an overview of the competition act 2010

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AN OVERVIEW OF THE COMPETITION ACT 2010

General:

The Competition Act 2010 (Act 712) ("the Act") was enacted in order to protect the interests

of consumers by the promotion of competition and the prohibition of anti-competitive

practices.

The Act is broken up into several parts as follows:

Part I - Preliminary Part II - Anti Competitive Practices Part III - Investigation and Enforcement Part IV - Decision of the Commission Part V - Competition Appeal Tribunal Part VI - General

Part I -Preliminary (Section 1-Section 3)

This Part sets out the commencement date of the Act, and the definition and interpretation of

terms used therein.

It also sets out the application of the Act, which is to any commercial activity within

Malaysia and to any commercial activity outside Malaysia which has an effect on

competition on any market in Malaysia.

For the purposes of the Act, the term "commercial activity" does not include:

any activity, directly or indirectly in the exercise of governmental authority; any activity conducted based on the principle of solidarity; and any activity for private consumption.

Part II - Anti Competitive Practices (Section 4-Section 13)

Prohibited anti-competitive practices as set out in this Part are:

Horizontal and vertical agreements Abuse of dominant position

Chapter, Sections Chapter 1, Sections 4-9 Chapter 2, Section 10Prohibited

practices

A horizontal or vertical agreement whichhas the object or effect of significantly

preventing, restricting or distorting

competition.

In relation to a horizontal agreement, this

includes agreement with the object of:

1. fixing, directly or indirectly, apurchase or selling price or othertrading conditions;

2. sharing market or sources ofsupply;

3. limiting or controllingproduction, market outlets ormarket access, technical or

technological development, or

Any independent or collective conduct by anenterprise which amounts to an abuse of a

dominant position in any market for goods or

services.

Abuse of a dominant position may include:

5. directly or indirectly imposing anunfair purchase or selling price or

other unfair trading condition;6. limiting or controlling production,

market outlet or market access,

technical or technologicaldevelopment, or investment to the

prejudice of consumers;7. refusing to supply to a particular

enterprise or group or category of
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investment; and

4. performing an act of bid rigging. enterprise;8. applying different conditions toequivalent transactions with

different trading parties, as would

discourage new market entry/

expansion/ investment by an

existing competitor, force an

existing competitor from the

market or serious injure it, or harmcompetition in any market

(including any downstream orupstream market) in which the

dominant enterprise is

participating;9. making contracts subject to

supplementary conditions which

have no connection to the subjectmatter of the comtract;

10. predatory behaviour towardscompetitors; or

11. buying up a scarce supply ofintermediate goods or resources

required by a competitor, wherethere is no reasonable commercial

justification for the dominantenterprise to do so.

However, a dominant enterprise is notprohibited from acting with reasonable

commercial justification or responding with

reasonable commercial justification to themarket entry or conduct of a competitor.

Relief of liability Due to:

12. significant identifiabletechnological, efficiency or

social benefits arising directly

from the agreement;13. benefits which could not

reasonably be provided to theparties of the agreement withoutit having such anti competitive

effect;

14. the detrimental effect of theagreement is proportionate to the

benefits provided; and

15. the agreement does not allow thecomplete elimination of

competition in respect of a

substantial part of the goods andservices.

Exemptions Enterprises may apply to the Competition

Commission ("Commission") for individualor block exemptions, in respect of a

particular agreement or a particular category

of agreements, as may be applicable, towhich the grounds for relief of liability as

set out above apply.

Exclusions

(Second Schedule

of the Act)

The prohibited anti-competitive practices set out in Part II of the Act shall not apply to:

16. an agreement or conduct, to the extent that is undertaken in compliance with alegislative requirement;

17. collective bargaining activities or collective agreements in respect of employmentterms and conditions between employers and employee's representatives;

18. an enterprise entrusted with the operation of services of general economic interestor having the character of a revenue-producing monopoly in so far as suchprohibitions would obstruct the tasks assigned to such enterprise.


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*Note: Enterprise refers to a legal entity carrying out commercial activity. Where a subsidiary company does not enjoy realautonomy in determining its actions on the market, then it and its holding company are considered as a single enterprise.

