The case was initiated pursuant to a complaint filed by Mr. T.R. Chandran alleging contravention of Section 3(3)(a) of the Competition Act against National Egg Coordination Committee (‘NECC’).^[1]  Subsequently, another complaint was filed by ‘People For Animals’ alleging contravention of Section 3(3)(a) and 3(3)(b) of the Competition Act by NECC, its directors and Agro Corpex India Limited (‘ACIL’). Upon consideration, based on the substantial similarity of the issues and allegations, the CCI clubbed these cases.

It was alleged that NECC and ACIL ensured that the prices of eggs were not affected by fluctuation in demand for eggs. It was also alleged that NECC, despite being a private association of egg producers, fixed and declared egg prices at various production and consumption centres under two broad heads being ‘NECC Prices’ and ‘Prevailing Prices’. This act of setting and disseminating egg prices constituted a violation of Section 3(3)(a) of the Competition Act. With respect to ACIL, it was alleged that even though ACIL projected to be company by poultry farmers, it was actually owned and controlled by NECC as the management of ACIL was from M/s Venkateshwara Hatcheries Group (‘VH Group’), the controllers of NECC.  It was further alleged that ACIL limited the supply of eggs to consumers to affect the prices in its favour thereby contravening Section 3(3)(b) of the Competition Act. Informant no. 1 also alleged that NECC fixed prices for 800 egg producers by convening meetings thrice a week and purposely created an artificial increase around the time when the Government of Tamil Nadu issues tenders for centralized, large-scale procurement of eggs for mid-day meal scheme for school children.

In its analysis, the CCI examined whether NECC declared egg prices on a daily basis and whether such determined prices were followed by farmers and poultry stores. To this, the CCI noted that NECC, while displaying daily egg prices, zone wise on its website, also monitored the monthly/annual egg prices at various NECC production and consumption centres. Upon clarification from the NECC, the CCI observed that the price declared by NECC was the de facto price in the market in as much as there was no other body in India other than NECC which declared the prices of eggs. Perusing the evidences gathered by the DG (emails, statements made by Chairmen, and WhatsApp conversations), the CCI also noted that weekly teleconferences (Wednesday) which were held at major production surplus zones between various zonal heads and other NECC functionaries to facilitate understandings/agreements amongst different NECC zones to act on egg prices and facilitated exchange of information about, inter alia, the price of other zones, stock level, movement of stock, etc. the CCI also acknowledged the role played by the Central Executive Committee of NECC in controlling the process of determination and declaration of prices of eggs by active intervention through its three-tier structure and reporting by the Zonal Chairmen at annual meetings.

On the basis of the above, the CCI held that that NECC was engaged in determining and declaring the prices of eggs on daily basis. On the point of implementation of these prices, the CCI took note of the minutes of annually held meetings of NECC, which revealed that NECC was engaged in the implementation of the egg prices declared by it. The CCI also looked at how NECC had changed the mandatory price of eggs to ‘suggestive price’, which showed that NECC had the intention to enforce price of eggs. Thus, the CCI concluded that NECC ensured strict adherence to the declared prices both at the central level and zonal level.

On price fixing, the CCI opined that price fixations and their dissemination were not bad at all times especially when there existed an underlying object of a common good. However, the need arose to examine whether such price fixation and dissemination of information is the sum result of factors with an economic rationale. Thus, the CCI held that a price that only acted as a benchmark or a mere suggestion and allowed the pendulum to move freely either side and did not clog the wheel should not be a malaise from a competition standpoint. However, since NECC forced farmers to sell at the declared price, the CCI found their conduct to be anti-competitive.

Therefore, the CCI was of the view that the act of NECC, particularly in trying to enforce such prices mandatorily by levying penalties/threatening to levy penalties on farmers, was contravention of Section 3(3)(a) and 3(1) of the Competition Act. The CCI directed NECC to cease and desist from issuing any directives/threats (verbal or in writing) that included imposition a penalty in case of non-adherence to the declared egg prices and emphasized on the need to sensitize its members/stakeholders by bringing into place a Competition Advocacy/Compliance Programme so as to ensure compliance with the provisions of the Competition Act.

[1] Case No. 09 of 2017 and Case No. 36 of 2017