November 6, 2012

The Malaysia Competition Commission (MyCC) has been ruffled by the decision of farmers to cull five million layer chickens which has resulted in a shortage of eggs that has pushed prices up to MYR0.05 (US$0.02) each.

The commission said it is investigating the collective action for possible uncompetitive practices and that it is currently gathering facts. MyCC issued a statement in response to press statements by Yap Hoong Chai, the chairman of the Federation of Livestock Farmers Association of Malaysia (FLFAM).

Yap said it is common practice for farmers to cull 10% of the older hens from each cycle which is about once every one to three months, to make room for younger and more productive hens.

However, Yap admitted that some farmers have increased the number of chickens they culled in this recent cycle, by up to 10% more, to reduce production costs. The MyCC is not taking his word at face value however.

"A unilateral decision by a farmer to reduce production for purposes of prudent costs management may not be an anti-competitive conduct. However, if it is done in agreement with other farmers, then this may be an infringement under the Competition Act 2010," said MyCC chief executive officer Dorai Raj.

The Competition Act 2010 prohibits enterprises operating at the same level in the production chain to collectively agree to limit or control production of goods and services, because this could significantly distort competition, she said. She also said the MyCC will now gather facts on the case before making a decision whether to pursue a formal investigation.

Under the Act, if the farmers were found to have infringed the law, they may be imposed a penalty of not more than 10% of their worldwide turnover besides being imposed other remedial orders.