Competition Laws of Malaysia - WordPress.com · 1/19/2013 1 Competition Laws of Malaysia Presentation at Japan Fair Trade Commission, Tokyo Vince Eng Teong SEE PhD Associate Fellow,

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Competition Laws of MalaysiaPresentation at Japan Fair Trade Commission, Tokyo

Vince Eng Teong SEE PhD

Associate Fellow, UMCoRS

December 2012

1© Vince See PhD 2012Presentation @ JFTC, Toyko

Outline

• Introduction• Competition Act 2010

– Purpose and scope of application– Two prohibitions– State-owned enterprises – Penalty, leniency, giving undertakings– Appeal to Competition Appeal Tribunal (CAT)– Rights of private action– Related criminal offences

• Malaysia Competition Commission (MyCC)– Functions & powers– Guidelines– Advocacy – Recent enforcement actions– Other activities


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Introduction

• About 20 years before Competition Act 2010 was legislated (Hazledine, 1992)

• Various countries and donors

– JICA

– Australian government

– German government (See, 2012)

• Grace period of 18 months

– Finally enforceable on 1 January 2012


Introduction

• General competition law regime:

– Competition Act 2010 (CA 2010)

– Competition Commission Act 2010 (CCA 2010)

• Sectoral competition regulations

– Communications & Multimedia Act 1998 (CMA 1998)

– Energy Commission Act 2001 (ECA 2001)

© Vince See PhD 2012 4Presentation @ JFTC, Toyko

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Purpose or Objective

• Long Title‘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.’

• Preamble ‘WHEREAS the process of competition encourages efficiency, innovation and entrepreneurship, which promotes competitive prices, improvement in the quality of products and services and wider choices for consumersAND WHEREAS in order to achieve these benefits, it is the purpose of this legislation to prohibit anti-competitive conduct’


Scope of Competition Act 2010

• Applicable to “commercial activity” only

• Applicable to “enterprise” only

• Exclusions

• Doctrine of single economic unit

• Extra-territorial jurisdiction


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Applicable to “enterprise” only• “enterprise” means any entity carrying on commercial activities

relating to goods or services• “goods” means property of every kind, whether tangible or

intangible and includes—(a) all kinds of movable property; (b) buildings and other structures;(c) vessels and vehicles;(d) utilities;(e) minerals, trees and crops, whether on, under or attached to land or not;(f) animals, including fish; and(g) choses-in-action



Applicable to “commercial activity” only – s 3(4)• “commercial activity” means any activity of a

commercial nature but does not include—(a) any activity, directly or indirectly in the exercise of governmental authority;(b) any activity conducted based on the principle of solidarity; and(c) 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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Exclusions – s 3(3), First Schedule• First Schedule – CA 2010

does not apply to any commercial activity regulated under:– Communications and

Multimedia Act 1998– Energy Commission Act

2001

• Sectoral competition law regimes

Presentation @ JFTC, Toyko © Vince See PhD 2012 9

Scope of Competition Act 2010Exclusions – s 13(1), Second Schedule• Second Schedule

(a) an agreement or conduct to the extent to which it is engaged in an order to comply with a legislative requirement;

(b) collective bargaining activities or collective agreements in respect of employment terms and conditions and which are negotiated or concluded between parties which include both employers and employees or organisations established to represent the interests of employers or employees;

(c) an enterprise entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly in so far as the prohibition under Chapter 1 and Chapter 2 of Part II would obstruct the performance, in law or in fact, of the particular tasks assigned to that enterprise.


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State-owned enterprises

Government-owned companies Government-linked companies


State-owned enterprises

• Not excluded from CA 2010 unless come within:

– Exclusive definition of “commercial activity”

• Para (a) – exercise of governmental authority

– First Schedule

– Second Schedule

• Para (c) of Second Schedule– Services of general economic interest

– Revenue-producing monopoly


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Doctrine of single economic unit

• “enterprise” …for the purposes of this Act, a parent and subsidiary company shall be regarded as a single enterprise if, despite their separate legal entity, they form a single economic unit within which the subsidiaries do not enjoy real autonomy in determining their actions on the market

© Vince See PhD 2012 13

A

B

B1 B2

C

C1

Presentation @ JFTC, Toyko

Scope of Competition Act 2010• Extra-territorial jurisdiction

– Effects doctrine

3. (1) This Act applies to any commercial activity, both within and subject to subsection (2), outsideMalaysia.(2) In relation to the application of this Act outside Malaysia, this Act applies to any commercial activity transacted outside Malaysia which has an effect on competition in any market in Malaysia.


