Leong Hup faces huge fine if guilty of infringing Competition Act

Leong Hup International Bhd’s wholly-owned subsidiary, Leong Hup Feedmill Malaysia Sdn Bhd (LFM), could be fined Rm157.47mil if it is found guilty of infringing Section 36 of the Competition Act 2010.

In a filing with Bursa Malaysia yesterday, Leong Hup said that the Malaysia Competition Commission (MYCC) has also proposed LFM to cease from participating and engaging in the alleged anti-competitive horizontal agreement with regards to any discussion on price-related matters pertaining to chicken feed.

Should LFM be found guilty, it explained that MYCC has also suggested that its subsidiary submit monthly price-related matters to MYCC, including the announcement of price adjustment to customers, a list of recent poultry feed prices and the monthly cost for poultry feed within six months from the issuance of the infringement decision.

Furthermore, MYCC would also direct LFM to enrol directors and senior management executives into a competition law compliance programme and training at its own expense.

“LFM is required to submit a progress report of the enrolment to the MYCC within 12 months from the issuance of the infringement decision.

“And to develop a standard operating procedure (SOP) in relation to the disciplinary procedure taken against any individuals employed by the enterprise who are found participating in any anti-competitive agreement including the employees and board of directors.

“The SOP should then be submitted to MYCC within six months from the issuance of the infringement decision,” it said.

On Aug 5, LFM received a notice of the proposed decision issued by MYCC pursuant to Section 36 of the Competition Act 2010.

The proposed decision is premised primarily on the allegation that LFM had engaged in agreements and/or concerted practices to fix the quantum of the poultry feed price, which is in breach of Section 4(1) read together with Section 4(2)(a) and 4(3) of the Act.