COMPETITION LAW IN MALAYSIA

• Author: Dato' Seri Mohd Hishamudin YUNUS LLB (Hons), LLM (London School of Economics and Political Sciences), Diploma in International Commercial Arbitration (CIArb (UK)); Barrister-at-law (Lincolns Inn), Advocate and Solicitor (Malaysia); Member, CIArb; Fellow Asian Institute of Alternative Dispute Resolution; Chairman, Malaysian Competition Commission; Member, Judicial Appointments Commission; Member of Human Rights Commission of Malaysia (SUHAKAM); former Judge of the Court of Appeal, Malaysia.
• Published date: 01 December 2020
• Citation: (2020) 32 SAcLJ 349
• Date: 01 December 2020

A Digest of Recent Developments1

In Malaysia, the Competition Act 2010 (Act 712) came into force in 2012. Since then, there has been a number of notable developments in this area of law. The first half of this article explains the legal and enforcement framework of competition law in Malaysia. Relevant statistics and enforcement decisions of the Competition Commission are also presented for a better understanding of the same. Further, recent judicial decisions such as Competition Commission v MAS-Air Asia Application for Judicial Review No: WA-25-82-05/2016 [2019] 6 CLJ 623 and MyEG v Competition Commission Application for Judicial Review No: WA-25-81-03/2018 are also analysed. These cases represent the recent developments of competition law by the courts, specifically on the interpretation of the provisions in the Competition Act 2010. This article sets out the regulatory concerns surrounding the competition law framework in Malaysia and how these concerns may be addressed.

I. Introduction

1 Competition law in Malaysia operates to prohibit anti-competitive agreements such as price-fixing, bid rigging, market sharing, and the abuse of a dominant position in any market for goods or services in order to protect the competition process and thereby the interest of consumers. It has been approximately seven years now

since the Competition Act 20102 (“Competition Act”) and Competition Commission Act 20103 (“Competition Commission Act”) were gazetted on 10 June 2010 and came into force on 1 January 2012. It was a timely decision for Malaysia to move towards complying with international regulatory standards and other regulatory requirements set out in international trade arrangements.4

2 Throughout the years, the Malaysian Competition Commission, as the independent commission established under the Competition Commission Act,5 has been striving to perform its statutory functions in, amongst others, implementing and enforcing competition law, addressing issues concerning competition law and policies vis-à-vis the Malaysian economy, and educating the general public regarding the advantages of a competitive consumer market.6 Whilst doing so, the Competition Commission has made a number of enforcement decisions that attracted great public interest. Some of the decisions were even brought to the courts for adjudication in recent years. These judicial decisions are worthy of discussion as they provide more certainty and clarity to the provisions of the Competition Act.

3 The first half of this article discusses the legal framework of competition law in Malaysia for the benefit of general readers; the latter half touches on recent developments of competition law in Malaysia, which would be more appealing to competition law practitioners, legal scholars and law students.

II. Competition law in Malaysia: At first glance

4 The purposes of enacting the Competition Act can be seen from its long title, which states:

… 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.

5 During the Second Reading of the Competition Bill 2010, the then Minister of Domestic Trade, Co-operatives and Consumerism, Dato' Seri Ismail Sabri bin Yaakob, in his parliamentary speech, elaborated on the purposes of introducing the Competition Bill 2010:7

The introduction of Competition Bill 2010 is for the purposes of ensuring the existence of healthy competition in the market. It is a suitable step to handle anti-competition practices and to prepare the companies in facing challenges from globalization and liberalisation. This Bill is seen to be able to give protection and benefits to the consumers in Malaysia in preparing a diversity of goods and services at a more competitive price …

6 The Minister also stated that the Competition Bill was drafted by considering the available competition laws in the US, UK, European Union, Singapore and Australia as referencing points; and that the international best practices were incorporated into the Competition Bill. He added that the Ministry still prioritised specific characteristics and needs of the country's economy, in particular the concept of a small and open economy.8 In other words, the Competition Act is a piece of legislation that was tailored to suit the local practices and policies of the Malaysian economy; thus, it may not have adopted all the common competition policies in other economies due to disparate objectives.

7 In this regard it is worth noting that the Court of Appeal in Labuan Ferry Corp Sdn Bhd v Chin Mui Kien9 held that:

It is plain and obvious that the object underlying the Competition Act is to protect the interests of the consumers by prohibiting anti-competitive conduct. It is meant to regulate conduct among competitors, as the title to the Act suggests. It is not meant to regulate monopolies of essential products or services. Most importantly, the Act does not prohibit monopolies, nor does it regulate them.

8 The Competition Act is wide enough to cover any commercial activity both within and outside Malaysia, subject to certain conditions and exceptions. Section 3(2) of the Competition Act provides that the Act is also applicable to any commercial activity transacted outside Malaysia if it has an effect on competition in any market in Malaysia. However, the Competition Act is not applicable to any commercial activity regulated

under the legislation specified in the First Schedule to the Act, but these excluded sectors are nonetheless regulated by their respective authorities established by law, as follows:

Legislation in First Schedule	Regulators
Communications and Multimedia Act 199810	Malaysian Communications and Multimedia Commission
Energy Commission Act 200111	Energy Commission
Petroleum Development Act 197412 and the Petroleum Regulations 197413 in so far as the commercial activities regulated under this legislation are directly in connection with upstream operations comprising the activities of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore of Malaysia.	Prime Minister
Malaysian Aviation Commission Act 201514	Malaysian Aviation Commission

9 “Commercial activity” is defined in s 3(4) to mean “any activity of a commercial nature” but does not include the following:

(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.

10 The exclusion in s 3(4)(a), especially the adoption of the term “indirectly”, may lead to ambiguity and the contention as to whether the Competition Act is applicable to government concessions and tenders. However, the Competition Commission takes the position that winners of government tenders cannot claim immunity under s 3(4) of the Competition Act. And s 4(2)(d) of the Competition Act does prohibit any act of bid rigging by the companies bidding for government contracts.

11 Another exclusionary provision is s 13 of the Competition Act, which states that the prohibitions of anti-competitive agreement and abuse of a dominant position under Pt II of the Act are not applicable to matters specified in the Second Schedule, as follows:15

(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.

12 The Competition Act is designed to prohibit all forms of business cartels through anti-competitive agreement,16 and to prohibit any abuse of a dominant position by an enterprise (or by a group of enterprises acting collectively).17

III. Prohibition of anti-competitive agreement

13 Section 4(1) of the Competition Act prohibits any horizontal or vertical agreement between enterprises that “has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services”. Based on the literal reading of s 4(1), the phrase “object or effect” of the agreement must be read disjunctively. In other words, if, say, the object of an agreement is to restrict competition in the market, the Competition Commission is not required to show that such agreement carries an anti-competitive effect in order to arrive at a finding of infringement. “Significant” in s 4(1) means the agreement must have more than just a trivial impact, and the Competition Commission would assess the impact of such agreement in relation to the identified market in deciding whether or not the threshold has been achieved.18 The subsequent sub-s (2) is a deeming provision, which provides for the types of prohibited horizontal agreements which are deemed to have the object in s 4(1), such as price-fixing, market sharing, controlling production,

market access, technological development or investment, or bid rigging.19 It is noteworthy that the term “agreement” is defined under s 2 to mean “any form of contract, arrangement or understanding, whether or not legally enforceable, between enterprises, and includes a decision by an association and concerted practices”. This wide definition of “agreement” is intended to prevent...