Malaysia fines three RoRo operators for price-fixing

The Malaysian Competition Commission has fined three RoRo ferry operators $520,000 for conspiring to fix fares from Peninsular Malaysia to Langkawi, an island community at the western end of the Strait of Malaka.

The commission said that from 2019 it began receiving complaints that prices for goods and services on the island were increasing to unreasonable levels. Malaysia’s Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) carried out an inquiry, and it found that the price hikes for consumers were connected to rising transport fares for commercial vehicles on the RoRo ferries connecting Langkawi with Kuala Perlis, which is the nearest mainland port. The ministry found that the RoRo operators were charging similar fares.

That led the head of the competition ministry to investigate whether a cartel was in place. Following an investigation the commission concluded that the three RoRo companies on the route (and two related businesses) had formed a cartel to set the prices for all vehicles on the crossing, resulting in increased prices for transport.

The operators allegedly involved included Langkawi Auto Express (LAE), Langkawi Ro-Ro Ferry Services (LRFS), Dibuk Cargo Services (DCS). The related firms were named as Langkawi Ferry Services (LFS) and Dibuk.

The commission said that the collusion began in 2018, and it was organized on relatively formal terms: the members of the cartel negotiated a secret annual MoU on set prices for car and truck transport. According to the commission the transport fares immediately increased on the route when the cartel’s MoU went into effect. The base rate for commercial vehicles rose from $117 to $128 in the span of a year, a 10% price increase. 

The commission began enforcement proceedings in September 2020. After an administrative process, the commission concluded that the five firms had violated Malaysian competition law, and it handed down fines for all of them.

LRFS was fined $190,000, DCS $60,000 and LAE $270,000. The two related entities, Dibuk and LFS, were also found responsible as they jointly own LAE. Given the economic difficulties of the pandemic era, the commission has agreed to reduce the penalties and give the firms six months to pay.