THE Malaysia Competition Commission (MyCC) has slapped five major companies with a collective fine of RM415 mil for orchestrating a “chicken feed cartel” aimed at manipulating prices.
MyCC CEO Iskandar Ismail revealed that the firms, identified as the country’s leading chicken feed producers had violated the Competition Act, distorting the prices of both poultry feed and chicken.
The companies involved in the cartel are 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.
“We have issued a final decision against the five companies for breaching Section 4 of the Competition Act 2010 through the formation of a chicken feed pricing cartel.
“Cartels are a supreme evil in competition law. Therefore, we act decisively to tackle issues like this. It is economic sabotage against all consumers,” he said at a press conference.
Iskandar stated that the investigation found the companies guilty of breaching the Competition Act by engaging in an agreement to “prevent, restrict, or distort competition” in the market for goods or services. The fines levied against the companies represent the largest monetary penalty imposed by MyCC to date.
Moreover, he also pointed out the severity of cartels in competition law, labeling them as a “supreme evil” and stressing the commission’s commitment to addressing such issues promptly. He described the formation of the chicken feed pricing cartel as “economic sabotage against all consumers”.
According to Iskandar, the cost of chicken feed constitutes a substantial portion (72.8%) of the total expenses for chicken production, compared to other factors such as day-old chicks (21%), manpower (2.6%), transportation (1.7%), vaccine/vitamin (1.0%) and utilities (0.9%).
“Based on our investigation, there are 29 feedmill companies, of which these five companies control 40% of the market,” he added.
Furthermore, the investigation revealed that out of 29 feedmill companies, the five penalised companies controlled 40% of the market.
Iskandar detailed that these companies collectively raised the price of chicken feed by RM1 to RM2 per 50kg, either simultaneously or within a week of each other.
The fines imposed on the companies are as follows: Dindings Poultry (RM70,023,622.35), FFM Bhd (RM42,689,583), Gold Coin Feedmills (RM97,511,670), Leong Hup Feedmill (RM157,470,027), and PK Agro-Industrial (RM47,800,793).
In addition to the fines, MyCC issued a cease and desist order, instructing the companies to end their participation in the chicken feed cartel. The affected companies have the option to appeal to the Competition Appeal Tribunal.
MyCC’s decision comes after former premier Datuk Seri Ismail Sabri Yaakob requested clarification on the outcome of the investigation against the alleged “chicken cartel.” The decision was originally expected to be announced in the third quarter of 2023. – Dec 22, 2023
Main photo credit: NST
