Give SMEs a safe voice against cartels, MyCC urged

KUALA LUMPUR: The Malaysia Competition Commission (MyCC) must have safe reporting channels for small businesses, as they often fear consequences for voicing concerns about dominant suppliers, according to Dr Chin Chee Seong, president of the SME Association of Malaysia. The association is willing to collect anonymous feedback from members and present common issues to MyCC.

Chin urged MyCC to swiftly investigate cases involving essential supplies and monitor unusual price movements, rather than waiting for formal complaints. He emphasized that strong laws alone will not yield results without timely enforcement, as the ultimate goal is a fairer and more competitive business environment.

Chin stressed that educating SMEs is crucial for effective enforcement, as they typically face higher prices and unfair terms due to their weaker bargaining power. Price-fixing and market-sharing by cartels increase costs, which are subsequently passed on to consumers. While granting MyCC stronger powers is essential, the most critical aspect is enforcement. Many SMEs are hesitant to lodge complaints against their major suppliers, believing they are dependent on them.

Chin explained that SMEs often unknowingly breach the Competition Act, as they lack a full understanding of it. They might agree on prices, discounts, or market allocation, which is illegal. However, strong MyCC enforcement will not immediately lower SME costs, as businesses still face higher wages, utilities, rentals, and taxes. Effective enforcement, though, can create a more equitable market.

Chin also called for MyCC to collaborate with business groups in organizing nationwide workshops and roadshows. He advised business owners to make independent decisions regarding pricing, discounts, and strategy, and to refrain from sharing confidential commercial information with competitors. Economist Geoffrey Williams believed empowering MyCC to tackle monopolies and cartels would foster competition, enhance customer service, and reduce consumer prices.

Williams stated that stronger regulatory oversight would compel companies to become more agile, innovative, and efficient to safeguard their market share from emerging competitors. He stressed that direct intervention against cartels must be complemented by policy reform, as some cartels exist due to government licensing. Removing these licenses is vital to addressing cartels and monopolies directly.

He pointed out that prices in competitive markets fluctuate with supply and demand, whereas cartel-controlled prices remain constant even during periods of surplus supply. Cartel conduct can also be observed when competing brands adjust prices simultaneously rather than independently to attract customers.

Regarding penalties, Williams argued that higher fines serve as a deterrent and should not be passed on to consumers. He warned that firms attempting to shift penalty costs to customers should face additional punishment. However, he emphasized that structural reform, rather than financial penalties, should be the primary driver of market reform, focusing on removing barriers to entry and opening market access to any interested seller.

Williams added that online cartels struggle to control the market when buyers have alternative choices and sellers are not confined to a single platform. He concluded that stricter competition rules would also attract foreign investors, provided regulations are enforced fairly and do not discriminate against foreign suppliers.