January 3, 2025

Malaysian court permits interim stay on US$91 million fine imposed on feed millers

Malaysia's High Court here has allowed an ad interim stay on a RM415.5 million (US$91.41 million) fine imposed by the Malaysia Competition Commission (MyCC) on five feed millers pending filing of affidavits and submissions in relation to its judicial review against the fine.

Judge Datuk Amarjeet Singh Serjit Singh gave the ad interim stay as lawyer for MyCC, Jason Teoh from Jason Teoh & Partners, said that they would submit an affidavit to show that the fine the five feed millers are required to pay will not affect the poultry industry as they claim.

The long list of lawyers who appeared for the five feed millers argued for a permanent stay on the fine sum pending the disposal of a Judicial Review against MyCC's fine. The fine was imposed on the feed millers — of which three are public-listed companies — in December last year for colluding in a “chicken feed cartel” to fix poultry feed prices. This is the largest fine that the quasi-judicial body, the Competition Appeal Tribunal (CAT), has imposed in its 12-year history.

The Bursa Malaysia-listed companies are Leong Hup International Bhd (KL:LHI), operating via wholly-owned subsidiary Leong Hup Feedmill Malaysia Sdn Bhd, Malayan Flour Mills Bhd via partially-owned Dindings Poultry Development Centre Sdn Bhd, and PPB Group Bhd through 80%-owned FFM Bhd.

The other two feed millers are Gold Coin Feedmills (M) Sdn Bhd under Gold Coin Group and PK Agro-Industrial Products (M) Sdn Bhd under Charoen Pokphand Holdings (M) Sdn Bhd, which in turn is a subsidiary of Thai conglomerate Charoen Pokphand Group Co Ltd.

The fine was imposed after MyCC found the feed millers to have infringed Section 4 of the Competition Act 2010 (Act 712) by entering into anti-competitive agreements and/or concerted practices in increasing the price quantum of poultry feed that contains soybean meal and corn as its main ingredients, between early 2020 and mid-2022.

MyCC's probe revealed that there are 29 feed millers in Malaysia, and that the five infringing feed millers command about 40% of total market share.

According to MyCC's probe, poultry feed stood out to be a significant cost factor in poultry farming, constituting a substantial 72.8% of overall expenses.

- The Edge Malaysia