Competition act malaysia 2010 pdf

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Views Total views. Actions Shares. No notes for slide. Competition Act 1. Price fixing, predatory pricing, consumer protection, abuse of dominance, bid-rigging, cartelisation, imposing barriers to entry, anti-trust, prohibited horizontal and vertical agreements, etc are some of the terms which may haunt Malaysian Enterprises if they are not ready for this Act. Enterprises engaged in commercial activities would either have to get their practices and house in order by or risk being challenged in regard to potentially anti-competitive conduct.

The respective Competition Commission and Authorities of numerous jurisdictions have taken action against, amongst others, employment agencies, coach operators, ticketing agencies, modeling agencies, vitamin cartels, air cargo operators, airlines, etc.

To date, more than countries around the world have either some form of competition or antitrust policies or legislation in place. Besides your Legal Advisors it is critical that your senior management, directors, heads of department, business strategists, management staff, sales and marketing divisions and other visionaries have a clear understanding of this new law and its implications.

Attend this comprehensive workshop and get your pressing questions mainly on the What, Why, Who, When, Where and How surrounding the Competition Act answered. Mr Anand is active in providing feedback to the relevant authorities and agencies on issues surrounding Competition Law in Malaysia.

He is actively engaged in reviewing documentation, practices and compliance and risk levels in such enterprises. Cynthia represents and advises foreign, multinational and Malaysian enterprises on Competition Law. Finally, the amount of financial penalty paid by enterprises can be reduced if they are granted leniency for cooperating with MyCC.

This is discussed next. The actual percentage of penalty reduction depends on the enterprise s — the order in which an enterprise comes forward to cooperate with MyCC, and the stage of the investigations. Section 41 2 c provides further flexibility to MyCC on what other circumstances are relevant — which certainly can include bringing to its attention infringement that were not previously detected. The Guidelines on Leniency Regime was published by MyCC in October to provide further clarification and guidance on its leniency programme.

A key emphasis of the Guidelines is that the enterprise s seeking leniency can only do so after it has admitted infringement of the Act.

It also emphasized on the importance of the significance of assistance provided by the enterprise s seeking leniency.

The MyCC retains flexibility in interpreting the significance of the cooperation. Another key feature of the leniency regime programme highlighted in the Guidelines is that enterprises that initiated the cartel i. The Guidelines also provides detailed information on the marker system used. In terms of reduction in financial penalties, the Guidelines provides a clearer picture of who is eligible for such leniency. Such an enterprise would be one that has admitted involvement in a cartel that MyCC has no knowledge of item 3.

This is clarified in item 8. The grant of leniency become unconditional only if all the conditions of the conditional grant of leniency are met and infringement decision is made. The conditions for the grant of conditional leniency is fairly exhaustive item 8. These include: admission of involvement in infringement; provision of significant assistance; cease and desist of infringing activities; full- disclosure of cartel participation; continuing cooperation with MyCC; cease from destroying relevant documents; non-harassment and non-intimidation of others to participate in cartel; and non-disclosure of leniency grant.

Finally, it should be noted that the granting of leniency to an enterprise does not immunise the enterprise from civil proceedings by parties which suffered from the act of infringement. This implies that any admission of infringement and cooperation may reduce financial penalties, but this may be off-set by losses from civil proceedings. Thus, the lack of immunization from civil proceedings for enterprises involved in leniency programme may deter enterprises from participating in the programme.

For the remaining five cases, based on publicly available information, leniency application was noted in only one case involving price fixing by seven tuition and day-care centres. The utilisation of leniency programme for each of these five cases are discussed based on public documents from MyCC.

A total of 24 enterprises were involved. Of these, reduction on financial penalties were given to 11 enterprises for cooperating with MyCC by providing additional information. There is, however, no indication that the reductions in financial penalties were due to leniency.

Fifteen firms were involved but no reductions due to leniency were documented. There were reductions in penalties for a few enterprises, but those were due to enterprises not increasing their prices. No reductions in financial penalties by MyCC were documented in this case. This implies that leniency was not granted to any of the firms. This case is pending decision by MyCC. As the infringement decision has not been issued, there is no information on whether conditional lenience was granted.

The final infringement decision has been issued. One of enterprises did apply for leniency. However, this application was rejected by MyCC on two grounds: i the leniency application took place at the advanced stage of investigations and made no significant contribution to the investigations; and ii the applicant was an instigator to the price fixing agreement.

To sum-up, based on the available information, the leniency programme has not been utilized much in cartel cases in Malaysia. There is only one recorded case of leniency application in the cartel cases and that, too, was rejected. The under-utilization of the leniency programme in cartel cases in Malaysia leads to the question of whether this is due to the deterrence effect or whether there are any deficiencies in the design of the programme or other external factors that compromise its efficacy.

