The Competition Act, enforced by the Malaysia Competition Commission (MyCC), covers commercial activities within or outside Malaysia, which have an effect on competition in any market in Malaysia. This extra territorial Act seeks to protect the process of competition (and not a competitor) to benefit final consumers with lower prices, better products and more choices. The two main areas of regulation are
- prohibition on anti-competitive agreements
- prohibition on the abuse of a dominant market position
An anti-competitive agreement implies an agreement, either horizontal or vertical, which has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services in Malaysia. Horizontal anti-competitive activities involve conduct among independent enterprises that are suppliers of competitive goods or services. Vertical anti-competitive activities involve the supply chain controlled by a producer, from stages of production to distribution to retail sale of goods or services.
Examples of deemed anti-competitive horizontal agreements include price fixing, market sharing, bid rigging, control of production or market access and collusion. The first MyCC case in anti-compeitive practices involves Cameron Highlands Floriculturist Association (CHFA). Members of the Association collectively agreed to increase the price of flowers by 10%, which constitutes a horizontal agreement to fix prices. A Cease and Desist order was issued.
Abuse of Dominant Market Position
Generally, a market share of above 60 percent indicates that an enterprise is deemed dominant. Prohibition on the abuse of a dominant market position targets any activities by a dominant enterprise which may force competitors out of the market, such as predatory pricing, price discrimination, controlling production and refusal to supply.
Malaysia’s sole producer of hot rolled coils, Megasteel Sdn. Bhd., was accused (but subsequently cleared) of being involved in unfair pricing of hot rolled coils in the upstream market, in order to disadvantage its cold rolled coils competitors (though price discrimination and margin squeezing). The MyCC had initially proposed to fine the company RM4,500,000 for such an abuse of dominant market position.
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