ACCORDING to the Competition Act 2010, the process of competition promotes “competitive prices, improvement in the quality of products and services and provides wider choice for consumers”.

Consumers thus benefit through lower prices, better products and services quality and have wider choices in the selection of their purchases.

The Competition Act, though often underrated, is one of the most important pieces of legislation for protecting consumers and enhancing consumer welfare.

Recognising the critical role that competition law and policy plays in the welfare of consumers, and guided by the international consumer movement, the Federation of Malaysian Consumers Associations (Fomca) began advocating competition law in 1998, and continued to do so until it was finally passed in 2010.

While many laws have an impact on consumers, two of the most critical are the Consumer Protection Act 1999 and the Competition Act 2010.

Taking Touch ‘n Go as an example, if an individual is dissatisfied with its products or services he or she can, in accordance with the Consumer Protection Act, make a complaint to the Consumer Tribunal.

A win means the consumer benefits individually, but other consumers do not.

However, if the monopoly of Touch’ n Go is eliminated and a free and open market payment system is established, through the Competition Act, millions of consumers benefit from one particular complaint through lower prices, better services quality, more innovative products and a company that would be more receptive to their issues.

When consumers have a choice, it will frequently be based on best value for their limited monies. In a free market, suppliers need to compete on price, quality or better customer service to attract new consumers, which ensures market efficiency.

Competition polices thus have impact on the entire market and millions of consumers benefit.

Also, when monopolies are broken, there are opportunities for new entrepreneurs to enter the market with innovative products.

Beyond direct impact on consumers, monopolies and cartels can also severely distort prices to the harm of consumers.

For example, in the food supply chain, monopolies and cartels have been reported to severely manipulate prices.

The 2019 report on the market review of key food items by the Malaysia Competition Commission (MyCC) confirmed this.

For example, from fisherman to consumer the price of ikan kembong will increase six-fold. Another example of substantial price increase is the price of cabbage.

The farm price is RM1.60 but the consumer pays a retail price of RM3.90, an increase of 143%.

The MyCC has identified multiple causes, including include market manipulation by middlemen, and multiple intermediaries who profit at the expense of the consumer.

Low- and middle-income consumers are severely affected.

While the MyCC has been trying to determine monopolistic practices, it is not enough to merely study and identify market distortions.

Competition law and the MyCC have been entrusted to break that monopoly and establish a free and open market. Only then will consumers benefit.

Four years on from the MyCC report, we are still plagued by monopolies and cartels causing suffering through excessive pricing.

We are grateful indeed that finally the prime minister, in recognising the sufferings of the rakyat, is examining the entire monopolistic structures that continue to prevail.

The way forward is that the MyCC must truly understand its role in ensuring a better quality of life for consumers.

If it fails, then consumers suffer. Conversely, if it succeeds, then consumers enjoy lower prices, better quality and wider choices.

What is needed is effective leadership. Beyond identifying monopolistic practices in the economy, the MyCC must use competition legislation and engage with stakeholders to break the monopoly, and ensure a free and open market.

An effective MyCC will have a substantial impact on the welfare of consumers. The Touch ‘n Go saga clearly indicates that, with political will, the MyCC can act effectively to protect consumers. – March 30, 2023.

* Paul Selva Raj is secretary-general of Fomca.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.