December 10, 2024

 

Malaysia competition tribunal upholds record US$93.8 million fine in chicken feed cartel case

The Competition Appeal Tribunal (CAT) under Malaysia's Ministry of Domestic Trade and Cost of Living has denied a request to stay a record MYR 415.5 million (US$93.8 million) fine imposed by the Malaysia Competition Commission (MyCC) on five feed millers for their role in a "chicken feed cartel" to fix poultry feed prices.

 

This fine, the largest in MyCC's 12-year history, was levied against three publicly listed companies — Leong Hup International Bhd, Malayan Flour Mills Bhd, and PPB Group Bhd — along with Gold Coin Feedmills (M) Sdn Bhd and PK Agro-Industrial Products (M) Sdn Bhd, a subsidiary of Thailand's Charoen Pokphand Group.

 

Leong Hup International was implicated through its subsidiary, Leong Hup Feedmill Malaysia Sdn Bhd. Malayan Flour Mills was named for its partially owned Dindings Poultry Development Centre Sdn Bhd, while PPB Group was linked via its 80%-owned FFM Bhd.

 

The CAT panel, led by High Court judge Dr Shahnaz Sulaiman and joined by four other members, affirmed MyCC's findings. MyCC was represented by a legal team led by Tan Sri Tommy Thomas. Lawyers for the five feed millers also made their case, but the tribunal upheld the penalty.

 

MyCC imposed the fine in December 2023, concluding that the feed millers had violated Section 4 of the Competition Act 2010 by entering into anti-competitive agreements and practices. These actions allegedly increased the price of poultry feed containing soybean meal and maize between early 2020 and mid-2022.

 

Poultry feed accounts for 72.8% of overall poultry farming expenses, according to MyCC's investigation. The inquiry revealed identical price increases of MYR 1 to MYR 4 (US$0.23 = US$0.9) per 50kg of feed sold by the five feed millers during the period in question. MyCC found that the five companies collectively held about 40% of the market share among Malaysia's 29 feed millers.

 

In August 2022, MyCC provisionally found the five companies in violation of the Competition Act and later allowed them to submit written and oral representations. However, Leong Hup International and PPB Group had previously rejected MyCC's provisional findings, stating the allegations against their subsidiaries were unfounded.

 

Despite MyCC's December ruling, the RM 415.5 million (US$93.8 million) fine remains unpaid. Companies were initially given 30 days to comply with the decision.

 

MyCC CEO Iskandar Ismail, speaking at the time of the penalty's announcement, described cartels as "a supreme evil in competition law and a form of economic sabotage at the highest level." He reaffirmed the commission's commitment to eradicating cartels without fear or favour, adding that this case serves as a warning to others.

 

-      The Edge Malaysia