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The ASEAN Competition The ASEAN Competition ConferenceConferenceSession 5: Comparisons of Competition Session 5: Comparisons of Competition Regimes in ASEANRegimes in ASEAN
Bali, IndonesiaBali, Indonesia
15-16 November 201115-16 November 2011
Lim Chong Kin
Director
Head, Competition & Regulatory Law Practice Group (Corporate)
Head, Telecommunications, Media & Technology Practice Group
COMPARISONS OF COMPETITION REGIMES IN ASEAN
• Looking back. Take stock of significant developments in competition policy and law in the last 5 years in ASEAN.
– Informs us about where we stand relative to each other, and to the rest of the world, and how to improve.
• Looking forward. More countries in ASEAN likely to introduce competition policy and law in the next 5 years (ASEAN AEC Blueprint 2015).
– Understand differences and impact on businesses (e.g. may unwittingly raise business compliance costs with more, and very different, regimes within ASEAN).
ASEAN MEMBER
COUNTRY
GENERAL COMPETITION
LAW/NAME OF
LEGISLATION
COMPETITION
AUTHORITY
PROHIBITION ON
RESTRICTIVE
AGREEMENTS
PROHIBITION ON ABUSE
OF DOMINANCE PROHIBITION ON ANTICOMPETITIVE MERGERS/TYPE
OF NOTIFICATION PROHIBITION ON
UNFAIR PRACTICES LENIENCY
PROGRAM
PENALTIES
BRUNEI No No Only Brunei's telecommunications sector is subject to competition regulation.
CAMBODIA No No No No No No No ---
INDONESIA
Yes Law of the Republic of Indonesia Number 5
year 1999 Concerning Prohibition of
Monopolistic Practices and Unfair Business
Competition
Yes The Commission for the Supervision of Business
Competition (“KPPU”)
Yes Chapters III & IV set out
the prohibited agreements and
activities
Yes Chapter IV & Chapter V set out the prohibitions
on monopolies and abuse of dominance
respectively
Yes See Article 28/ Mandatory notification for post merger (i) asset value above 2.5 trillion Rupiah
and/or (ii) sales value above 5 trillion Rupiah. 20 trillion Rupiah combined asset threshold applies
to the banking sector
No Separate regulation under the Law on
Consumer Protection No.8 of
1999
No
Administrative directions and fines from 1 billion to 25 billion Rupiah; and criminal sanctions including fines of up to 100 billion Rupiah or a maximum 6-month jail term in lieu of a fine
LAOS No No Decree No.15/PMO on competition was issued in 2004 to promote a fair business environment. The Decree has not been implemented to date. However, there are plans to reform the
Decree and adopt a comprehensive law on competition.
MALAYSIA
Yes Competition Act 2010
(Effective January 2012)
Yes Competition
Commission of Malaysia (being set up)
Yes Section 4 prohibits
anticompetitive agreements
Yes Section 10 prohibits abuse of dominance
No
No Separate regulation under the Consumer Protection Act 1999
Yes
Administrative directions and fines up to 10% of the worldwide turnover of
the enterprise for the period of infringement
MYANMAR No No No No No No No ---
PHILIPPINES No No Competition issues in the Philippines are addressed through several different laws that are enforced by the respective sector regulators. No
Administrative directions, fines and/or jail terms under the respective
sectoral legislation
SINGAPORE Yes
Competition Act (Cap. 50B)
Yes Competition
Commission of Singapore (“CCS”)
Yes Section 34 prohibits
anticompetitive agreements
Yes Section 47 prohibits abuse of dominance
Yes See Section 54/Voluntary notification;
notification encouraged where post merger combined market share is (i) 40% or more; or
(ii) between 20% – 40% and the combined market share of 3 largest firms is 70% or more
No Fair trading and
consumer protection are regulated by separate statutes
Yes
Administrative directions and fines of up to 10% of the turnover in Singapore for each year of
infringement, up to a maximum of 3 years
THAILAND Yes
Trade Competition Act B.E. 2542 (A.D. 1999)
Yes Trade Competition
Commission
Yes Section 27 prohibits
specific types of anticompetitive
agreements
Yes Section 25 prohibits
specific behaviours by dominant operator
Yes See Section 26/Mandatory notification once thresholds met (Thresholds to be released)
Yes Section 29 prohibits acts against fair and
free competition
No Jail term of up to 3 years and/or fine of up to 6 million Baht; and double
penalty for repeated offences
VIET NAM Yes
Law on Competition No.27/2004/QH11
Yes Viet Nam Competition Council & Competition
Administration Department
Yes Section 1 of Chapter II prohibits specific types
of competition restriction agreements
Yes Section 2 of Chapter II prohibits specific acts
by dominant enterprise or monopoly
Yes Article 18 prohibits concentrations that result in a
combined market share of 50%, unless exempted/ Mandatory notification where combined market share is 30% – 50%
Yes Chapter III prohibits
acts of unfair competition
No
Administrative measures and/or fines up to 10% of total turnover of
organisation or individual in the financial year preceding the year of
infringement
IMP
OR
TA
NT
DIS
CL
AIM
ER
: Th
is docu
me
nt covers a
wide ra
nge of to
pics and is no
t inte
nded
to be a co
mpre
hensive stud
y of th
e sub
jects cove
red,
no
r is it in
ten
de
d to
pro
vid
e le
ga
l ad
vic
e. It s
ho
uld
no
t be
trea
ted
as
a s
ub
stitu
te fo
r le
ga
l ad
vic
e o
n s
pe
cific
situ
atio
ns
.
