An overview of Competition Law in Malaysia

Introduction

Similar to the competition laws in Singapore and the United Kingdom, Malaysia has enacted general application competition law. The Malaysian Parliament passed the 2010 Competition Act and 2010 Competition Commission Act in May 2010, and on June 2, 2010, they were given royal assent. While the Competition Act went into effect on January 1, 2012, the Competition Commission Act did not. There are also regulations against anti-competitive conduct that are sector-specific, particularly in the franchising, media, and telecommunications industries. The Malaysian Contracts Act 1950 also has a particular ban on trade restraint.

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The Malaysian Competition Commission (MyCC), a body established on 1 April 2011 in accordance with the Competition Commission Act, is responsible for enforcing the Competition Act. The Competition Commission Act grants the MyCC a wide range of powers and responsibilities, including the responsibility for advising the Minister or any public or regulatory authority on matters of competition as well as for educating and raising public awareness of the advantages of competition law. Agreements between businesses that significantly lessen, limit, or distort competition in Malaysia are prohibited under the Competition Act.

Currently, cartel conduct under the Competition Act 2010 (the Competition Act) is not a criminal offence. However, obstructing a Malaysia Competition Commission (MyCC) investigation may lead to criminal sanctions. Among other things, it is an offence to:

• refuse to give access to documents when directed by MyCC;
• provide false or misleading information, evidence or documents;
• destroy, conceal, mutilate or alter any evidence with the intent to defraud MyCC or obstruct MyCC’s investigation;
• tamper with or break a seal affixed to protect the integrity of evidence;
• tip off others in a manner that is likely to prejudice any investigation or proposed investigation; or
• threaten reprisals on persons who file complaints of infringements or cooperate with MyCC in its investigations.

If found guilty of any of the aforementioned offences, a body corporate may be subject to a fine of up to 5 million ringgit and up to 10 million ringgit for repeated offences. For first-time offenders, the penalty is up to 1 million ringgit in fines, up to five years in prison, or both; for repeat offenders, the penalty is up to 2 million ringgit in fines, up to five years in prison, or both.

If an infraction is discovered, MyCC may impose a financial penalty of up to 10% of the enterprise’s global turnover for the time period in question. According to the Competition Act, MyCC may impose any pecuniary fine, regardless of how small.

Under the definition of “enterprise,” the idea of a single economic unit is acknowledged, and this may cause the turnover of the relevant enterprise to be expanded to include parents with significant influence and subsidiaries without the freedom to choose their own course of action in the market. The infringement must stop right away, and MyCC may indicate the procedures to be taken to make this happen or issue any other pertinent instructions.

The financial penalty may be greater than in other countries where the fine is only applicable for a certain number of years, as it may be in Malaysia throughout the full period of the infraction. However, the magnitude of this may not be felt for a while, as it applies only from 1 January 2012, the date on which the Competition Act came into force.

Any person who disobeys MyCC’s instructions could face legal action before the High Court. For illustration: 24 ice producers were penalised by MyCC in January 2015 for allegedly manipulating the prices at which edible tube ice and block ice were sold. The fines totaled 252,250 ringgit. Each manufacturer was subject to financial penalties ranging from 1,080 to 106,000 ringgit.

MyCC published its Guidelines on Financial Penalties, which outline how it chooses the proper amount and the variables it may consider. MyCC wants to reflect the seriousness of the violation and discourage such conduct in the future by applying financial penalties. MyCC may take aggravating factors and mitigating factors into account when deciding the amount of any financial punishment in a specific case.

The General Insurance Association of Malaysia (PIAM) and its 22 members, all insurance companies, were found in violation by the MyCC in 2020 for engaging in and taking part in a horizontal anticompetitive agreement under Section 4(2)(a) of the CA for the fixing of parts trade discounts and labour rates by the parties of PIAM Approved Repairers Scheme workshops.

Conclusion

In 2019 and 2020, the MyCC kept its attention on dismantling domestic cartels. The majority of cases handled by the MyCC since the CA went into effect have involved price-fixing cartels. Of the 27 cases listed as having been investigated by the MyCC on its website (consisting of actions taken by the MyCC at various stages, including issuance of proposed decisions, findings of infringement or non-infringement, and undertakings required to be given by enterprises), 16 of the cases relate to price-fixing cartels, with one case each for market manipulation and price-fixing. Seven warehouse operators were the subject of a proposed decision from MyCC in 2020 for allegedly engaging in price-fixing, specifically for surcharges on long-length handling and heavy-lift handling services for all import and export cargo in the Northport and Westport areas of Port Klang.

Author: Tanya Saraswat, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or   IP & Legal Filing.