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Industry-wide arrangements for the so-called Chicken of Tomorrow restrict competition

26-01-2015

Supermarkets, poultry farmers, and broiler meat processors have made arrangements amongst each other regarding the selling of chicken meat produced under enhanced animal welfare-friendly conditions, which is the so-called ‘Chicken of Tomorrow’. One particular element of these arrangements is that Dutch supermarkets remove regular chicken meat from the shelves. The Netherlands Authority for Consumers and Markets (ACM) believes this goes too far.

The higher animal welfare-friendly standards in the plans for the ‘Chicken of Tomorrow’ include slightly more space and slightly more litter on the floors, and the chickens live a couple of days longer. In addition, environmentally friendly measures are taken. One of the conditions for businesses to qualify for an exemption from the prohibition of cartels is that the benefits for consumers should exceed the harm inflicted on them such as fewer options for consumers and a higher cost price. ACM has examined whether these measures are valued by consumers. The analysis has revealed that consumers are prepared to pay more for animal-welfare and environmental improvements, but not for the measures of the Chicken of Tomorrow. On balance, consumers do not benefit from these arrangements.

Chris Fonteijn, Chairman of the Board of ACM, explains: ‘It is good that market participants launch sustainability initiatives. Consumers are offered more options because of them. In addition, producers are able to differentiate themselves. According to our study, it turns out that consumers are indeed willing to pay more for sustainable chicken meat as long as they know how it has been produced. So much can still be gained by providing better information. We are also observing that the market for sustainably-produced meat is very dynamic at the moment. I do not believe that it is necessary to make joint arrangements about removing regular chicken meat from supermarket shelves.’

Sales volumes of more sustainably produced chicken meat have increased in recent years. For example, the Dutch Society for the Protection of Animals (de Dierenbescherming) has a star-rating system, called the Better Life label (het Beter Leven-kenmerk). With regard to this label, no far-reaching  agreements or production quotas have been made that restrict competition.

ACM has discussed this analysis with the market participants involved.  They have announced they will explore possible alternatives for their arrangements.