Tackling inefficiencies: Combating Cartels in Malaysia

Tackling inefficiencies: Combating Cartels in Malaysia

If eggs are too expensive, don’t eat eggs.
If sugar is too expensive, consume less sugar. Avoid diabetes.
And the latest, if chicken is expensive, by right, avoid buying chicken.

Consumer prices in Malaysia has always been a contentious issue. Consumer price refers to the cost that a consumer pays for goods and services. The price of consumer goods can be influenced by various factors, including the cost of production, demand for the product, and the presence of cartels.

Today, I will do my best to address the presence of cartels.

A cartel is a group of companies that work together to limit competition and fix prices in order to maximize profits. Cartels can form in any industry, including the consumer goods sector. Inefficiencies in the market can lead to the formation of cartels, as companies seek to take advantage of the situation and increase their profits.

One sector where cartels have had a significant impact on consumer prices is the meat and poultry industry. Meat and poultry are essential products for many consumers, and the prices of these goods can have a significant impact on household budgets. The existence of cartels in the meat and poultry industry can lead to higher prices for consumers, as the companies involved in the cartel work together to fix prices at a level that is higher than what would be possible in a competitive market.

The inefficiencies in our market gives opportunity for cartels to form:
1. Concentration of market power: Regulations that limit the number of competitors can lead to a market dominated by a few firms.
2. Price-fixing agreements: Companies may agree to set prices at a certain level to increase profits and reduce competition.
3. Collusion among suppliers: Companies may collude to set prices above their competitive levels and limit production to create artificial scarcity and increase prices.
4. Monopsony power: One large buyer can reduce competition by setting prices below the competitive level and using its size to dictate terms to suppliers.
5. Misuse of intellectual property rights: Companies may attempt to gain an unfair competitive advantage by limiting access to technology or products.

In order to curb the formation and activities of cartels in the consumer goods sector, various countries have taken a number of actions. These actions can include investigations and enforcement by competition authorities, as well as the imposition of fines and other penalties on companies found to be involved in cartel activity. In addition, countries may implement policies and regulations aimed at promoting competition and preventing the formation of cartels.

Here are some examples:
1. United States: Enforced antitrust laws to challenge transactions that violate the Sherman and Clayton Antitrust Acts.
2. OECD: Hosted a Global Forum on Competition debate on Crisis Cartels to identify solutions to the issues of monopolization and monopsony.
3. European Union: Imposed sanctions on cartels in the food sector to ensure a competitive marketplace and protect the economic welfare of workers, farmers, small businesses and consumers.
4. Canada: Worked with Free Trade Agreement countries to mitigate measures that can reduce GHG emissions related to the food system.
5. Mexico: Invested in poverty reduction programs to increase access to affordable food.
6. Brazil: Implemented a competition policy to promote consumer welfare and economic growth, including measures to reduce the concentration of market power and restrict the misuse of intellectual property rights.

Overall, the existence of cartels in the consumer goods sector, particularly in the meat and poultry industry, can have a significant impact on consumer prices. In order to protect consumers and promote fair competition, it is important for countries to take action to curb the formation and activities of these cartels.

Therefore, my suggestion is for the government to look into the inefficiencies of our market.



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