited from dealing with any breeds other than those supplied by the Venky’s group.

Further, the Commission noted that such clauses prevent breeders from procuring alternative parent stock from competitors.

The Commission observed that such vertical arrangements could harm competition and lead to higher prices, reduced consumer choice, and market foreclosure.

The order also recorded material placed by the Informant indicating that contract farmers may bear production risks while receiving limited returns.

In view of the above, the Commission directed the DG to investigate the matter and also examine the role of persons responsible for the conduct of the business of the parties.

[Read Order]