15 October 2019
On 6 August 2019, the Malaysia Competition Commission (“MyCC”) released its Market Review on Food Sector (“Market Review”). The Market Review was undertaken pursuant to sections 11 and 12 of the Competition Act 2010 which empower the MyCC to conduct a review on any market to determine whether any feature or combination of features of the market prevents, restricts or distorts competition in the market. The aim of the Market Review is to assess the market structure and competitiveness of the market to determine whether there are any anti-competitive conduct in the food sector while at the same time, delving into the rationale behind the significant increase in price of certain food items in recent years.
The Market Review focused on five staple food items - namely beef, Indian mackerel, infant formula, mustard leaf and round cabbage. Briefly, the Market Review highlighted that in the fish sub-sector (Indian mackerel) and vegetables sub-sector (mustard leaf and round cabbage), the existence of multiple intermediaries within the supply chain is one of key reasons that the said sectors are not efficient. Additionally, the Market Review also highlighted issues relating to the misuse of Approved Permits which are required for importing round cabbage into Malaysia.
As for the beef and infant formula sub-sectors, the Market Review illustrated that Malaysia is highly dependent on the import of both beef and infant formula products into Malaysia, as opposed to relying on domestic products. The high barriers to entry and dominance of existing industry players (namely, beef importers and multinational producers of infant formula) have resulted in the Malaysian market for these products being exposed to price fluctuations and lesser choices in the market.
The launch of the Market Review is in line with MyCC’s agenda to promote healthy competition for the benefit of the market and to address issues on the cost of living in Malaysia. Such agenda is squarely in line with the Malaysian government’s effort to increase growth and to encourage development of entrepreneurship within Malaysia.