The Emergence of More Vigorous Competition and the Importance of Entry – Comparative Insights from Flour and Poultry

Abstract

The uncovering of several cartels and exclusionary practices by the Commission in the food and agro-processing sector has shown that the liberalization of the sector in 1996 did not necessarily increase competition and bring the benefits to consumers envisaged at the time. This paper draws on competition cases in the food and agro-processing sector to explore firm behavior and outcomes in two important food value chains. It reveals how anti-competitive arrangements worked and provides insights as to how the successful entry of new competitors in highly concentrated markets has facilitated increased competition to the benefit of consumers. In particular, the paper draws a comparison between the poultry value chain, where new entry has been observed, in contrast with the wheat-to-bread value chain which has not experienced any substantive new entry.

Keywords: cartels, exclusionary practices, agro-processing, poultry

JEL Classification: D4, L40, L41