MyCC urged to dig deeper: Exposing tactics cartels use to monopolise government projects

SHAH ALAM - The Malaysia Competition Commission (MyCC) is urged to continue investigating companies participating in government tenders to expose more tactics aimed at avoiding cartel formation for monopolising government projects.

Malaysian Muslim Lawyers Association (PPMM) President Muhamad Hisham Marzuki said that most cartels enter into agreements amongst themselves by strategically offering different tender prices.

"For example, in a scenario where three companies, A, B, and C, bid for a government project.

"Company A offers a price of RM2 million, Company B RM1.8 million, while Company C quotes around RM1.5 million.

"Naturally, the company offering the lowest price has a higher probability of winning the project.

"When this strategy succeeds, they will distribute the received amount according to the pre-established agreement," he told Sinar.

Previously, over 500 companies were reported to be under MyCC's scrutiny for suspected cartel formation in government project tenders. Various modus operandi were employed, including owners willing to marry multiple times to build their empires, allowing them to use their wives and relatives as proxies.

On Dec 22, MyCC imposed a penalty of RM415.5 million on five chicken food grinding companies for violating Section 4 of the Competition Act 2010 (Act 712) through the formation of a cartel to fix chicken food prices—the largest cartel detected since MyCC's establishment in 2011.

The affected companies are Leong Hup Feedmill (M) Sdn Bhd (Leong Hup), FFM Berhad (FFM), Gold Coin Feedmills (M) Sdn Bhd (Gold Coin), Dindings Poultry Development Centre Sdn Bhd (Dindings), and PK Agro-Industrial Products (M) Sdn Bhd (PK Agro).

Domestic Trade and Cost of Living (KPDN) Minister Datuk Armizan Mohd Ali said that the cartel issue involving these five companies has a detrimental impact on the country's economy, as it involves a conspiracy to raise chicken food prices and, consequently, the market's chicken supply.

Meanwhile, Hisham mentioned that withdrawing from tenders at the last moment is one of the tactics often employed by proxies when bidding for projects.

"This is one of the behaviors frequently exhibited by cartel companies solely to secure projects for their mutual benefit.

Company owners will compromise among themselves, allowing one of them to win the tender by having their associates withdraw at the last moment," he said.

Additionally, he stated that any form of agreements between business entities is a violation of the law under the Competition Act 2010.

"These cartels conspire to regulate the production of certain goods, which is a clear violation of the law.

"When they control or limit the production of a product in the market, it leads to high demand among consumers. This situation will drive up prices, burdening consumers," he added.

Issues related to cartels involving essential goods for the public and government projects often attract the attention of the Malaysian public.

This includes dismantling a cartel syndicate monopolizing 345 tenders from several ministries valued at RM3.8 billion, exposed by the Malaysian Anti-Corruption Commission (MACC) in 2021.

The alleged head of the syndicate is believed to have controlled over 150 companies since 2014.