KUALA LUMPUR: It will be a long and drawn-out affair for the Malaysia Competition Commission (MyCC) to get five feedmillers to pay the RM415 million penalties for establishing "chicken feed cartel", industry observers said.
The quintet will most likely appeal, and their chances of getting favourable court decision are decent, based on past cases involving some insurance companies as well as AirAsia Bhd parent Capital A Bhd, they said.
The Competition Appeal Tribunal had previously ruled in favour of AirAsia in MyCC's allegation that AirAsia and Malaysia Airlines had breached the market sharing prohibition by sharing markets in the local air transport sector.
MyCC's fine on AirAsia was RM10 million.
MyCC had last week fined Dindings Poultry Development Centre Sdn Bhd, FFM Bhd, Gold Coin Feedmills (M) Sdn Bhd, Leong Hup Feedmill (M) Sdn Bhd and PK Agro-Industrial Products (M) Sdn Bhd.
The RM415 million was the largest ever fine meted out by MyCC since its establishment in 2011.
Malayan Flour Mills Bhd-owned Dindings Poultry was fined RM70.02 million, PPB Group Bhd's 51 per cent-owned FFM (RM42.69 million), Gold Coin (RM97.51 million), Leong Hup (RM157.47 million) and PK Agro (RM47.8 million).
Analysts at AmInvest Research believe that the feedmillers will appeal to the Competition Appeal Tribunal.
"The appeals and subsequent court cases mean that this would be a long and drawn-out affair," they said today, adding that FFM owner PPB Group had said that it would be consulting its external legal counsel on the appropriate action.
AmInvest Research pointed out that in 2022, the tribunal had ruled in favour of the insurance companies in respect of the repair works done on motor vehicles. Following the tribunal's decision, MyCC filed a judicial review at the High Court.
In November 2023, the Federal Court ruled in favour of Capital A and dismissed MyCC's review of application.
AmInvest Research estimated that the fines of RM35.7 million (51 per cent of RM70 million) would reduce Malayan Flour's 2023 net profit to RM14.7 million from RM50.4 million and shave 3.1 per cent of PPB's 2023 net earnings of RM1.4 billion.
"We think that Malayan Flour and PPB would not be recognising the fines in their books as they mull on the next course of action," the firm said, maintaining its "Buy" calls on Malayan Flour with a fair value of 80 sen and PPB Group with a fair value of RM19.40.
Meanwhile, Malayan Flour said MyCC's decision on Dindings Poultry is "without merit".
The group and Dindings Poultry "strongly challenge" MyCC's decision and were in consultation with the external legal counsel to take the "necessary and appropriate action" to appeal the decision and apply for a stay of the decision in the interim, according to Malayan Flour's stock exchange filing on Tuesday.
Dindings Poultry had received MyCC's notice on Dec 22, where the authority maintained its finding of price-fixing infringement with the imposition of a financial penalty of RM70.02 million, Malayan Flour noted.