KUALA LUMPUR (Dec 6): A five-member Competition Appeal Tribunal (CAT) under the Ministry of Domestic Trade and Cost of Living has denied a stay of the RM415.5 million fine imposed by the Malaysia Competition Commission (MyCC) on five feedmillers — of which three are public listed companies — for colluding in a “chicken feed cartel” to fix poultry feed prices.
This is the largest fine that the quasi-judicial body 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 (KL:MFLOUR) via partially-owned Dindings Poultry Development Centre Sdn Bhd, and PPB Group Bhd (KL:PPB) through 80%-owned FFM Bhd.
The other two feedmillers 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 CAT panel was led by High Court judge Dr Shahnaz Sulaiman, and consisted of Datuk Dr Mohd Gazali Abas, Datuk Zainal Azman Abu Seman, Datuk Abdullah Isnin and Chambai Anak Lindong.
MyCC were represented by Tan Sri Tommy Thomas, Mervyn Lai and Jason Teoh from Jason Teoh & Partners, while there was a long list of lawyers appearing for the five companies.
When contacted by The Edge, Lai confirmed the CAT’s decision.
MyCC imposed the fine in December 2023, after the feedmillers were found 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 maize as its main ingredients, between early 2020 and mid-2022.
They were given 30 days from the announcement to pay the fine. It is understood by The Edge the sum has yet to be paid.
MyCC’s probe revealed that there are 29 feedmillers in Malaysia, and that the five infringing feedmillers 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.
Its investigation uncovered evidence of identical increment in the quantum of poultry feed prices, of between RM1 and RM4 per 50kg, sold by the parties between January 2020 and June 2022.
In August 2022, MyCC provisionally found that the five enterprises had infringed the competition law, and later granted the companies opportunities to submit written and oral representations.
Parent companies Leong Hup International and PPB Group had previously rejected MyCC's provisional findings, and said the allegations against their respective subsidiaries were without merit.
MyCC chief executive officer Iskandar Ismail, in announcing the imposition of the fine last year, said cartels are a supreme evil in competition law and a form of economic sabotage at the highest level, more so in a public interest case.
“MyCC has been tasked by the government with eradicating cartels, and we will continue to do so without fear or favour.
"We are still monitoring the chicken industry since the recent government decision to discontinue subsidies and price control on chickens. We hope the lesson learnt from this case will be a deterrent to all, particularly those cartels-to-be," he added.