This was not a Chicken Little tale. The sky really was falling in for Turkey's poultry industry. But in an about-turn, the authorities have fully withdrawm the intervention that saw 13 market-dominant poultry producers placed government control, according to local media reports.

The blanket removal of corporate trustees from the poultry firms, including market heavyweights Banvit (BANVT), Senpilic, Erpilic and Lezita, brought an abrupt end to an aggressive government enforcement action.

Crackdown then backdown

The legal drama traces back to an aggressive antitrust and anti-hoarding campaign spearheaded by Ankara. Facing persistent, double-digit food inflation, authorities deployed judicial oversight measures, appointing state deposit insurance fund TMSF to control the operations of the major poultry suppliers.

The government’s core rationale was that it was necessary to investigate alleged “unjust price increases” and potential cartel behavior in the poultry supply chain. The targets, meanwhile, argued that the price spikes seen in the market were not driven by collusion but by global feed costs and Turkish lira devaluation.

Moving "decisively"

On June 12, the Istanbul chief prosecutor’s office (@istanbulCBS) launched the sweeping corporate raid against the sector. Some 29 executives were detained across eight provinces.

Turkey’s justice minister, Akin Gurlek (@abakingurlek), commented on the synchronised crackdown in a tweet, noting that the state would move decisively against actors accused of driving up the cost of living for ordinary citizens.

Banvit, the only listed company among those that were seized, said on the day of the raid in a stock exchange filing: "On June 12, it was announced that an investigation had been initiated concerning certain companies operating in the white meat (poultry) sector, including our company."

"Within the scope of the said investigation, an operation was carried out on June 12 and it was publicly disclosed by the official authorities that a decision imposing a judicial supervisory trusteeship measure had been rendered in respect of 13 companies pursuant to Article 133 of the Criminal Procedure Code No. 5271,” Banvit, majority owned by BRF (Sao Paulo/BRFS3) and Qatar Holding LLC (a unit of Qatar Investment Authority/QIA) since 2017, added.

“Our company's operations are being conducted within the framework of its legal obligations. The matter is being monitored by our company and the public will continue to be duly informed in accordance with the Capital Markets Board's applicable regulations,” the company also said.

Reverse gear

On June 14, all suspects were released.

On June 16, Banvit said: “The decision of the Istanbul 5th criminal court regarding the aforementioned supervisory trusteeship measure has been conveyed to us by the [TMSF]. Pursuant to the related decision, it has been decided that the [TMSF] be appointed as the supervisory trustee of our company and that the validity of the decisions and transactions of our company's management body be made subject to the approval of the trustee.”

On June 17, Banvit said: “Our objection was filed against the decision of Istanbul 5th criminal court imposing a supervisory trusteeship measure on our company within the scope of the investigation initiated by the Istanbul chief public prosecutor's office, and in line with our objection, it has been decided today that the supervisory trusteeship measure imposed on our company be removed.”

As of June 19, all trusteeship appointments were lifted.

“Anormal”

Commenting on the Istanbul 5th (sulh ceza) criminal court’s ruling to reverse its decisions in response to appeals filed by the seized companies, Ilker Atamer (@ilkeratamer), a local lawyer, wrote in a tweet: “The criminal courts normally reject appeals as a general rule. However, since the appointment of trustees to the poultry firms clearly caused discomfort within the upper echelons of the state, they exceptionally accepted the appeal this time.”

Turkey's courts not known for covering themselves in glory

“Meanwhile, the trustee appointed was a fully authorised management trustee under Article 133 of the criminal procedure code (CMK). The concept of a 'monitoring trustee' does not exist within the CMK and a monitoring trustee cannot be appointed under criminal law frameworks anyway,” Atamer added.

“Consequently, the term 'monitoring trustee' used in the decision is incorrect. If the original trustee appointment order itself reads 'monitoring trustee,' I would not be surprised, given that the [low] quality of the criminal courts is already a matter of common knowledge,” he also remarked.