Competition law

(1) What is the intention/purpose of the Competition Act 2010 (the “Act”)?

The Act aims to (a) promote economic development by promoting and protecting the process of competition, thereby protecting the interests of consumers; and (b) provide for matters connected therewith.

(2) What does the Act apply to?

The Act applies to all commercial activities both within and outside Malaysia, if it has an effect on competition in any market in Malaysia, except where that commercial activity is regulated under: (a) the Communications and Multimedia Act 1998; (b) the Energy Commission Act 2001; (c) the Malaysian Aviation Commission Act 2015; and (d) The Petroleum Development Act 1974 and Petroleum Regulations 1974 insofar as those commercial activities are directly in connection with upstream operations comprising the activity of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore of Malaysia.

(3) Which authority is entrusted with enforcing the Act?

The Malaysia Competition Commission (the “MyCC”).

(4) What does the Act prohibit?

The Act prohibits anti-competitive agreements/concerted behaviour and abuse of dominance.

(5) What is the general framework for assessing whether an agreement or practice can be considered anti-competitive?

Section 4 of the Act prohibits both horizontal and vertical agreements between enterprises which have the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services.

The Act deems as anti-competitive all “horizontal agreements” between enterprises which have the object of (i) fixing purchase or selling prices or any other trading conditions; (ii) sharing market or sources of supply; (iii) limiting or controlling production, market outlet or market access, technical or technological development, or investment; or (iv) bid rigging.

There is no similar deeming provision for “vertical agreements” but the MyCC has set out in its guidelines on Chapter 1 Prohibition the types of vertical agreements that the MyCC will initially consider as its enforcement priorities: those involving price (in particular the MyCC states that it would take a strong stance against minimum resale price maintenance) and those involving non-price restrictions (such as tying, exclusive distribution agreements, agreements that require the buyer to purchase all/most of its supplies from the supplier, exclusive customer allocation agreements, franchise agreements and up-front access agreements).

(6) In what circumstances is a particular conduct considered to be anti-competitive if carried out by a firm with dominant position?

“Dominant position” is when one or more enterprises possess significant power in a market to adjust prices or outputs or trading terms, without effective constraint from competitors or potential competitors. The Act expressly states that market share is not conclusive as to whether the enterprise is dominant. MyCC’s guidelines on the Chapter 2 Prohibition (“Chapter 2 Prohibition Guidelines”) provide that the MyCC will consider a market share above 60% to be indicative that an enterprise is dominant but they also set out factors to be considered for ascertaining dominance such as buyers’ likely response to price rises.
The Act does not define “abuse of dominant position” but provides a non-exhaustive list of what may amount to an abuse of dominant position:

(i) Imposing unfair prices or unfair trading conditions on any supplier or customer;
(ii) Limiting or controlling production, market outlet or market access, technical or technological development or investment to the prejudice of customers;
(iii) Refusing to supply an enterprise or a category of enterprises;
(iv) Applying different conditions to equivalent transactions to an extent that may discourage new market entry or expansion/investment by a competitor, force from the market or seriously damage an existing competitor which is no less efficient than the dominant enterprise, or harm competition in any market.
(v) Tying and bundling;
(vi) Any predatory behaviour towards competitors; or
(vii) Acquiring scarce supply of intermediate goods or resources required by a competitor without any reasonable commercial justification.

(7) What remedies can the MyCC impose for anti-competitive conduct/ agreements?

If there has been an infringement, MyCC can order that the infringement be ceased immediately, impose a financial penalty or give any other direction as it deems appropriate. The MyCC is empowered by the Act to impose a very extensive financial penalty of up to 10% of the worldwide turnover of an enterprise for any infringement of the prohibitions over the entire period during which the infringement occurred.

(8) Can private parties obtain competition-related remedies if they suffer harm from anti-competition conduct or agreement?

Yes, the Act gives a right of stand-alone private action in civil proceedings in Court to any person who had suffered loss or damage directly as a result of an infringement of any prohibition against any enterprise who is a party to the alleged infringement.