According to the Competition Act 2010, the process of competition promotes “competitive prices, improvement in the quality of products and services and provides wider choice for consumers”. Consumers thus benefit through lower prices, better products and services quality and have wider choices in the selection of their purchases.
The Competition Act, though often under-rated, is one of the most important legislation for protecting consumers and enhancing consumer welfare.
Recognizing the critical role that competition law and competition policy plays in the welfare of consumers, and guided by the international consumer movement, FOMCA began advocating for the Competition Law since 1998, until the law was finally passed in 2010.
While many laws have direct or indirect impact on consumers, two of the most critical consumer protection laws in Malaysia are the Consumer Protection Act 1999 and the Competition Act 2010. The critical difference between these two laws is the extent of the impact the law has on consumers.
Taking TouchnGo as an example, if an individual is dissatisfied with its products or service they can in accordance with the Consumer Protection Act, make a complaint to the Consumer Tribunal. Assuming the consumer wins his case and gets a fair redress; he benefits individually. Other consumers do not benefit.
However, if the monopoly of TouchnGo is eliminated and a free and open market payment system is established, through the Competition Act, not one consumer but millions of consumers benefit not only on one particular complaint but will benefit in the entire payment system through lower prices, better services quality, more innovative products and a company that would be more receptive to their issues and complaints.
When consumers have a choice, their choice will frequently be based on best value for their limited monies. In a free market, suppliers need to compete on prices, quality or better customer service to attract new consumers. Consumers’ choices ensures market efficiency.
Competition polices thus have impact on the entire market and millions of consumers benefit.
Also, when monopolies are broken, there are opportunities for new entrepreneurs to enter the market with innovative products.
Beyond direct impact on consumers, monopolies and cartels can also severely distort prices to the harm of consumers. For example in the food supply chain monopolies and cartels have been reported to severely manipulate prices.
The 2019 report on the market review of key food items by the Malaysia Competition Commission confirms that one of the key reasons for high food prices is distortions and manipulations in the food supply chain.
For example the price of ikan kembong has increased by six times between the price received by the fisherman and the price paid by the consumer. Another example of substantial price increase is the price of cabbage; price at the farm is RM 1.60 while consumer pay a retail price of RM 3.90, and increase of 143%.
Malaysia Competition Commission (MyCC) in their report have identified multiple causes of the exorbitant food price in the market. The reasons include market manipulation by middlemen, and multiple intermediaries causing unreasonable increase in food prices.
Clearly thus monopolies and cartels cause suffering amongst consumers while they enjoy exorbitant profits. All consumers, but particularly low and middle income consumers are severely affected.
While MyCC has been undertaking market studies to determine monopolistic practices in the market; it is not enough to merely study and identify market distortions. Competition Law and the Competition Commission have been entrusted to break that monopoly and establish a free and open market. Only then will consumers benefit.
While the Market study on the food supply chain by the MyCC was published in 2019, we are still plagued by monopolies and cartels that continue to cause suffering amongst consumers through excessive pricing.
FOMCA has indeed been continuously advocating for an open and free market on all essential foods, medicines as well as essential services.
We are grateful indeed that finally the Prime Minister of Malaysia in recognising the sufferings of the rakyat due to a significant increase in the cost of living, especially related to food, is relooking at the entire monopolistic structures that continues to prevail and causing so much of suffering amongst consumers especially B40 and even the M40.
Way forward, the Competition Commission must truly understand their role in ensuring a better quality of life for consumers. If they fail consumers suffer; if they succeed consumers enjoy lower prices, better quality and wider choices.
What is needed is effective leadership. Beyond identifying monopolistic practices in the economy, the Commission must use the Competition Law as well as engage with the relevant stakeholders to break the monopoly and ensure a free and open market.
An effective Competition Commission will have substantial impact on the welfare of consumers. The TouchnGo saga clearly indicates that with the political will the Commission can act effectively to protect consumers’ as well as enhance their well-being.
