A Brief Review of the Legal Implications and Enforcement Issues Arising from Competition Act 2010

Summary

The competition laws were designed in order to ensure that the relationship that exists between the businesses are policed with an intention of ensuring that there is a fair competition within the market through the provision of a level playing field for all the businesses. The Competition Act 2010 of Malaysia is reported to have taken over fifteen years for implementation within Malaysia as a result of the legacy issues such as the industrial and protectionalism that is provided to the few selected industries that includes transportation and construction. The Act is reported to have been gazetted in June of the year 2011 and is intended to be fully enforced from the January of the year 2012. The Malaysia Competition Commission is also reported to have been established as the body charged with the enforcement of the Act. Nonetheless, the Act has impacted so much on the how the enterprises will be conducting their various commercial activities as well as their interactions, either with the suppliers, competitors, or customers within Malaysia or globally. Indeed, some of the various commercial behaviors that have for long been allowed within Malaysia are likely to become modified or simply prohibited (Lemley & McKenna 2010).

This article aims at providing a brief review of the critical areas that are actually affected by the Act, the particular issues that are actually arising from the Act, as well as the practical steps that are being made towards ensuring that there is compliance with the Act. Further, the article will promote various issues that include understanding as well as operating within the legislations given the power of the Competition Commission in imposing heavy penalties that comes with the infringement of the businesses as well as issuing various directions with the direct impact on the particular infringing enterprises. Therefore, it is significant for the various enterprise to fully understand the role that is played by the Competition Commission, ways of approaching the competition Commission so as to avoid the investigation or when an investigation has already started and their various obligation and rights when and if investigated, including any defense availed to them (Lemley & McKenna 2010). Furthermore, the article will discuss and share experiences in a practical way towards the compliance with the Competition Act of the year 2010. Indeed, it provides a very holistic context towards the Competition Law, both locally and globally. In a nutshell, the article will discuss the implications of the Act to the various businesses in terms of their operations as well as understanding how to achieve compliance with the Act and the various steps that can be taken by the businesses as well as the Competition Commission.

A Brief Review of the Legal Implications and Enforcement Issues Arising from Competition Act 2010

The Malaysian government is one of the many countries that have implemented the competition laws within Asia with the introduction of the Malaysia Competition Act 2010 as well as the establishment of the Competition Commission (MyCC). The introduction of the Competition Act 2010 is likely to have a very direct impact on the way enterprises interact as well as conducting their various commercial activities. Indeed, before the introduction of this particular Act, it is reported that Malaysia did not have any specific comprehensive and general competition law that could be applied across all the economic sectors. The competition regulations and laws existing within Malaysia are reported to have been implemented in two different sectors, which are the multimedia and communications sector that is governed by the popular Communications and Multimedia Act of the year 1998 as well as the energy sector that is actually governed by the Energy Commission Act of the year (De Chernatony, Jevons, Veloustou & Christodoulides 2010).

The Act is actually meant to ensure that the business activities that are carried out within Malaysia through the two different regulation areas such as the prohibition on the anti-competitive agreements as well as prohibition on the increased abuse of the dominant market position. The Act is reported to be applicable to any of the commercial activities that are transacted within and outside Malaysia that actually has an effect on the Competition in any of the Markets in Malaysia. The various commercial activities that are regulated under the two Acts that include Communications and Multimedia Act of the year 1998 as well as Energy Commission Act of the year 2001, but it is not actually subject to the particular Act (Collins & Carolyn 2007).

The Competition Act 2010 followed the unveiling of the New Economic Model in the March of the year 2010 by the Prime Minister, YAB Dato’ Seri Mohd Najib Bin Tun Abdul Razak that was aimed at doubling the per capita income of Malaysia in ten years through the transformation of the Malaysian economy through the eight Strategic Reform Initiatives (SRI), with the inclusion of the Programme of deregulation and liberalization in order to promote a very competitive domestic economy. Malaysia is in the process of ensuring complete implementation of the new regime that includes the Competition Commission, as well as the various firms taking steps of ensuring compliance with the new obligations and this is inclusive of the companies that are linked to the government that will also be subject to the provisions (De Chernatony, Jevons, Veloustou & Christodoulides 2010).

In the context of the key provision that is within the Competition Act 2010, the Act provides a regulation of the various business activities within Malaysia through the two main regulation areas that includes a prohibition on the abuse of the dominant market position and the prohibition on the anti-competitive agreements. The Act is actually applicable to any of the various commercial activities that affect the completion within Malaysia whether carried out in Malaysia or globally. The various commercial activities are regulated under the Energy Commission Act of the year 2001 and the Communications and Multimedia Act of the year 1998. Furthermore, the prohibitions on the anti-competitive agreements as well as the abuse of the dominant market position are not applicable to the areas such as the conduct or agreement that are engaged in so as to comply with the legislative requirement, collective conduct that is related to concluding and negotiating employment conditions and terms, as well as the conduct of the various enterprises that are entrusted with the various operation of the services of the general economic interest or having the of a particular monopoly producing revenue (Glockner 2010).

