Government creates collusion commission while others call for harsher penalties.

Agrosuper, one of the three Chilean poultry companies accused of collusion last week, has publicly denied the charges. The denial comes as Chile’s president calls for the full rigor of the law to be applied, and leading Socialist senator presses the government to treat executives of the poultry companies as it did student demonstrators.

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In an interview with La Tercera, general manager of Agrosuper, José Guzmán, said of the charges, “I know there has been no agreement to limit supply.”

The National Economic Prosecutors Office (FNE) filed a lawsuit with the Chilean Free Competition Defense Court against Agrosuper, Ariztía, Don Pollo and the Poultry Producers Association of Chile (APA), for fixing production levels and prices over the last decade.

Together Agrosuper, Aritzía and Don Pollo control 92 percent of Chile’s poultry market and are charged with colluding for at least a decade. The investigation began in April and alleges that the APA essentially dictates how much each company can produce, thus artificially deciding each company’s market share.

The FNE is seeking the maximum penalty, a US$110 million fine and the dissolution of the APA.

La Tercera has already reported the industry’s three-pronged argument that the four organizations will use as their defense. The poultry companies will claim that the APA never set production quotas, that they caused no harm to competitors or consumers,  and that Chile continues to have an open poultry market.

In an interview with La Tercera, Guzmán called the accusations “categorically and completely false, misleading and wrong. It is regrettable that this situation has occurred, because I know directly that there is no agreement nor has there ever been a limitation on production. It is all completely untrue.”

President Piñera has been vocal about the government’s commitment to protecting consumers from such collusion as well as protecting the free market. In order to protect both, Piñera has created a “collusion commission” that will study preventative measures against future threats to free trade.

One role of the new commission will be to evaluate harsher penalties, such as possible jail sentences for executives, rather than merely assessing a fine.

“We are seeking tougher sanctions, so that employers will think very hard, think not only seven times, not seventy times but seven times seventy times before engaging in practices that undermine competition,” Piñera told El Mercurio.

Yet the president’s public posture has been criticized by some, including Socialist Party President, Sen. Osvaldo Andrade, as weak. Andrade took a jab at the president’s “tough on crime” stance with student protesters, suggesting Piñera and Interior Minister Rodrigo Hinzpeter treat the poultry executives just as they have treated the students.

“He’s dealing with friends here,” he said of Hinzpeter. “When he deals with hooded vandals, the minister jumps up with notable speed. He gets working, he accuses others, proposes legislation …. But when he deals with white collar types, he’s tired, and there’s only enough energy there to form a commission.”

“I call on the Government to act promptly, and not to make distinctions among offenders. Everyone involved deserves blame and punishment, including familiar faces,” Andrade said Monday.

Andrade called for these harsher penalties, especially for poultry producing companies, due in part to the effects of price fixing on the poorest Chileans.

Chicken is among the cheapest form of protein and the average Chilean consumes 60 pounds a year, according to a report released by the Office of Agricultural Policy (PASO).

According to Cecilia Castro Herrera, founder of the National Leadership Camp charity, which provides chickens to families in need during the holidays, “if the accusations are true, the poorest families continue to lose.”