According to the Competition Act 2010, the goal of the Act is to “promote economic development by promoting and protecting the process of competition”. The Act also specifically states that by doing so it aims to protect the interests of the consumer. Has the Competition Act in fact protected the interests of consumers?
The biggest impact on the cost of living for consumers is the increasing price of food. FOMCA had strongly advocated for a market review on the food supply chain to ascertain if the high price of foods was due to market manipulation.
On August 2019, the Malaysian Competition Commission published and released the Market Review on the food sector. The report had confirmed that one of the key reasons for high food prices was price distortions and manipulations in the food supply chain.
For example according to the report, 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 the consumer pays a retail price of RM 3.90, and increase of 143%.
Another example of price manipulation was the fish supply chain. Middle man are known to hoard fish when prices are low, thus restricting supplies and forcing the prices of fish to increase. There was also opaqueness in price determination along the supply chain.
Malaysia Competition Commission (MyCC) in their report had identified multiple causes of the exorbitant food price in the market. The reasons include market manipulation by middlemen, multiple intermediaries and manipulation of Approved Permits causing unreasonable increase in food prices.
To protect consumers, the function of MyCC should not be just to identify the cause of price distortions and manipulations. The Act enables the Commission to Act against the price manipulators to ensure a truly competitive market to enhance consumers’ well-being through reduced food prices.
Yet, in a report on April 2021 in a local newspaper, the MyCC continues to report that the price of ikan kembong is increasing six times before the fish reaches the market. Further it continues to report that in the supply of fish is being manipulated by middle-man who hoarding supply and forcing up fish prices.
Thus despite the Market Review in 2019, the price manipulation in the food sector continues to persist. It appears that despite identifying clearly that there is price manipulation that is causing exorbitant price of food for consumers, MyCC has been unable to act to break the price manipulation. Consumers continue to suffer through higher prices of food. It appears that consumers interest have not been protected.
On another issue, FOMCA had filed a complaint against Touch ‘n Go on October 2018. One of the key complaint was that Touch ‘n Go was a monopoly that was unjustly imposing an addition 10% surcharge for its use in the parking areas in several malls and since consumers did not have an alternative, that was unjust as Touch ‘n Go had already collected payments for the cards.
On August 2020 (22 months later) , MyCC had responded to FOMCA that based on their enquiry, the “complaint does not raise any competition concern” and further that Touch ‘n Go was justified in the surcharge “due to its investment and maintenance costs of the system incurred by the operators”. Consumers had no redress through MyCC and had to continue to paying the unjustified increased charges. Thus MyCC did not protect the consumer; instead it defended the monopoly. Consumer interests again were not protected.
Yet in January 2021, the new Chief Executive Officer of Touch ‘n Go confirmed that after receiving many complaints from consumers, they were in the process of removing all Touch ‘n Go parking surcharges. The redress to consumers came not by MyCC seeking justice for consumers but through the internal decision-making of the Company.
In fact, MyCC had failed to act in the best interests of consumers.
The first complaint filed against market manipulation was by FOMCA against the Malaysian Airlines and Air-Asia collaboration that severely disadvantaged consumers through reducing competition in their routes and increasing charges. In this case at least, MyCC took firm action to break the attempted cartel. Thus at least in the case of the MAS and Air Asia tie-up, consumers through MyCC attained consumer justice.
Paul Selva Raj
Secretary General, FOMCA