In terms of the anti-competitive agreements, the Act prohibits the vertical and horizontal agreements between the various enterprises where a particular agreement has the effect or object of essentially preventing, distorting and restricting competition in any of the market services or goods. Specifically, the Act provides a list of the various horizontal agreements which are actually deemed to have the anti-competitive object, inclusive of the agreement that actually has the object to specifically fix indirectly or directly, selling or purchasing price or any other trading conditions, share sources or market supply, control or limit production, market access, market outlets, technological or technological investment or development, or specifically performing an act of the bid rigging. The Competition Act does not actually contain the prohibitions on the third line forcing or the other forms of the vertical agreements unless they are able to have an anti-competitive effect or object. That is simply applying only to the horizontal agreements (Glockner 2010).

As per the other jurisdictions, the specific prohibition on the anti-competitive agreements in the Malaysian government applies not just to the formal contracts, but also to any of the understanding or arrangement, whether it is or not legally enforceable that includes the concerted practices. The term concerted practices is simply defined broadly in order to include any of the forms of coordination between the enterprises which is actually knowingly substituting the practical cooperation for the various risks of the competition, and is inclusive of any of the indirect or direct communication between the various enterprises, the effect or object of which could be for influencing one or more of the conduct of the enterprises or merely disclosing an enterprise’s contemplated course of conduct in the circumstances where the particular disclosure would have actually been made under the normal conditions of the competition. Therefore, conceivably, a public announcement made by the enterprise regarding the pricing strategy or simply the way it will likely to compete in the market could actually rise to the concerted practice incase the announcement has the effect or object of influencing behavior that actually exist within the market (Flynn 2010).

Unless a specific exemption is applicable, the anti-competitive agreements is likely to be the subject of the financial penalties of approximately up to 10 percent of the total global turnover of the particular enterprise over a period during the occurrence of the infringement. The leniency regime is actually established specifically under the Competition Act. A decrease of approximately up to 100 percent of the penalties which could have been imposed are granted to a particular enterprise incase it admits an involvement in a particular prohibited horizontal agreement as well as provided essential information or any other form of cooperation to the Competition Commission. An enterprise that is particularly a party to the prohibited agreement could claim a relief from the liability incase there are important as well as identifiable efficiency, social, and technological benefits coming from the agreement, the benefits are not likely to be achieved devoid of the agreement having the particular effect of distorting, preventing, or restricting the preventing. The detrimental effect resulting from the agreement on the competition is actually proportionate to the would-be benefits, as well as the agreement being completely incapable of completely eliminating the competition in respect of the substantial part of the services or goods (Sampath 2008).

In case the conditions are not actually met, a particular exemption originating from the anti-competitive agreement prohibition is likely to be granted by the Competition Commission in the form of an individual exemption with the respect to a specific category of agreements. Exemptions are likely to be granted subject to the various obligations or conditions as the Competition Commission deems appropriate as well as for a limited duration as is specified within the relevant exemption order. Incase the power to actually issue a block as well as the individual exemptions actually confers on the Competition Commission a specific adjudicatory role in the assessment of the claims that the restrictions put on the competition is actually justifiable. Indeed, it is highly anticipated how the power of issuing the block as well as individual exemptions is likely to actually work in practice (American Bar Association 2011).

This article would like to include the following observations; the Commission is expected to consult before actually issuing the block exemptions. Indeed, there is no specific requirement for the individual exemptions. However, despite the fact that the Act has conferred express powers to the Commission to revoke as well as vary the individual exemptions, there is no similar provision that could be applicable to the block exemptions. However, it is not very clear as to whether this is a suggestion that the Commission does not actually have any power to vary or revoke the block exemptions. Furthermore, the Commission is likely to cancel the block exemption in the perspective of the individual agreements that are not actually to meet the requirement that are stipulated under section five. The Commission could also issue various block exemptions that are subject to the conditions. As per the block exemptions, the Commission could issue the individual exemptions subject to the obligations or conditions and within a limited duration. The Commission could revoke or vary the individual exemptions incase there is a material change of the circumstance or incase the obligation is actually breached. Nonetheless, an individual exemption could be actually cancelled ab ignition incase the exemption was actually granted on the basis of the information that is misleading or false in a material manner. The commission is likely to issue block exemptions cautiously and at the same time subject to the comparatively stringent conditions. However, the individual’s exemptions could be subject to a particular shorter duration in return for the less stringent conditions (Stone & Barker 2009).