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Two prohibitions

• Anti-competitive agreements

• Abuse of dominant position

• No merger control


Anti-competitive agreements

• Sections 4 to 9 of CA 2010

• General prohibition – s 4(1)

• List of agreements that are anti-competitive by object – s 4(2)

• Exemption criteria – s 5

• Individual exemption – sections 6, 7

• Block exemption – sections 8, 9


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Anti-competitive by object or effect

• General prohibition of horizontal or vertical agreement that has object or effect of significantly preventing, restricting or distorting competition in any market for goods or services: s 4(1) CA 2010

• Section 4(2) – list of horizontal agreements that are deemed anti-competitive by object:– Price-fixing – Market-sharing – Limiting or controlling output, market outlets or market

access, technical or technological development, investment

– Bid-rigging


Exemptions

• Two kinds:

– Individual

• Specific agreement(s)

• Self-assessment process with application where necessary

• 1 application pending

– Block

• Category of agreements

• 3 applications pending


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Exemptions • Criteria:

(a) there are significant identifiable technological, efficiency or social benefits directly arising from the agreement;

(b) the benefits could not reasonably have been provided by the parties to the agreement without the agreement having the effect of preventing, restricting or distorting competition;

(c) the detrimental effect of the agreement on competition is proportionate to the benefits provided; and

(d) the agreement does not allow the enterprise concerned to eliminate competition completely in respect of a substantial part of the goods or services.

• Same criteria apply to both individual and block exemptions


Abuse of dominant position

• Section 10 of CA 2010 • General prohibition – s 10(1)• Specific prohibitions – s 10(2)

– Unfair purchase or selling price or trading conditions– Limiting or controlling output, market access, technical or

technological development, investment to prejudice of consumers

– Refusal to supply enterprise(s)– Applying different conditions to equivalent transactions with

other trading parties– Tying– Predatory behaviour– Buying up scarce intermediate supply required by competitor


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Abuse of dominant position

• Presumption of dominant position – s 10(4) ‘The fact that the market share of any enterprise is above or below any particular level shall not in itself be regarded as conclusive as to whether that enterprise occupies, or does not occupy, a dominant position in that market.’

– MyCC guidelines: 60% or more – presumed to be dominant

• Justification – s 10(3)– Reasonable commercial justification

– Reasonable commercial response to the market entry or market conduct of a competitor


Penalty

• Financial penalty – s 40(1)(c)

• Section 40(4) provides that:‘A financial penalty shall not exceed ten percent of the worldwide turnover of an enterprise over the period during which an infringement occurred.’

• Administrative in nature

• Applicable to both:– Anti-competitive agreements

– Abuse of dominant position


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Leniency

• Applicable to hardcore cartels only

• Pre-condition– Provision of info or co-operation which significantly

assisted or is likely to significantly assist in the identification or investigation of cartel: s 41(1)

• Maximum reduction is 100%: s 41(1)

• Possible different reductions depending on:– Whether the first person to blow the whistle,

– Time of admission or provision or info, or

– Any other circumstances: s 41(2)


Power to accept undertakings

• Commission has power to accept from an enterprise an undertaking to do or refrain from doing certain things: 43(1) of CA 2010

• Acceptance of undertaking leads to:

– Closure of investigation

– No imposition of fines: 43(2) of CA 2010


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Appeal to Competition Appeal Tribunal

51. (1) A person who is aggrieved or whose interest is affected by a decision of the Commission under section 35 (issuance of interim measures), 39 (no finding of infringement) or 40 (finding of infringement) may appeal to the Competition Appeal Tribunal


Rights of private action

64. (1) Any person who suffers loss or damage directly as a result of an infringement of any prohibition under Part II shall have a right of action for relief in civil proceedings in a court under this section against any enterprise which is or which has at the material time been a party to such infringement.

(2) The action may be brought by any person referred to in subsection (1) regardless of whether such person dealt directly or indirectly with the enterprise.

