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Malaysia: Langkawi Ro-Ro cartel fined $526,756

Christian Fernsby |
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 ransportation via Ro-Ro vesselsbetween Langkawi and Kuala Perlis and vice versa.

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Topics: MALAYSIA   

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 a 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 beginning from the year 2018 to 2019.

The investigation was completed in 2020.

For such infringement, Langkawi Auto Express Sdn. Bhd. (“LAE”) was fined for the amount of RM1,130,876.87 ($270,771). At the same time, Dibuk Sdn. Bhd. and Langkawi Ferry Services Sdn. Bhd. were equally responsible for the infringement and were fined as both enterprises own LAE through a joint venture.

Similarly, Dibuk Cargo Services Sdn. Bhd. (Dibuk) has been fined for the amount of RM250,172.25 ($59,899) 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, Langkawi Ro-Ro Ferry Services Sdn. Bhd. has been fined for the amount of RM810,531.29 ($194,069).

It was found that the cost of living in Langkawi had in some ways increased due to the cartel behaviour of all five enterprises well before the start of the pandemic. From the MDTCA report obtained by MyCC, the numbers clearly show that the increase in prices of goods coming from the mainland was apparent after the signing of the second MOU.

From this case, it is clearly demonstrated that the distortion caused by a cartel in a supply chain ecosystem can lead to price increase; thus, robbing the people’s hardearned money, in particular, the islanders and tourists of Langkawi.


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