Case Discussion: RM415 Million Penalty – Chicken Feed Cartel

Case Discussion: RM415 Million Penalty – Chicken Feed Cartel

One of the most striking examples of MyCC’s enforcement capabilities came on 22 December 2023, when the Commission issued a record-breaking penalty of RM415 million against five major poultry feed millers in Malaysia. The case stands as the clearest example of how MyCC moves from quiet investigator to bold enforcer — especially when public interest is at stake.

The enterprises involved were some of the biggest names in the industry:

1. Leong Hup Feedmill Malaysia Sdn. Bhd.
2. FFM Berhad
3. Gold Coin Feedmills (Malaysia) Sdn. Bhd.
4. Dindings Poultry Development Centre Sdn. Bhd.
5. PK Agro-Industrial Products (M) Sdn. Bhd.

The allegation? That these companies engaged in concerted practices — in other words, they coordinated with each other to fix the prices of poultry feed, a critical input in Malaysia’s chicken supply chain.

Let’s back up a little to understand why this mattered so much.

🔗 The Supply Chain Context

The chicken industry in Malaysia is structured in three tiers:

• Upstream: raw material importers and feed millers;
• Midstream: broiler and egg producers (farms, hatcheries, etc.);
• Downstream: processors, retailers, and distributors.

Poultry feed is not a small cost. In fact, it makes up 72.8% of the total production cost in chicken farming. Any distortion in feed pricing can cascade through the system — from feed millers to farmers, to processors, and finally to consumers buying chicken in wet markets and supermarkets.

So when feed prices go up unnaturally — not because of global commodity trends, but due to secret coordination — the entire country feels it. That’s why MyCC treated this as a matter of public interest and national economic stability.

🕵️ The Investigation: Step-by-Step

MyCC’s formal investigation began in November 2021 under Section 14(1) of the Competition Act 2010. By February 2022, a special task force was formed within MyCC to probe the chicken and egg industries specifically.

Investigators employed aggressive tools:

• Dawn raids on company premises;
• Collection of internal communications, including WhatsApp chats, call logs, and pricing documents;
• Statements from employees and notes from meetings;
• Analysis of price announcements and raw material trends.

🧾 Key Evidence Uncovered

The investigation revealed three categories of compelling evidence:

1. Suspicious Price Alignment

Despite differences in each company’s poultry feed formula — which should have led to different cost structures — the enterprises raised their prices by the same amount at the same time, often even when raw material costs had dropped. MyCC concluded this was not market-driven behavior, but rather deliberate price fixing.

2. Communications and Coordination

Communication records, especially WhatsApp messages and call logs, matched perfectly with pricing decisions. Discussions happened shortly before price hikes — a strong indicator that coordination occurred behind the scenes.

3. Meetings and Witness Testimony

Although official minutes of the Malaysian Feedmillers Association meetings were sanitized, personal notes taken by company representatives hinted at price discussions. Witnesses confirmed that raw material costs and pricing were openly discussed — a textbook example of concerted practice under Section 4 of the Competition Act.

⚖️ Legal Outcome: Final Decision and Penalties

MyCC issued its Final Decision in December 2023, covering three distinct periods of infringement:

The financial penalties imposed were:

• Leong Hup: RM157.47 million
• Gold Coin: RM97.51 million
• FFM: RM42.69 million
• PK Agro: RM47.8 million
• Dindings: RM70.02 million
  Total: RM415.5 million

This remains the largest penalty MyCC has ever imposed in its 12-year history.

📋 Additional Remedies and Directives

In addition to fines, MyCC issued behavioral remedies, including:

• A cease and desist order to stop all cartel behavior;
• Mandatory monthly reporting on poultry feed price changes;
• Compliance training for board members and employees;
• Updating company Codes of Conduct to define competition law violations as internal misconduct.

This combination of financial and structural penalties ensures that companies can’t just pay a fine and move on — they must change how they operate.

🔍 Broader Impact and Closing Thoughts

This case does more than punish bad behavior. It sends a clear message: cartel conduct is economic sabotage, especially in sensitive sectors like food supply. As MyCC CEO Iskandar Ismail put it, “Cartel is a supreme evil in competition law.”

The case also reflects MyCC’s increasing international alignment. Cartel enforcement is ramping up globally — similar cases in the U.S., Singapore, South Korea, and Brazil have led to massive fines and even criminal charges.

For Malaysia, the case is a turning point. It shows that MyCC is not just a watchdog, barking in warning — it is an active enforcer, willing to bite when businesses collude.

And this is just the beginning. With merger controls and digital market regulations on the horizon, the role of MyCC is set to expand even further.