Observations:• No statutory stay of claim

pending investigation by the Commission

• Civil actions in court • Includes direct and indirect

purchasers


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Related criminal offences

• Destruction of documents• Obstruction of officers• Tipping off• Giving false or misleading

info

• Companies: s 61(a)– First offence

• Fine not exceeding RM5 million

– Second or subsequent offence• Fine not exceeding RM10

million

• Individuals: s 61(b)– First offence

• Fine not exceeding RM1 million or 5 year jail or both

– Second or subsequent offence• Fine not exceeding RM2

million or 5 year jail or both


Related criminal offences

• Where a company commits an offence, the following personnel of the company may be charged and deemed to have committed the offence found to have been committed by the company:– S 63(1)

– Director

– CEO

– COO

– Manager

– Secretary

– Other similar officer of the company or

– Any person:• Purporting to act in any such

capacity

• Responsible for the management

• Assisting in such management


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Malaysia Competition Commission

• Composition – Chairperson

• Full remuneration

– Four government appointees

– Five commissioners from the private sector

• Commissioners – Appointed by Prime Minister upon

recommendation of Minister of Domestic Trade

– Term of office 3 years, renewable


Malaysia Competition Commission

• Structure

– Commissioners

– Chief Executive Officer

– Committees

• Competition Appeal Tribunal


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Functions & powers

• 3 roles

– Investigator

– Prosecutor

– Adjudicator


Guidelines

• 3 guidelines issued:

– Market definition

– Anti-competitive agreements

– Abuse of dominant position

• Available for download @ http://www.mycc.gov.my/guideline.asp


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Advocacy

• Advocacy – Port Klang Authority (10

Feb 2012)

– Association of Chartered Certified Accountants (19 March 2012)

– Johor Port Shipping & Forwarding Association (6 June 2012)

– Malaysian Association of Pharmaceutical Suppliers (21 June 2012)

– Strategy plan

• Handbook on competition law for the general public– Available for download @

http://www.mycc.gov.my/news.asp?page=Handbook


Recent enforcement actions

• Investigation of Malaysia Airlines-Air Asia-Air Asia X collaboration

• Market review of broiler market

• Proposed decision against Cameron Highlands flower growers association

• Investigation of culling of chickens with an effect on egg production

• Investigation into steel industry


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Other activities of MyCC

• Talk on Competition Law 2010 for Judges (13 October 2012)

• Bid-Rigging Seminar with Government Agencies (24-25 Sept 2012)

• 7th East Asia Conference on Competition Law & Policy (2 May 2012)

• Launch of Handbook on Competition Policy and Law in ASEAN for Business (15 Nov 2010)

• First Seminar on Competition Law (30 Sep 2010)


Bibliography

• Hazledine T, 'A Competition Policy for Malaysia?', 23 April 1992

• See (2012) The Competition Act 2010—The Issues and Challenges, forthcoming in European Journal of Law and Economics (ISI-indexed journal published by Springer)

• See (2010) A Decade after the Communications & Multimedia Act 1998—The Law and Competition 18 Competition & Consumer Law Journal 139 (published by LexisNexis Australia)

• See (2002) The Law on Legal Professional Privilege in Malaysia: Any Room for Common Law? 1 Malayan Law Journal xcvii (published by LexisNexis)

• MyCC press releases @ http://www.mycc.gov.my/news.asp


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Antitrust Consultation

• Awareness and compliance trainings and education (workshops, seminars) on competition law and policy that are industry-oriented or company-specific

• Preparation of competition law protocols or guidelines that are tailored to meet the demand of a particular company or industry

• Annual refresher courses on competition law and practice

• Certification of staff training on competition law and practice

• Economic expert analysis whether for industry use or as expert evidence in legal proceedings

• Preparation of competition law handbooks that are comprehensible to layman as well as the professionals

• High-level antitrust risk consultation


Thank you

For comments or enquiries:[email protected];

[email protected] pictures are inserted for illustration purposes only


Documents

Competition Laws of Malaysia - WordPress.com · 1/19/2013 1 Competition Laws of Malaysia Presentation at Japan Fair Trade Commission, Tokyo Vince Eng Teong SEE PhD Associate Fellow,