COMPETITION LAW:
IMPACT ON BUSINESS AND
LEGAL PRACTICE
TAN SRI DATO’ SERI SITI NORMA YAAKOB
CHAIRMAN, MALAYSIA COMPETITION COMMISSION
4 July 2013
COMPETITION COMMISSION ACT 2010
(ACT 713)
An Act to provide for the establishment of the
Competition Commission, to set out the powers
and functions of such Commission, and to provide
for matters connected therewith or incidental
thereto.
Came into force on 1 April 2011
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MALAYSIA COMPETITION COMMISSION (MyCC)
S. 16: An independent body established under
the Competition Commission Act 2010 to
enforce the Competition Act 2010.
Main roles include:
•Advocacy
•Exemption
•Investigation & Enforcement • Compliance & Leniency
•Market review
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Overview of Competition Law
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COMPETITION ACT 2010 (ACT 712)
An Act to promote economic development
by promoting and protecting the process
of competition, thereby protecting the
interests of consumers and to provide for
matters connected therewith
Came into force on 1 January 2012
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SCOPE OF LAW
Applies to all commercial activities,
both within and outside Malaysia
which has an effect on competition
in any market in Malaysia
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SCOPE OF LAW (ACTIVITIES NOT INCLUDED)
“Commercial activity” means any activity of
commercial nature but does not include:1. Any activity, directly or indirectly in the exercise of
governmental authority;
2. Any activity conducted based on the principle of
solidarity; and
3. Any purchase of goods or services not for the purposes
of offering goods and services as part of an economic
activity
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SCOPE OF LAW (EXCLUSION)
Commercial activities regulated under:
 Communications and Multimedia Act 1998 [Act 588]
 Energy Commission Act 2001 [Act 610]
• Agreement or conduct that comply with any legislative
requirement
• Collective
bargaining activities in respect of
employment terms & conditions
• Services of general economic interest or having the
character of a revenue-producing monopoly
•
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MAIN PROHIBITIONS
ANTICOMPETITIVE
PRACTICES
ANTICOMPETITIVE
AGREEMENTS
ABUSE OF
DOMINANT
POSITION
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Exemptions
a) Significant identifiable technological,
efficiency or social benefits
b) Benefits could not be provided without
the anti-competitive agreement
c) The detrimental effect of the agreement
is proportionate to the benefits
d) Competition is not eliminated completely
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Impact of Law on Business
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OVERVIEW OF BUSINESSES IN MALAYSIA
Enterprise means
any entity carrying
on commercial
activities relating to
goods and services
for the purpose of
the Malaysia
Competition Act
2010.
As at 2011,
Malaysia has
approximately
46,629 companies
Others
8%
Agriculture, Forestry
and Fishing
3%
Public Administration,
Support Services and
Defence
Construction, Mining
6%
and Quarrying
9%
Professional, Scientific
and Technical
Activities
9%
Accommodation and
Food Services
5%
Wholesale and Retail
Trade, Repair of
Motor Vehicle
37%
Information and
Communication
4%
Manufacturing
8%
Real Estate, Financial
and Insurance
11%
Companies Registered for 2011
According to Business Category based on Malaysia Standard Industrial Classification 2008 (MSIC 2008)
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IMPLEMENTATION OF THE COMPETITION LAW IN
ASEAN COUNTRIES
Indonesia
Singapore
• Implemented
Thailand
Vietnam
Malaysia
Myanmar
Lao PDR
Brunei
Cambodia
Philippines
• Yet to implement
• By 2015
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ANTI-COMPETITIVE AGREEMENTS
Section 4 (1) of the Competition Act 2010
A HORIZONTAL or VERTICAL AGREEMENT between
ENTERPRISES is prohibited insofar as the agreement has
the OBJECT or EFFECT of SIGNIFICANTLY preventing,
restricting or distorting competition in any MARKET for
goods or services.
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ANTI-COMPETITIVE AGREEMENTS
HORIZONTAL AGREEMENTS
Agreement between enterprises each of which
operate at the same level in the production or
distribution chain
PRODUCTION LEVEL
DISTRIBUTION CHAIN
e.g., between chicken
producers
e.g., between
retailers
between sugar manufacturers
between wholesalers
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ANTI-COMPETITIVE AGREEMENTS
VERTICAL AGREEMENTS
Agreement between enterprises each of which operate at a
different level in the production or distribution chain
VERTICAL AGREEMENT
VERTICAL AGREEMENT
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Pricefixing
Limiting or
Controlling
ANTICOMPETITIVE
AGREEMENTS
Market
Sharing
Bid
Rigging
Example: The Federal Court ordered Malaysia Airlines Cargo Sdn Bhd to pay A$6 million plus
costs for price fixing as part of a cartel following action by the ACCC, bringing the
total penalties ordered against the alleged international cartel to A$58 million.
