THE Competition Act 2010 promotes “competitive prices, improvement in the quality of products and services and provides wider choices for consumers”.
The Act, although often underrated, is one of the most important legislation for protecting consumers and enhancing consumer welfare.
Recognising the critical role that competition law and policies play in the welfare of consumers, and guided by the international consumer movement, the Federation of Malaysian Consumers Associations (Fomca) has been advocating for the Competition Law since 1998, until it was finally passed in 2010.
While many laws have direct or indirect impact on consumers, the Consumer Protection Act 1999 and Competition Act 2010 are the two most crucial consumer protection laws in Malaysia. The difference between the two is the extent of the impact it has on consumers.
For example, take Touch ‘n Go, if an individual is dissatisfied with its products or services, they can file a complaint with the Consumer Tribunal under the Consumer Protection Act. Assuming the consumer wins his case and gets a fair redress, he will alone benefit, while other consumers do not benefit.
However, if the monopoly of Touch ‘n Go is eliminated and a free and open market payment system is established under the Competition Act, then not one consumer but millions may benefit from a single complaint. The company may perhaps lower rates, offer better services and innovative products as well as be more receptive to issues and complaints.
When consumers have choices, they will mostly base them on the best deal. In a free market, suppliers need to compete on prices, quality and customer service to attract new consumers, which will ensure market efficiency. Thus, competition polices have a vast impact on the entire market, with millions of consumers benefitting.
In addition, when monopolies are broken, more opportunities are opened for new entrepreneurs to enter the market with innovative products.
Monopolies and cartels can also severely distort prices to the detriment of consumers. For example, in the food supply chain, monopolies and cartels have been reported to severely manipulate prices.
According to a market review conducted in 2019 by the Malaysia Competition Commission (MyCC), it was confirmed that one of the key reasons for the high food prices is distortions and manipulations in the food supply chain.
For example, the price of ikan kembong increased six times from the time it was sold by the fisherman until it was bought by the consumer. Another example is the price of cabbage, which cost RM1.60/kg at the farm but consumers paid a retail price of RM3.90/kg.
MyCC identified various causes for the exorbitant food prices in the report, which included market manipulation by middlemen and multiple intermediaries.
Clearly, monopolies and cartels are the cause for the suffering of consumers, particularly those from the low and middle income, while they enjoy exorbitant profits.
While MyCC has been conducting studies to determine monopolistic practices in the market, it is not enough. Competition laws and the commission must make an effort to break monopolies and establish a free and open market for the benefit of consumers.
Although the study on the food supply chain and market distortions was conducted in 2019, we are still being plagued with exorbitant food prices.
Fomca has been continuously advocating for an open and free market on all essential food, medicines as well as essential services.
We are thankful that Prime Minister Datuk Seri Anwar Ibrahim recognises the sufferings of the rakyat, especially the B40 and M40 group, due to the significant increase in cost of living, especially related to food, and is reviewing the entire monopolistic structure.
MyCC must understand the significant role it plays in ensuring a better quality of life for consumers. Besides identifying monopolistic practices in the economy, the commission needs to engage with the relevant stakeholders to break monopolies and ensure a free and open market.
An effective commission, with a proper leadership, will ensure that consumers are protected and can enjoy lower prices, better quality and wider choices, which is the right way forward.
Paul Selva Raj, Secretary-General, the Federation of Malaysian Consumers Associations. Comments: letters@thesundaily.com
