Inquiry into Alleged Anti-Competitive Practices by Venkateshwara Hatcheries Group

Case No. 15 of 2025 Page 1 of 16

COMPETITION COMMISSION OF INDIA

Case No. 15 of 2025

In Re:

People For Animals (PFA)

Informant And

Venkateshwara Hatcheries Pvt. Ltd.

Opposite Party No.1 Venky’s (India) Ltd.

Opposite Party No.2 Venco Research & Breeding Farm Pvt. Ltd.

Opposite Party No.3 Venkateshwara Research and Breeding Farm Pvt. Ltd.

Opposite Party No.4 Uttara Foods and Feeds Pvt. Ltd.

Opposite Party No.5 Uttara Impex Pvt. Ltd.

Opposite Party No.6 Venkateshwara B.V. Biocorp Pvt. Ltd.

Opposite Party No.7 Venkateshwara Biofeed Private Limited

Opposite Party No.8 Anuradha Desai

Opposite Party No.9

Case No. 15 of 2025 Page 2 of 16

CORAM

Ravneet Kaur Chairperson

Anil Agrawal Member

Sweta Kakkad Member

Deepak Anurag Member

Order under Section 26(1) of the Competition Act, 2002

1. The Information has been filed by the People for Animals (‘Informant’/ ‘PFA’), seeking the institution of an inquiry under Section 26 of the Competition Act, 2002 (‘the Act’) into abuse of dominance and vertical restraint in the Indian poultry industry by the Venkateshwara Hatcheries Group (‘VH Group’) through its group companies, i.e., Opposite Party Nos. 1 to 8, and its Chairperson, Ms. Anuradha Desai, Opposite Party No. 9 (hereinafter referred to as ‘Opposite Parties’ or ‘OPs’ collectively).

2. The Informant, is stated to be a trust registered under the Indian Trust Act, 1882. The Informant claims to be a reputed animal welfare organisation in India. The Informant also claims to have worked to rehabilitate sick and needy animals, run shelters and sterilisation programmes, promote awareness and education about animal rights, their protection and welfare and assist the Government in formulation and implementation of policies for animal welfare.

3. OP-1 to OP-8 are group companies of the VH Group, which is allegedly the largest fully integrated poultry group in Asia, undertaking operations in chicken and egg processing, broiler and layer breeding, genetic research, diagnostics, vaccines for poly diseases, feed supplements, bio-security products, poultry feed and equipment, along with nutritional health products among others. These group companies are allegedly the sole licensees for the supply of parent stock of the Babcock breed of

Case No. 15 of 2025 Page 3 of 16

layer hens under the trademark/tradename BV 300 and Cobb breed of broiler chicken under the trade name ‘Vencobb’ in India. OP-9 is the Chairperson of the VH Group.

4. According to the Informant, commercial and backyard poultry are two distinct sectors of poultry with starkly different productivity levels, as the names suggest. The Informant stated that as per the National Action Plan for Egg & Poultry - 2022 for Doubling Farmers' Income by 2022 by the Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture & Farmers Welfare, Government of India (‘NAPEP -2022’), the poultry sector can broadly be divided into two sectors, that is, the highly organized commercial sector, which constitutes 80% of the total poultry sector and the unorganized sector or backyard poultry, comprising 20% by value of the poultry sector in 2015-2016.

5. The Informant has stated that commercial poultry differs from backyard poultry in terms of faster and higher yield, higher capital costs, use of selected breeds and specialised feed based on the breed requirement, vaccination, and controlled confinement of the birds. In contrast, backyard poultry production is a low input business, characterized by indigenous night shelter systems, scavenging system with supplementary feeding, natural hatching of chicks, native/hybrid variety of birds, and local marketing. The specialized production and costs associated with commercial poultry farming drastically limits the substitutability of backyard poultry with commercial poultry production.

6. The Informant has also stated that consumers are unlikely to substitute the produce of commercial farm with that of a backyard farm, given the hyperlocal marketing of backyard poultry that may also not satisfy commercial standards and regulations, which commercial poultry farms are constrained to follow. The Informant refers to the NAPEP-2022 to state that fowls dominate the poultry population in India. Alternate species of birds like ducks, turkeys, and guinea fowls comprise only 2% of the poultry population and are not ready substitutes for products derived from fowls.