In the perspective of the Competition Commission as well as the enforcement under the Act and specifically with reference to the investigation; as with China and Europe, the competition regulator of Malaysia will actually have an inquisitorial role. The Competition Commission could carry out an investigation within any enterprise, conduct, or agreement if it has any particular reason of suspecting an infringement of the particular Act as well as upon a direction of the Minister concerned or simply a particular complaint by any particular person. The Act allows the Competition Commission as well as its several similar powers of investigation as those that are given to the police officers in the perspective to the corresponding police investigations that includes the power to require the provision of information from any particular person who the Commission deems to be actually with the various facts as well as the circumstances of that the particular case. The power to retain the documents as well as have access to the books, records, and the accounts or several other things of carrying out any of the functions of the Commission or the powers under the Competition Act 2010, as well as to the extent that is authorized through a warrant that was issued by the Magistrate or simply where there is an urgent need of a search, entry into the premises, search seize or the seal of any record, document, book, account, and the computerized data, search the suspicious individuals on or in the premises (Farkas 2011).

During the process of investigation, the Competition Commission could impose the interim measures incase the Commission reasonably is of the opinion that there is an infringement and at the same time measures are essential as a matter of urgency in preventing irreparable and serious damage or to simply protect the interest of the public. The interim measure taken could actually involve causing or requiring any individual to suspend the specific effect of as well as desist from the implementation of any of the suspicious agreement. The individual desist completely from any of the conducts that could be an infringement of the prohibitions on the anti-competitive agreements as well as abuses of the dominance or simply do or refrain from actually doing any of the acts. The Competition Act allows the enterprises to make a proposal of the undertaking that the Commission is likely to accept having been subjected to the conditions. Incase the Commission accepts the undertaking; the Commission is expected to actually close down its investigations without necessarily making any particular finding on the infringement and is not expected to impose any penalty. The provisions that result from the undertaking can be enforced by the commission (Sosnitza 2005).

In the context of the decisions made by the Competition Commission, incase on the competition of the investigation, the Commissions actually finds out that there is an actual infringement. The Commission is expected to ensure that the infringing enterprise takes specified steps of ending the infringement; imposing a financial penalty that is not excess of 10 percent of the global turnover of the enterprise within the period the infringement took place, or give another direction that is deemed fit. Another enforcement issue is that the High Court could be involved in the enforcement of decisions of the Competition Commission. Moreover, before making determination of the infringement and eventually making decision, the Commission is expected to give notice to the enterprise on its proposed decision as well as its findings, reasons and any of the proposed penalties or the remedial action. Finally, the enterprise that is involved is also expected to come up with a written submission of simply seek oral hearing (Farkas 2011). These are some of the legal implications and enforcement issues arising from Competition Act 2010.

Conclusion

The article had reviewed the legal implications and enforcement issues arising from competition act 2010. The competition laws were designed in order to ensure that the relationship that exists between the businesses are policed with an intention of ensuring that there is a fair competition within the market through the provision of a level playing field for all the businesses. However, the Act has several legal and enforcement issues have been discussed in the paper. Therefore, for smooth implementation, the issues should be amicably ironed out.

Bibliography

American Bar Association 2011, Section of Antitrust Law, Competition Laws Outside of the United States, 2nd ed., Canada chapter.

Collins, P & Carolyn N 2007, The Practice of Competition Law: Effective Management of Competition Law Risk, Faculty of Law, University of Toronto, Toronto.

De Chernatony, L, Jevons, C, Veloustou, C & Christodoulides, G 2010, “Introduction: Thought leadership in brand management,” Journal of Business Research, vol. 63, no.11, p.1111.

Farkas, T 2011, “Does the United Kingdom need a general law against unfair competition? A fashion industry insight: Part 2,” European Intellectual Property Review, vol.33, no.5, pp.290-298

Flynn, D 2010, “The Clone Rangers: Designers are trying to put a stop to copycat versions of their work being mass produced. Are their fears justified or are they simply being paranoid,” The Sunday Times, 18 April.

Glockner, J 2010, “The scope of application of the UCP Directive – “I know what you did last summer,” International Review of Intellectual Property and Competition Law, vol. 41, no. 5, pp.570-592.

Lemley, MA & McKenna, MP 2010, “Owning Mark (et)s,” 109 Mich. L. Rev. 137

Sampath, PHN 2008, “The Law of unfair competition: International, European and Sri Lankan Perspectives,” 20 Sri Lanka Journal of International Law 99.

Sosnitza, O 2005, “German law of unfair competition: toward liberal standards,” International Review of Intellectual Property and Competition Law, vol. 36, no. 5, pp. 525-542.

Stone, D & Barker, J 2009 April, “Own-brand and look-alike products: Is it time for an English law against “unfair competition?”,” Trademark World No. 216,

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