Blemings v Monaghan Poultry Products Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Shanley |
| Judgment Date | 15 January 1997 |
| Neutral Citation | [1997] IEHC 191 |
| Date | 15 January 1997 |
| Docket Number | [1994 No. 288 IP] |
| Court | High Court |
[1997] IEHC 191
THE HIGH COURT
BETWEEN
AND
Citations:
SIGLER THEORY OF PRICE (1996)
TREATY OF ROME ART 85
TREATY OF ROME ART 86
MERGERS TAKEOVERS & MONOPOLIES (CONTROL) ACT 1978
DEANE & ORS V VHI BOARD UNREP KEANE 22.4.93 1993/10/3124
COMPETITION ACT 1991 S4(1)
TREATY OF ROME ART 85(1)
TREATY OF ROME ART 87
TREATY OF ROME ART 88
TREATY OF ROME ART 89
TREATY OF ROME ART 90
TREATY OF ROME ART 91
TREATY OF ROME ART 92
TREATY OF ROME ART 93
TREATY OF ROME ART 94
TREATY OF ROME ART 36
MASTERFOODS LTD HB ICE CREAM LTD 1993 ILRM 145
COMPETITION ACT 1991 S4(1)(d)
COMPETITION ACT 1991 S4(1)(e)
SOCIETE TECHNIQUE MINIERE V MASCHINENBAU ULM GMBH 1966 ECR 235
CO-OPERATIVE STEMSEL EN KLEURSELFABRICK V COMMISSION 1982 1 CMLR 227
METRO (NO 1) V COMMISSION 1977 ECR 1875
METRO (NO 2) V COMMISSION 1986 ECR 3021
BELLAMY & CHILD COMMON MARKET LAW OF COMPETITION 4ED PARA 2–083
UNITED BRANDS CO & UNITED BRANDS CONTINENTAL BV V COMMISSION 1978 1 CMLR 429
HOFFMAN-LA ROUCHE V COMMISSION 1979 3 CMLR 211
MICHELIN V COMMISSION 1985 1 CMLR 282
TETRA-PAK RAUSING SA V COMMISSION 1991 4 CMLR 334
TREATY OF ROME ART 86(a)
BODSON V POMPES FUNBRES DES REGIONS LIBERES 1988 ECR 2479
COMPETITION ACT 1991 S5(2)(c)
BELLAMY & CHILD COMMON MARKET LAW OF COMPETITION 4ED PARA 9.055
COMPETITION ACT 1991 S5(2)(d)
HILTI V COMMISSION 1992 4 CMLR 16
Synopsis:
Competition
Chicken growing in Monaghan - whether dominant position - geographic market - whether infringements of s.4/s.5, Competition Act, 1991 - obligation on plaintiffs to buy meal through defendants - price discrimination - whether unfair prices - whether breach of contract due to failure by defendants to account for dead and useless birds - Held: Defendant in dominant position but no abuse - breach of contract due to failure to account - (High Court: Shanley J. - 15/01/1997) - [2001] 1 IR 385
|Blemings & Ors. v. David Patton Ltd. & Ors|
Mr. Justice Shanley on Wednesday the 15th day of January 1997
The 47 Plaintiffs in this Action grow chickens for the Defendant, Monaghan Poultry Products Limited. All of the Plaintiffs reside in the Country of Monaghan, and the first named Defendant (herein referred to as "MPP"), carries on it's business from premises on the outskirts of the town of Monaghan. The agreements between each of the Plaintiffs and MPP, whereby the Plaintiffs grow chickens for MPP, have never been reduced to writing: I shall return to the detail of these contractual relationships later, but, for the present, I shall identify only three elements:
(i) the Plaintiffs are not permitted to purchase chicken feed other than through MPP.
(ii) the Plaintiffs are paid a price by MPP by reference to live chicken weight received from a Plaintiff grower by MPP after deductions have been made by MPP for feedstuffs supplied by millers and other items.
(iii) the Plaintiffs are not paid for chickens received by MPP from growers which are classified as "dead or useless".
The Plaintiff growers contend:-
(a) That each of the agreements between the growers and MPP, whereby they, as growers, are not permitted to purchase meal directly from the millers who make such meal, infringes Section 4 of the Competition Act, 1991.
(b) That each of the agreements between MPP and certain Millers whereby those millers agree not to supply the Plaintiff growers other than through MPP also offends Section 4 of the 1991 Act.
(c) That each of the agreements between the Plaintiff growers and MPP impose unfair selling prices upon the growers selling chicken flesh to MPP and, in consequence, infringe Section 4 of the 1991 Act.