7. As per the Informant, the two broad product markets within the commercial poultry sector that the VH Group is present in, are those of the commercial layer hens and broiler chickens. Layer birds and broiler birds constitute separate markets in view of

Case No. 15 of 2025 Page 4 of 16

difference in inputs, end-use, consumer preferences, and existence of specialised producers, as is summarily explained hereunder: i. Difference in inputs: Distinct breeds of "pure lines" breed of layer birds and of broiler birds have been created to increase the production of eggs and meat respectively, in commercial poultry. As a result of trait selection, broilers and layers differ in feed intake, growth rate, efficiency of nutrient utilisation, and development of muscles. Layer hens tend to be leaner and do not put on the same mass as broiler birds. Some prominent breeds of 'improved fowl' or hybrid breeds of layer birds include - Babcock, Hyline, Shaver, Lohmann, and Bovans. A few breeds of broiler chickens are - Hubbard, Ross, Babcobb and Vencobb. ii. Difference in end-use: Broilers are raised to be consumed as poultry meat, whereas layers hens are raised for egg production. Eggs lend themselves to a greater range of uses, including as an ingredient in baking. These differences in end-uses of chicken and eggs indicate little substitutability between the two, except when viewed as a source of protein.

8. The Informant has alleged that, as per the website of VH Group, BV-300 and Vencobb are the dominant breeds of layer hens and broiler chickens in India, having a market share of over 80% and 75%, respectively. As per Informant, Hy-lines, Bovans, and Lohmanns comprise the remaining 20% of the commercial layer market. Moreover, the Informant has alleged that the OPs have a dominant influence in the Indian egg production and poultry farming industry through its strategic involvement with key organizations such as the National Egg Coordination Committee (‘NECC’) and the Bharat Egg Producers Association (‘BEPA’). It is stated that NECC is the largest association of poultry farmers in India, with over 35,000 members, and the VH Group holds a significant stake in it. Additionally, BEPA, incorporated in 1998, includes significant representation from the VH Group, with three of its five directors, including OP-9 and Mr. B. Venkatesh Rao, being associated with the VH Group. The VH Group's control extends to the All-India Poultry Development and Services Pvt. Ltd. (‘AIPDS’) through Ms. Anuradha Desai and Mr. B. Venkatesh Rao, highlighting their pervasive influence and dominance in the market.

Case No. 15 of 2025 Page 5 of 16

9. The Informant has alleged that OP-1 to OP-8 are vertically integrated as may be seen from the businesses operated by them: a. OP-1: Venkateshwara Hatcheries (P) Ltd. (1971) (‘VHPL’): Business relating to inter alia, the supply of day-old chicks, hatching eggs, contract broiler farming, egg powder, poultry feed, poultry vaccines, disease diagnosis and research. VHPL is the holding company of Venky's (India) Ltd. b. OP-2: Venky's (India) Ltd. (1976) (‘VIL’): Business relating to supply of day-old chicks, hatching eggs, processed and further processed chicken, animal health products, nutritional health products for animals and humans, Specific Pathogen Free (‘SPF’) eggs, pet food and health care and solvent-extraction i.e., de-oiled soya cakes and edible oil. c. OP-3: Venco Research & Breeding Farm (P) Ltd. (1980) (‘VENCO’): Pureline breeding, genetic research, Vencobb broiler breeder, and Vencobb broiler. d. OP-4 Venkateshwara Research & Breeding Farm (P) Ltd. (1980) (‘VRB’): Pureline breeding, genetic research, BV 300 Layer breeder and BV 300 layers. e. OP-5: Uttara Foods & Feeds (P) Ltd. (1986): Breeder feeds, broiler feeds, layer feeds, mineral mixtures and feed concentrates. f. VR Equipment Ltd (1989) (‘VREL’): Feeding and drinking systems, environment control systems, and colony cages. g. VJ Equipment Ltd (1994) (‘VJEL’): Incubation systems, hatchery equipment, and hatchery ventilation systems.

10. The Informant has submitted that the Broiler Breeder Agreement (‘BBA’) and Layer Breeder Agreement (‘LBA’) restrict the contract breeder from distributing their own product. clause 7.1.10 of the BBA prohibits the sale of commercial chicks and hatching eggs to any “unauthorised person”. This term has been broadly defined in clause 1.19 to include any competitors, overseas buyers, persons dealing with any breed other than the Vencobb broiler breed, and any other person as may be intimated to OP-3. Restriction or limitation on the market of commercial broiler chicks and hatching eggs without adequate reason, amounts to a violation of Section 4(2)(b)(i) of the Act, as well as imposition of vertical restraints in the form of exclusive supply and distribution agreement as provided under Section 3(4) of the Act.