COMPARISONS OF COMPETITION REGIMES IN ASEAN
3
COMPARISONS OF COMPETITION REGIMES IN ASEAN
Comparisons across ASEAN• General lack of consistency in competition laws across
ASEAN
• Examples:
1. Differing analytical approach: Form v. Effects basedForm-based approach Effects-based approach
• More certainty in terms of what is permitted but more rigid in application.
• Examples: Thailand, Indonesia, Vietnam
• More self-assessment required (less certainty), but more flexible (more economics-based).
• Examples: Singapore, Malaysia
COMPARISONS OF COMPETITION REGIMES IN ASEAN
2. Differing competition policies
Competition policy driven by each country’s own economic pursuit and reflective of political and social conditions.
3. Differences in substantive aspects of law– Treatment of vertical agreements
• e.g. excluded under restrictive agreements & practices (Singapore); included under restrictive agreements & practices (Malaysia).
– Threshold for dominance• e.g. Indonesia (between 50-75%); Singapore (60%);
Thailand (combination of market shares & turnover); Vietnam (30-75%).
COMPARISONS OF COMPETITION REGIMES IN ASEAN
– What constitutes an abuse of dominance • Subject to a ‘substantial market power’ test (e.g.
Singapore, Malaysia); list of prohibited conduct (e.g. Vietnam, Thailand, Indonesia).
– Exemption criteria • Subject to a ‘net economic benefit’ test (Singapore,
Malaysia); specified conduct (Indonesia); hybrid of both (Vietnam).
3. Differing institutional set-up
– Role of competition authority and courts
• e.g. some authorities with dual role as investigator and adjudicator; other institutional set-ups with responsibilities split between the authority (investigate) and courts (adjudicate).
COMPARISONS OF COMPETITION REGIMES IN ASEAN
Challenges faced by foreign investors
• Challenges at two levels:
– at individual country level; and
– at regional level.
COMPARISONS OF COMPETITION REGIMES IN ASEAN
Country level challenges
What do businesses want?
• Access to markets and freedom from anticompetitive behaviour.
• Generally but cautiously welcome adoption of competition law.
But ALSO double-edged sword!
• Regulatory transparency & certainty (at the country and regional level).
COMPARISONS OF COMPETITION REGIMES IN ASEAN
Regional level challenges
Reality Check
• With disparate competition law regimes, businesses may find it harder and more costly to operate in ASEAN.
• 10 member countries = 10 disparate sets of laws?
???
COMPARISONS OF COMPETITION REGIMES IN ASEAN
New role of advocacy • Advocacy (narrow role) = competition authorities reaching
out to the business community.
• Advocacy (wider role) = advocating harmonisation of competition law.
• No need to reinvent the wheel:
– Start with what is already available.
– Member countries looking at introducing competition policy and law should use best practices (e.g. ASEAN Regional Guidelines).
MODELS OF HARMONISATION
Towards an ASEAN model?Not advocating that ASEAN adopts the EU model.
– i.e. supra-national competition regulator, harmonised law.– But about recognising that despite the challenges, some
harmonisation is possible.
Challenge is to ensure a balance between country-specific features and broad harmony.
– Short term goals: improve transparency; commonality in merger procedures; strengthening networks.
– Medium term goal: greater consistency in analytical approach (e.g. a more economics-based application of the law).
HARMONISATION: THE NEXT STEP FORWARD
Short term goals• Improving Transparency and Certainty
– Take practical steps (e.g. publishing decisions, translating decisions into English).
– Issue guidelines (with English translations) to help businesses understand how law will be applied (e.g. how investigations will be conducted).
– Implement consultation process to garner regular feedback from stakeholders (e.g. seek views before issuing guidelines and policies).
– Set up a one-stop portal on all cases, guidelines, news updates and consultation papers from ASEAN authorities. Good to take stock of resources available and consolidate to maximise benefits (e.g. ICN templates, APEC database)
HARMONISATION: THE NEXT STEP FORWARD
Short term goals• Harmonising Merger Control
– Design a common filing form that can be used across ASEAN.
• Can still retain individual filing thresholds, but to the extent that filing is needed, the same form/information is provided.
– Sync procedures – will provide business certainty given time-sensitive nature of mergers.
• e.g. similar filing timelines; and similar phases of review (a 2-phase process).
HARMONISATION: THE NEXT STEP FORWARD
Medium term goal• Working towards some consistency in analytical approach
– Its been done before!
• e.g. EU has gradually moved towards more a economic-based application of the law, and is now more similar in its analytical approach to the US than before.
– Set up a working group to identify key areas for harmonisation.
• Identify and get a consensus on what is practical and achievable in the short and medium term; and
• Set clear timelines and milestones for implementation.
THANK YOU
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