KUALA LUMPUR: KUALA LUMPUR: Five chicken feed manufacturers were fined a total of RM415.5 million after they were found guilty of forming a "chicken feed cartel" to fix prices.
The fine is the largest ever meted out by the Malaysia Competition Commission (MyCC) since its establishment in 2011.
The companies are Dindings Poultry Development Centre Sdn Bhd (Dinding); FFM Bhd (FFM); Gold Coin Feedmills (M) Sdn Bhd (Gold Coin); Leong Hup Feedmill (M) Sdn Bhd (Leong Hup); and PK Agro-Industrial Products (M) Sdn Bhd (PK Agro).
Five of the 29 companies were estimated to control up to 40 per cent market share of chicken feed in the country.
MyCC chief executive officer Iskandar Ismail said the companies had contravened Section 4(1) of the Competition Act 2010 (Act 712) for establishing an agreement between them with the goal or effect of "preventing, restricting or distorting competition" in any market for goods or services.
He said these companies were found to have conspired to do so via several platforms including telecommunications records among their top management, meeting minutes and witness statements between Jan 2020 and June 2022.
Dinding Poultry was fined RM70.02 million, FFM (RM42.69 million); Gold Coin (RM97.51 million); Leong Hup (RM157.47 million) and PK Agro (RM47.8 million).
Iskandar said MyCC's investigation showed that from Jan 2020 to June 2022, all companies had raised poultry feed prices by the same amount.
He said checks showed a rise of between RM1 to RM4 per 50kg sack of chicken feed throughout the same period.
He said the companies had employed a strategy to make it seem like the cost of producing poultry feed was going up due to higher raw material expenses.
"Even though each company used different main ingredients like soybean and maize in their poultry feed, they all increased prices by the same amount at the same time.
"This is surprising because their unique formulas should have led to different costs, but they all raised prices equally," he said at a press conference today.
He said the deliberate collective alignment in price increment, considering the differences in raw material composition, raised further concerns about the concerted practices.
Iskandar said despite the cost of raw materials decreasing at times, the companies still chose to increase poultry feed prices by the same amount.
"This recurring patterns strongly substantiate the existence of price fixing practices by the enterprises," he said.
He said the probe also unearthed extensive examination of the communication channels used by representatives of the enterprises.
"WhatsApp conversations and call logs recovered during the investigation correlated significantly with the dates of the price announcements. This correlation strengthens the case for a connection between communication practices and pricing decisions.
"The alignment between communication records and the increase of poultry feed prices suggests a deliberate effort to synchronise their actions, compromising the competition within the chicken poultry feed market," he added.
MyCC said the companies' representatives had also attended meetings organised by the Malaysian Feedmillers Association (MFA).
He said while the official meeting records didn't show any direct sharing of price or cost details, MyCC discovered personal notes from a representative of one company, hinting at a potential agreement or coordinated actions regarding poultry feed prices.
"Witness statements have unequivocally reaffirmed that there was indeed an oral exchange of pricing information for raw materials before, during and subsequent MFA meetings," Iskandar said.
In addition to the fine, MyCC also issued a cease and desist order instructing the companies to cease participation in the chicken feed cartel.
They are also required to send a monthly report on chicken feed prices from July 202 and implement studies as well strengthening compliance adherence training programme.
The companies may appeal to the Competition Appeal Tribunal.
Iskandar said the formation of cartels was the worst offence in competition law, and a form of economic sabotage at the highest level.
"MyCC was tasked with continuing efforts to eradicate cartels without fear or favour. We hope everyone will draw lessons from this case."