Part II of the Act also provides that the Commission may conduct a market

review either on its own initiative or upon the request of the Minister for

Domestic Trade and Consumer Affairs, the findings of which review andrecommendations thereof are to be published and made available to the public.

Part III - Investigation and Enforcement (Section 14-Section 34)

The Commission may conduct an investigation where it has reason to suspect

that that any enterprise has infringed or is infringing any prohibition under the

Act. In the course of such investigation, the Commission has the power:

by notice in writing, to require any person whom it believes to beacquainted with the facts and circumstances of the matter to provide or

produce any information or document which is relevant to theinvestigation, and to make a statement in relation to the same;

to enter premises to search for and seize documents, with and withoutwarrant;

to require access to records and computerised data; and to retain documents.

Part IV - Decision by the Commission (Section 35-Section 43)

Pending completion of the investigation, the Commission may give such

interim directions as it considers appropriate, if it deems that there is or there

is likely to be an infringement and it is situation in which it is necessary to acturgently to prevent irreparable damage and to protect the public interest.

Once the investigation has been completed, if the Commission decides that

there has been an infringement of one or more of the prohibitions in Part II,

the Commission will forward a written notice to the relevant enterprise,

informing them of such decision, of the proposed penalties to be applied, and

of their option to make written or oral submissions to the Commission.

Notwithstanding the enterprise may exercise its option to make oral

submissions to the Commission, the Commission may also conduct a hearing

in order to determine whether there has been an infringement of a prohibition

under Part II of the Act.

If the Commission finds that there has been no infringement, it shall so inform

the affected party(ies) of its decision and the reasons therefor. If the

Commission finds that there has been an infringement, it shall require the

immediate ceasing of the agreement, and may specify the appropriate steps to

be taken by the infringing enterprise to cease such practice or impose a

financial penalty or give any other decision deemed appropriate. The

Commission may bring proceedings before the High Court in the event of non-

compliance with its directions.


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This Part also sets out provisions for a leniency regime, where the penalty

imposed on an enterprise which has admitted its involvement of a prohibition

in respect of a horizontal agreement and has provided information or

cooperation to the Commission which has or is likely to significantly assist the

Commission in its investigation on other enterprise, may be reduced by up to

100%.

Part V - Competition Appeal Tribunal (Section 44-Section 60)

This Part provides for the establishment of a Competition Appeal Tribunal,

which shall have exclusive, final and binding jurisdiction to review any

interim decision and finding of infringement or non-infringement of the

Commission. The Competition Appeal Tribunal may confirm or set aside the

relevant decision or any part of the same, and may:

remit the same to the Commission; impose, revoke, or vary the amount of financial penalty; give directions or take such steps as the Commission could have given

or taken; or

make any other decision which the Commission could have made.Part VI - General (Section 61-Section)

This Part sets out the general penalty for an offence [1]committed under the

Act for which no penalty has been expressly provided, which is:

for a body corporate, a fine not exceeding RM5,000,000.00, and for a second

or subsequent offence, a fine not exceeding RM10,000,000.00; or

for person who is not a body corporate, a fine not exceeding RM1,000,000.00

or imprisonment for a term not exceeding 5 years or both, and for a second

and subsequent offence, a fine not exceeding RM2,000,000.00 or

imprisonment for a term not exceeding 5 years or both.

It also provides for an officer of a body corporate which has committed an

offence under the Act to be charged jointly and severally in the same

proceedings as the body corporate, and if the body corporate is found to have

committed the offence, the office would also be deemed to have done the sameunless it was done without his consent, knowledge or connivance and he had

taken all reasonable precautions and exercised due diligence to prevent the

commission of the same.

Also, if a person is liable for any punishment or penalty for his act, omission,

neglect or default, he will be liable for the same punishment or penalty for the

act, omission, neglect or default of his employee or agent, acting in, and

committed on his behalf.

Further, any person who suffers damage or loss as a result of an infringement

of a prohibition shall have a right of private action in civil court against theenterprise committing the infringement.
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This Part also sets out the Minister's power to prescribe compoundable

offences and to make regulations, as well as the Commission's power to issue

guidelines.

[1]The Act, however, does not make clear as to what constitutes an "offence", and whether the general penalty clause would be

applicable for an infringement of a prohibition.

an overview of the competition act 2010

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