MyCC Issues Infringement Decision against five Ro-Ro Operators for engaging in a price-fixing cartel
Three major Langkawi Ro-Ro operators have been fined by the Malaysia Competition Commission (“MyCC”) for forming a price fixing cartel in relation to the increase in fares for vehicle transportation via Ro-Ro vessels between Langkawi and Kuala Perlis and vice versa. Besides the three operators, two other related enterprises were held responsible for the same conduct.
In 2019, there were numerous complaints from the public as the prices of goods and services in Langkawi had increased. The Ministry of Domestic Trade and Consumer Affairs (“MDTCA”) then conducted research on the matter and found that the reason for the price increase was mainly due to the increased fares for commercial vehicles using Ro-Ro vessels traveling between Langkawi and Kuala Perlis and vice versa. In addition, it was found that there were price similarities in the fares charged by the RoRo operators. Consequently, the Minister of MDTCA had instructed MyCC to investigate the matter.
In its investigations, MyCC found that the three main Ro-Ro operators along with two other enterprises were involved in private discussions to increase and fix the fares, not only for commercial vehicles, but also for passenger cars using their Ro-Ro vessels.
This led to the formation of the cartel via two Memorandums of Understanding (“MoU”) beginning from the year 2018 to 2019. The investigation was completed in 2020 and thereafter MyCC issued its Proposed Decision against the five enterprises on 14 September 2020. The parties then made their representation to MyCC between December 2020 and April 2021. After considering all evidence, including their representations, MyCC found that the following five enterprises have infringed section 4 of the Competition Act 2010 (“the Act”):
- Langkawi Auto Express Sdn. Bhd. (“LAE”)
- Dibuk Sdn. Bhd. (“Dibuk”)
- Langkawi Ro-Ro Ferry Services Sdn. Bhd. (“LRFS”)
- Langkawi Ferry Services Sdn. Bhd. (“LFS”)
- Dibuk Cargo Services Sdn. Bhd. (“DCS”)
For such infringement, LAE was fined for the amount of RM1,130,876.87. At the same time, Dibuk and LFS were equally responsible for the infringement and were fined as both enterprises own LAE through a joint venture. Similarly, DCS has been fined for the amount of RM250,172.25 and MyCC found that Dibuk was equally responsible for the infringement and were fined as both enterprises share common directors and shareholders. On the other hand, LRFS has been fined for the amount of RM810,531.29.
In the decision, MyCC also directed the enterprises to cease and refrain in the future from engaging in price fixing agreements that may disrupt competition in the market. The MyCC further directed the parties to independently determine their future charges for the carriage of vehicle transportation via Ro-Ro vessel. Given the economic difficulties arising as a result of the pandemic, MyCC has agreed to grant the parties a reduction from the initial amount of the financial penalty coupled with a moratorium for 6-months from the date of the decision. With this, the parties have the liberty to pay the amount in instalments for up to 6-months.