(Source: ACCC v Malaysian Airline System Berhad & anor)
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ABUSE OF DOMINANT POSITION
Competition Act 2010, Section 10
An enterprise is prohibited from engaging,
whether independently or collectively, in any
conduct which amounts to an abuse of a
dominant position in any market for goods or
services.
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ABUSE OF DOMINANT POSITION
“Dominant Position”
A situation in which one or more enterprises possess
such significant market power to adjust prices,
outputs or trading terms without effective
constraint from competitors
Note: 60% market share indicative of dominance
Example: The European Commission had adopted a Decision stating that Microsoft had
infringed Article 82 EC by committing abuses of a dominant position because it had
engaged in two kinds of abusive conduct, … The European Commission imposed a
fine of €497 million on Microsoft, as well as corrective action to be taken within a
certain period of time, subject to a complex verification mechanism.
(Source: T-201/04 Microsoft v Commission, judgment of 17 September 2007)
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Unfair purchase
or selling prices
or unfair trading
conditions
Limiting or
Controlling
ABUSE OF
DOMINANT
POSITION
Refusing to
supply
Predatory
behaviour
Applying
different
conditions
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ABUSE OF DOMINANT POSITION
(continued)
Reasonable Commercial Justification
Conduct defined as ABUSE and prohibited may be
allowed if there are reasonable commercial
justification or represents a reasonable
commercial response to the market entry or
market conduct of a competitor.
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Impact of Law on Legal Practice
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WHAT SHOULD THE LEGAL PROFESSION DO?
Enhance knowledge of Competition Act
Develop understanding as regards the legal &
the economic principles of Competition Law
Understand types of agreements that are
prohibited
Develop knowledge on compliance to
adequately advise client
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Challenges
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CHALLENGES
Developing knowledge & capacity building
With globalisation, need to review existing rules
& regulations that may have impact on
competition process
Timely to review its business model
Ensure profession remains relevant & effectively
compete in global marketplace
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Responsibilities of Companies
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1 INTRODUCE COMPLIANCE PROGRAMMES
Review all existing agreements & practices
Ensure all new agreements are negotiated &
concluded on terms that comply with Competition
Law
• Ensure robust Competition Law compliance policies
are put in place:
• Training staff on the Dos and Don’ts
• Code of conduct
•
•
i.e. provide reporting channel from employee to senior management,
initiate an incentive scheme to encourage employee compliance
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2 KNOW THE LAW
•
Educating employees about competition law
•
•
•
•
•
The rationale of competition law
How competitive markets benefit society
Which types of conduct that are prohibited
How the legal prohibitions apply to the activities of your
company
Make known the consequences of such conduct to
the employee if discovered
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3 SELF ASSESSMENT
•
Assess the specific commercial activities engaged in
by the company with reference to the prohibited
conduct
•
Establish periodic competition audit of your company
•
Discuss among the senior management on the
course of action (to comply) if the company is found
to be in breach of Competition Act
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BENEFITS OF COMPETITION
Increases choice – by stimulating a broader range of
products & services
Ensures value for money – by ensuring firms compete on
price & quality
Stimulates innovation & productivity – by motivating
firms to create new products & reduce costs in order to
win customers
Supports economic growth – by promoting choice, value,
innovation and productivity
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CONCLUSION
“Sword” & “Shield” Approach
• How to make use of competition law as a “sword” to
attack the anti-competitive or potentially anti-competitive
practices of your market rivals
• How to make use of the same law to “shield” yourself
against allegations of anti-competitive behaviour
“Re‐educate” yourself of your business contracts
• Agreements and practices & assess their possible or
potential anti-competitive effects
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CRYSTAL CLEAR MESSAGE
"Healthy competition is needed to
make the economy more efficient and
dynamic. For this, the Competition
Law will be introduced to provide a
regulatory framework against market
manipulation and cartel practices that
may affect market efficiency…"
YAB Dato’ Seri Najib Tun Razak , Prime Minister
of Malaysia in tabling the 10th Malaysia Plan
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