The Federation of Malaysian Consumer Associations (FOMCA) filed a complaint on Monday to the Malaysian Competition Commission (MYCC) – which only began work in January 1 – alleging that Nestle was engaged in unfair trading practices.
Paul Selva Raj, chief executive of FOMCA told BeverageDaily.com that the federation had received complaints from retailers about alleged anti-competitive acts committed by Nestlé relating to three brands in particular: Milo, Nescafe and Maggi.
Selva Raj said: “For some products, Nestlé is fixing the prices that retailers can sell at. That is our complaint. It involved quite a few retailers and they [Nestle] have not denied it actually.
“Their explanation is that they want to prevent retailers from using their products as loss leaders. So it is a very direct and simple matter so far as we are concerned.”
'Credible' market force
Price fixing along such lines eliminated competition among retailers – preventing proper competition – it also meant that consumers unwittingly bought goods at higher prices, Selva Raj said.
In April, Nestlé also applied to opt-out of Malaysia’s 2010 Competition Act, which prohibits an enterprise from abusing a dominant market position in the provision of goods and services, he added.
Selva Raj said:“The MYCC needs to stop all of this, eliminate all non-competitive behaviour, and I think that being a new commission it also has to prove it’s a credible force in the market and society. They cannot just brush this aside.”
But Nestlé senior corporate spokeswoman, Melanie Kohli, told BeverageDaily.com: “Nestlé Malaysia strongly denies any engagement in anti-competitive activities in the trade as alleged by FOMCA.”
Nestlé’s Brand Equity Protection Policy (BEPP) did not influence price setting by customers, Kohli said.
Stopping Nestlé brand ‘misuse’
She added: “It only prevents the misuse of Nestlé brands as promotional loss leaders by selected retailers. Such activities can have the long-term effect of weakening and eroding the brand equity of Nestlé’s products.”
Kohli explained that Nestlé had sought confirmation of its position – regarding its BEPP - from the MYCC and provided it with a full statement of facts on its application.
“Accordingly, it is inappropriate for us to discuss this further until feedback from MYCC has been received,” she said.
“Nestlé Malaysia reaffirms its full commitment to comply with all applicable laws locally and internationally in conducting its business.”
Selva Raj said that the MYCC was obliged to consider FOMCA’s complaint within a “reasonable time” and would produce a report either upholding it (and taking action) or rejecting it.