New Competition Law in Malaysia (July 2010)
The Malaysian Competition Act 2010 has been gazetted on 10 June 2010 and is expected to be implemented in January 2012.
The Malaysian Competition Act provides a legal framework for curtailing anti-competitive practices in Malaysia and applies to any commercial activity within Malaysia and outside of Malaysia insofar as the activity was transacted outside Malaysia but which has an effect on market competition in Malaysia. Currently, activities performed by the energy, communications and multimedia sectors have been exempted by the Act and other commercial activities may be further exempted by Ministerial order from time to time.
Briefly, the Act introduces 2 main types of prohibition namely, against:
i. Anti-competitive agreements between enterprises which operate at the same level in the production or distribution chain as well as between enterprises operating at different levels.
The prohibitions generally extend to agreements which have the object of amongst others, price-fixing, sharing market or sources of supply, limiting or controlling production, market outlets or market access, technical or technological development, or investment, and bid rigging.
ii. Any abuse of a “dominant position” by an enterprise in any market for goods or services.
An enterprise occupies a dominant position in the market if it possesses such significant power in a market to adjust prices or outputs or trading terms, without any restraint from competitors or potential competitors, regardless of the level or percentage of market share of the enterprise.
An abuse of dominant position occurs amongst others, where such enterprise imposes unfair prices or unfair trading conditions on any supplier or customer; controls production, market outlets or market access, technical or technological development, or investment; refuses to supply to a particular enterprise or group of enterprises; engages in discriminatory practices for equivalent transactions; makes a contract conditional upon the acceptance by the other party of extraneous terms; engages in predatory behavior towards competitors, or buys up, without any justification, scarce supply of intermediate goods or resources needed by a competitor.
A violation of a prohibition is termed an infringement. The Act provides several grounds for relief of liability for an infringement. There are also grounds for applying for an individual exemption or a block exemption for a particular category of agreements. For the moment, the prohibitions do not apply to agreements entered into pursuant to legal compliance, collective agreements governing employment terms, and enterprises engaged in providing services of general economic interest or in the nature of a revenue-producing monopoly where the prohibitions would obstruct the performance of their tasks.
The Act empowers the Competition Commission to conduct market reviews, and to carry out investigations and enforcement duties. The Commission provides a platform for any affected enterprises to make written or oral representations concerning any proposed decision or finding of infringement by the Commission, and is also empowered to conduct hearings for the purposes of determining whether an infringement has occurred.
The Act also establishes a Competition Appeal Tribunal which shall have the exclusive jurisdiction to review any decision made by the Commission.
As regards penalties, first-time offenders are required, unless otherwise expressly provided, to pay a fine not exceeding RM5 million for companies or not exceeding RM1 million for individuals. Individual offenders may be subjected to an imprisonment term not exceeding 5 years in lieu of or in addition to payment of a fine.
The new competition law is expected to have far-reaching implications on trade by encouraging efficiency, innovation and entrepreneurship and hopefully, on consumers through competitive pricing, improvement in the quality of products and services and the availability of wider choices.
ABOUT THE AUTHOR: Clara Yip
Advocate & Solicitor (Malaya and New Zealand) (non practicing); Registered Patent and Trademark Agent and Founding Partner, MarQonsultIP.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.