KUALA LUMPUR – The Malaysia Competition Commission (MyCC) has handed down a whopping RM415.5 million fine to five poultry feed companies after being found to have jointly fixed prices for their products in the local chicken-rearing industry.
The companies were alleged to have agreed in unison to raise the price of chicken feed, leading to an increase in chicken prices.
According to a statement, MyCC chief executive officer Iskandar Ismail said investigations revealed that the five companies, making up the country’s largest chicken feed producers, had violated Section 4 of the Competition Act 2010 by entering into an agreement between them with the goal or effect of “preventing, restricting or distorting competition” in any market for goods or services.
The five companies fined include Dindings Poultry Development Centre Sdn Bhd, FFM Bhd, Gold Coin Feedmills (Malaysia) Sdn Bhd, Leong Hup Feedmill Malaysia Sdn Bhd, and PK Agro-Industrial Products (M) Sdn Bhd.
“Investigation by MyCC covered the period between January 2020 and March 2022 had unravelled the distortion in the poultry feed market.
“The same reveals a series of multiple pieces of evidence in the form of price announcement, pricing pattern and communication among the enterprises,” he said.
Investigations, Ismail pointed out, include extensive examination of the communication channels used by representatives of the enterprises.
“WhatsApp conversations and call logs recovered during the investigation correlated significantly with the dates of the price announcements.
“This correlation strengthens the case for a connection between communication practices and pricing decisions.
“The alignment between communication records and the increase of poultry feed prices suggests a deliberate effort to synchronise their actions, compromising the competition within the chicken poultry feed market.”
MyCC may impose a financial penalty of not more than 10% of the worldwide turnover and/or any other direction deemed suitable under Act 712.
Based on the detailed calculation made by MyCC, the enterprises have been imposed the following financial penalties totalling around RM415,495,696.49.
Leong Hup was fined the highest amount at RM157,470,027.02 million followed by Gold Coin (RM97,511,670.48); Dindings (RM70,023,622.35); PK Agro RM47,800,793.00 and FFM (RM42,689,583.64).
In addition to these financial penalties, MyCC had also issued directions to be adhered to by the enterprises as follows:
i. Cease and desist order – enterprises to cease participation in poultry feed cartel;
ii. Monthly reporting on poultry feed prices – enterprises to submit poultry feed price increases and decreases;
iii. Review and enhance compliance training programs – FFM, Gold Coin, and Dindings to enhance their competition law compliance training program and enrol employees and board members for the program;
iv. Implementation of compliance programs – PK Agro and Leong Hup to enrol employees and board members in a competition law compliance program; and
v. Recognition of competition law infringements as misconduct – enterprises to include a provision in their respective code of conduct recognising involvement in competition law infringements as misconduct.
“Cartel is a supreme evil in competition law and a form of economic sabotage at the highest level, more so in a public interest case.
“MyCC has been tasked by the government to eradicate cartels, and we will continue to do so without fear or favour.
“As we have intimated before, we are still monitoring the chicken industry since the recent government decision to discontinue subsidies and price control on chicken. We hope the lesson learned from this case will be a deterrent to all, in particular cartels-to-be,” he added. – December 22, 2023