(d) That each of the agreements between the Plaintiffs and MPP, apart from infringing Section 4 in the foregoing and certain other respects, permits MPP to impose unfair purchase prices and makes the conclusion of the agreements subject to the acceptance by the growers of a supplementary obligation (namely the purchase of feed from MPP) which "by its nature" or according to "commercial usage" has not any connection with the agreement, thereby abusing a dominant position in the market for the supply of broiler growing services in breach of Section 5 of the Competition Act, 1991.
(e) That MPP has acted in a price discriminating manner in its dealings with growers thereby infringing both Sections 4 and 5 of the 1991 Act.
(f) That the contractual relationship between each of the Plaintiffs and MPP imposed an obligation on MPP to act in a fair and equitable manner in its dealings with each of the Plaintiffs and that in misstating, exaggerating, or failing to properly account to each of the Plaintiffs in respect of dead and useless birds, it was in breach of its agreement with each of the Plaintiffs.
(g) That all of the foregoing infringements, or breaches, entitle the Plaintiffs and each of them to an account and/or damages.
While the Defence delivered by MPP traversed each and every allegation contained in the Statement of Claim delivered by the Plaintiff growers, it can be said that, at the trial of this Action, the following were the matters strongly put in issue by MPP:-
(i) That they have infringed either Sections 4 or 5 of the Competition Act, 1991.
(ii) That they were in breach of any contractual obligation owed to the Plaintiff growers.
(iii) In particular, that they occupy a dominant position in the alleged or any product market, or if they do, that they have abused such a position.
(iv) Additionally, that the requirement to purchase feedstuffs through MPP and the purchase prices offered by MPP for live chicken flesh were matters which could be regarded as infringements of the Competition Act, 1991.
(v) That, even if breaches of contract or infringement of the 1991 Act were established, the Plaintiffs had made out a claim for any special damages.
There was one matter of importance on which the Plaintiffs and MPP agreed, namely that the relevant product market with which the Court was concerned was the market for the provision of broiler growing services.
The production of broiler chickens for processing comprises a number of stages:
(a) First, it is necessary to rear what are described as "grandparent" stock for the purpose of producing parent stock.
(b) The parent stock are reared on what are called "breeder farms". These farms are usually independent of any chicken processor but of necessity have contracts for the supply of eggs, either to an "independent" hatchery owner, or a processor who also has a hatchery.
(c) The hatcheries incubate and hatch the eggs. These eggs can only be held for a maximum of 10 days before commencing the hatching process. Accordingly, a hatchery at any given date will not take more eggs than its anticipated requirement of day old chicks over the next 10 plus 21 days (being the incubation and hatching period). Where a breeder farmer has more eggs than there is a demand for, they are destroyed on his farm. Most of the processors in the Republic of Ireland own their own hatcheries: however, there are two independent hatcheries which supply day old chicks on demand to processors and, occasionally, to growers. Mr. John Mawers, a witness called by MPP, owns his own breeder farm and hatchery. The hatchery produces some 200,000 day old chicks per week. The hatching process is by way of an environmentally controlled machine which, as Mr. Mawers put it, "takes the place of the old broody hen".
(e) The day old chicks are despatched by the processor to the growers (with whom the processor has contracts) to grow the chickens. These growers feed the chickens in chicken houses especially constructed for that purpose. When fattened, the live chickens are taken to the processor.
(f) The processor, receiving the fattened chickens at the processing plant, stuns, bleeds and passes the chickens along a kill line, where various organs are removed by staff, and birds, deemed unfit for human consumption, are removed by veterinary inspectors from the Department of Agriculture.
There are 98 breeder farms for chicken eggs; some 14 hatcheries (2 of which are independent of processors) 335 growers and 13 processors in the republic of Ireland. The industry is concentrated in 8 counties: Monaghan, Cavan, Limerick, Cork, Waterford, Galway, Mayo and Roscommon. Three processors do business in the Cavan Monaghan area: they are MPP, Cartons and Cootehill. The plants of Cartons and Cootehill are in County Cavan, but all three processors have most of their growers located in Monaghan. Mr. Quigley, one of the Plaintiffs, estimated that MPP will produce 46% of the processed chicken flesh in the Cavan-Monaghan area in 1996, with Cartons producing 45%, and Cootehill 9%. Ms. Breda O'Driscoll, a director of MPP, gave evidence that MPP's share of the Monaghan "market" was 34% of the regional market (Cavan, Monaghan, Louth and Meath) 21%, and nationally 16.3%. It is to be noted that Mr. Quigley's figures cannot be compared with Ms. O'Driscoll's: his figures represent an estimate of the share of binds processed by the three processors in 1996, whereas Mrs. O'Driscoll's figures are representative of market share on the basis of sales in each region and not necessarily for 1996 - though prepared in that year.
In 1993, according to Mrs. O'Driscoll, the demand for whole chickens represented...
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