Five feedmillers provisionally found to infringe Competition Act 2010, says MyCC

TheEdge Fri, Aug 05, 2022 03:36pm - 2 days View Original


KUALA LUMPUR (Aug 5): The Malaysia Competition Commission (MyCC) has on Friday (Aug 5) issued a proposed decision against five feedmillers, which include Bursa Malaysia listed companies Leong Hup International Bhd’s wholly-owned subsidiary Leong Hup Feedmill Malaysia Sdn Bhd, Malayan Flour Mills Bhd's partially-owned Dindings Poultry Development Centre Sdn Bhd and PPB Group Bhd's 80%-owned FFM Bhd.

Notably, PPB is the flagship company of tycoon Robert Kuok Hock Nien.

The others involved are Gold Coin Feedmills (M) Sdn Bhd under Gold Coin Group and PK Agro-Industrial Products (M) Sdn Bhd under CP Malaysia.

MyCC, the quasi-judicial body, told a press conference on Friday that it has provisionally found that the five enterprises have infringed Section 4 of the Competition Acts 2010 by entering into anti-competitive agreements and/or concerted practices in increasing the price quantum of poultry feed that contains soybean meal and maize as its main ingredients, between early 2020 and mid 2022.

During the press conference, MyCC chief executive officer (CEO) Iskandar Ismail highlighted that the findings are provisional and it should not be assumed that any of the enterprises have broken the law at this stage.

The enterprises will have the opportunity to submit their representation within 30 days from the date of service of the proposed decision.

Iskandar added that the commission will only issue its final decision on whether there is a finding of infringement or non-infringement of the Competition Act 2010 after hearing and considering the representations together with the evidence gathered during the investigation.

“The finding of an infringement will allow MyCC to impose a financial penalty of up to 10% of the parties’ worldwide turnover during the period of infringement. On top of the penalty, MyCC has the discretion to impose any other appropriate directives that MyCC sees fit,” he added.

The final decision on the finding of the infringement is expected to be announced in October.

On June 27, its special task force tabled its investigation report to the members of the commission led by MyCC chairman Datuk Seri Mohd Hishamudin Md Yunus.

What the investigations revealed was that sensitive commercial information shared between the five enterprises was seen to potentially distort competition in the market.

“By adjusting prices at the same quantum, which results in similar increments amongst the enterprises, the choices of customers in choosing their preferred poultry feed supplier that offers the best value may be restricted.

“Therefore, the conduct of the said enterprises can potentially lead to an anti-competitive landscape in the supply chain of the poultry industry,” Iskandar explained.

According to MyCC, poultry feed contributes approximately 72.8% of the total cost of poultry farming. Therefore, MyCC said a distortion of competition in the poultry feed market would affect the entire supply chain, and it inevitably affects consumers, who are at the end of the supply chain, the most.

“It is crystal clear under the Competition Act 2010 that enterprises should not enter into any agreement, exchange commercially sensitive information on prices or engage in any concerted practice to prevent, restrict or distort competition. They should, instead, independently determine their respective conduct and facilitate a competitive landscape in the market,” said the MyCC CEO.

As for now, business is as usual for these companies, he said.

MyCC set up a special team in early February to investigate an alleged existence of a cartel that controls the price and production of chicken supplies in Malaysia.

Read also:
Leong Hup, PBB reject MyCC's findings that their units engaged in fixing poultry feed prices

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