Most of the cases investigated under Section 4 2 were initiated by media reports. In the case involving leniency application, investigations were initiated by complaints by a customer buyer. The issue of design of leniency programme is examined in the next two sections. Both these two developments provided the momentum for other countries to adopt their own leniency programmes. ICN, for example, came up with the Anti-Cartel Enforcement Manual in revised, with a chapter on best practices in the drafting and implementation of leniency policy.

One example is the best practices on the marker system in the ICN Manual. The ICN Manual , sub-section 2. The first prerequisite relates to the credibility of the competition agency in terms of its commitment and ability to detect and prosecute cartels. However, there is some endogeneity here as the performance of a competition agency in terms of detecting and prosecuting cartels depends partly on the efficacy of leniency policy.

MyCC has clearly developed some credibility in enforcement as it has issued decisions in six cartel cases in the past six years. However, most of these cases have involved relatively small financial penalties — with the exception of the MAS case which was reversed by the Tribunal and the insurance case which is still pending. The second prerequisite is that the sanctions imposed must be substantial enough ICN uses the term significant to make leniency attractive to cartel members.

Finally, the third prerequisite is transparency and certainty in the operation of the leniency policy. The procedures as outlined by its Guidelines are fairly detailed but the agency retains substantial discretion in implementing its leniency programme see earlier discussion. Such discretionary powers, whilst providing some flexibility, may create uncertainties. However, such uncertainties can be reduced over time if MyCC is able to demonstrate — through effective enforcement - the value of the leniency programme.

Thus, building-up a credible enforcement reputation is absolutely essential. However, as noted by Spagnolo , the theoretical literature does have limitations that arise from the need to make restrictive assumptions for tractable models of optimal leniency policy.

Nevertheless, such models are still useful to highlight how specific elements of leniency programme work. These elements are discussed below. Chen and Rey argue that it is optimal to offer leniency before and after investigations have begun especially when the prospects of successful prosecution are significantly enhanced by it. In the latter case, the offer of leniency should only be made to the first informant.

This is because the reductions in expected penalty for the first informant exceed any penalty reductions that can be secured before investigations begin. Subsequent informants — who will receive lower penalty reductions, may not be sufficiently incentivised to report. However, it is difficult to say whether doing so is sub-optimal because the value of subsequent leniency applications to MyCC may lie in the additional information that is needed to prosecute a cartel. Another element that is discussed in the theoretical literature is the treatment of ring- leaders.

As noted by the ICN Manual , p. Kobayashi work on plea bargaining imply that ring leaders tend to have the most information on cartels. Therefore, they should be incentivized to defect apply for leniency in order to maximize the probability of successful prosecution of cartels.

However, as noted by Spagnolo , p. The cost-benefit calculus for ring leaders to defect is likely to be affected by at least a number of factors: i the share of gains enjoyed by the ring leader in the cartel; ii the distribution of information amongst cartel leaders; and iii the penalties incurred if prosecution is successful.

The lack of such immunization from civil proceedings could reduce the incentives for enterprises to participate in the leniency programme. To sum-up, the leniency programme in Malaysia does not appear to be under-utilized in the cartel cases that have been investigated by MyCC. Drawing from best-practices as well as research literature, there could be a number of reasons underlying this situation. Another possibility that is important but often taken as exogenous in the research literature is the political and institutional environment.

This is explored next. Effectiveness Leniency Programme in Malaysia: The Role of Politics and Institutions It is possible that the efficacy of a leniency programme may also depend on political and institutional environment. In the literature on the judiciary and politics, for example, there are links between politicians and judges.

For example, politicians may be involved in the selection, promotion and disciplining of judges Jacob, et. It is however de facto quasi-independent due to a number of factors. First, it receives an annual financial allocation from the Government of Malaysia.

This allocation amounted to RM4. At present, four of the nine commissioners of MyCC are senior bureaucrats from ministries. The influence of politics on independent regulatory commissions in Malaysia can be seen from how political changes can bring about changes in these regulatory commissions.

This political change was to be followed by changes in the leadership of independent regulatory commissions or in some cases, the closure of such commissions. There are also plans to abolish another regulatory commission, the Land Public Transport Commission.

These developments do suggest that the appointment of regulatory commissions at least in the past are not politically-neutral. Otherwise such appointments would have been robust against changes in political regimes. Has the quasi-independence of MyCC affected the design and implementation of its leniency programme? This is a difficult question to answer. The structure of its leniency programme does follow many of the best practices as encapsulated in the ICN Manual and the leniency programmes in other countries and regions e.

Given the close nexus between politics and regulatory commissions in the country, the public perception of the credibility of these commissions could be affected by the overall state of governance in the country.

One related and important area of governance is anti-corruption.