Cartel Enforcement Activity in Malaysia: A 12-Month Review
Over the past year, the Malaysia Competition Commission (MyCC) has intensified its cartel enforcement efforts, cracking down on price-fixing and bid-rigging activities. Two of the most significant enforcement actions were the largest price-fixing fine in MyCC history and a major bid-rigging investigation involving government tenders.
Record-Breaking Fine on Chicken Feed Millers for Price-Fixing
Final Decision: MYR 415 Million Penalty
- Date of Decision: 22 December 2023
- Industries Affected: Poultry & Livestock Feed Sector
- Companies Involved: Five major chicken feed millers
- Violation: Price-fixing arrangement
- Penalty: MYR 415 million (largest fine imposed by MyCC to date)
Key Findings from MyCC’s Investigation:
- Pricing coordination: The MyCC found that price fluctuations among the companies aligned with the dates of price announcements, suggesting collusion.
- Oral price exchanges: Witness testimonies revealed that competitors shared raw material pricing information during trade association meetings.
- Communication patterns: The enterprises engaged in discussions before implementing price changes, reinforcing the existence of a cartel arrangement.
Current Status:
- Legal challenge expected: Several companies have indicated their intent to appeal against MyCC’s decision.
- Significance: This case highlights MyCC’s strengthened approach to tackling anti-competitive agreements that directly impact food prices and consumers.
Bid Rigging in Defence Tenders: MyCC’s Proposed Decision
Proposed Decision: Seven Enterprises Accused of Bid Rigging
- Date of Decision: 19 December 2023
- Industries Affected: Government Procurement (Ministry of Defence)
- Tenders Affected: Four defence-related tenders worth MYR 20.8 million
- Companies Involved: Seven enterprises
- Violation: Bid rigging
Key Findings from MyCC’s Investigation:
- Collusive tendering: The enterprises allegedly colluded in their bid submissions to manipulate tender outcomes.
- Information sharing: Evidence suggests that businesses exchanged bid details to control contract allocation.
- Kickback arrangements: Some companies entered into subcontracting deals as “kickbacks” to ensure predetermined winners.
Next Steps for the Enterprises:
- Written Response: Companies have 30 days to submit a written reply addressing MyCC’s concerns.
- Oral Hearing: Companies may also defend their position in an oral presentation before MyCC.
Public Support for MyCC’s Bid Rigging Crackdown:
- Malaysian Corruption Watch has urged the public to support MyCC’s actions, especially regarding government tender projects.
- MyCC is currently investigating over 500 companies suspected of cartel activities.
MyCC’s Ongoing Investigations & Common Bid Rigging Tactics
- Number of Active Investigations: More than 500 companies under review for suspected cartel practices.
- Common Bid Rigging Strategies Identified by MyCC:
- Submission of multiple bids under different company names to simulate competition.
- Bid withdrawals to allow pre-determined winners to secure contracts.
Conclusion: A New Era of Stringent Cartel Enforcement in Malaysia
The past 12 months have seen MyCC take unprecedented enforcement action against price-fixing and bid-rigging cartels. The record MYR 415 million fine against chicken feed millers and the government tender bid-rigging case underscore MyCC’s commitment to tackling cartels that inflate prices, distort competition, and harm consumers.
With over 500 companies under investigation, businesses involved in price-fixing, bid rigging, or collusion must reassess their compliance strategies to avoid substantial financial penalties and reputational damage.
Key Takeaways for Businesses:
- Avoid anti-competitive agreements that could lead to hefty fines.
- Ensure transparency in bidding processes to prevent allegations of bid rigging.
- Strengthen compliance programs to mitigate risks of violating the Competition Act 2010.
As MyCC intensifies enforcement, businesses should remain vigilant and review their competitive practices to stay compliant with Malaysia’s evolving competition law landscape.
