Competition Law
Anti-Trust Laws in Malaysia: Current State, Key Cases, and Potential Reforms

As many businesses in Malaysia continue to navigate post-pandemic economic uncertainty, some are resorting to anti-competitive practices in an attempt to gain greater market share. Against this backdrop, it is crucial for businesses to understand the current competition law landscape in Malaysia and the enforcement actions being taken by authorities.

This article provides an overview of Malaysia’s Competition Act 2010, highlights recent significant decisions by the Malaysia Competition Commission (MyCC), and concludes with a brief discussion on the anticipated amendments to the Competition Act, particularly the introduction of a merger control regime.

1. Overview of the Competition Act 2010

The Competition Act 2010 (“CA 2010” or “the Act”) serves as Malaysia’s principal legislation governing anti-competitive practices by businesses. The Act aims to encourage efficiency, innovation, and entrepreneurship, promote competitive pricing and product quality, and safeguard consumer interests.

Prohibited Conduct Under CA 2010

The CA 2010 expressly prohibits:

• Anti-competitive agreements (e.g., price fixing, cartels, bid rigging);¹ and
• Abuse of dominant position (e.g., predatory pricing, price discrimination, bundling, tying).²

The Malaysia Competition Commission (MyCC) is the independent enforcement authority established under the Competition Commission Act 2010. Operating under the Ministry of Domestic Trade and Cost of Living, MyCC is empowered to:

• Investigate allegations of anti-competitive conduct;
• Impose penalties for infringements of CA 2010; and
• Issue guidelines to facilitate compliance with the Act.

Recent Landmark Decisions on Competition Law in Malaysia

1. MyCC’s Proposed Decision Against Five Feed Millers

In August 2022, MyCC issued a proposed decision against five major chicken feed millers for alleged anti-competitive conduct. MyCC found evidence of concerted practices and agreements that led to increased prices for poultry feed, comprising soybean meal and maize. These actions significantly affected the price of chicken meat and reduced consumer choice, thereby distorting competition in the poultry sector.

If MyCC confirms the infringements, the companies may face:

• Financial penalties of up to 10% of their global turnover during the infringement period; and
• Additional directives to prevent further anti-competitive behavior.

However, companies may be eligible for:

• Relief from liability if they demonstrate significant technological, efficiency, or social benefits resulting from the agreement;⁴ and
• Leniency under CA 2010’s leniency regime, based on cooperation levels and public interest benefits.⁵
  Non-compliance with MyCC’s decision can lead to further legal action.⁶ Appeals against MyCC’s decisions can be filed with the Competition Appeal Tribunal (CAT).⁷

2. Malaysian Airline System Bhd v Competition Commission & Another Appeal⁸

In August 2011, Malaysian Airline System Berhad (MAS), AirAsia Berhad, and AirAsia X Sdn Bhd entered into a Collaboration Agreement aimed at resource pooling. Following this, a share swap took place between MAS and AirAsia.

The airlines sought exemption from MyCC, claiming the agreement would enhance competition against global carriers. However, complaints arose regarding alleged price fixing and market sharing.

MyCC’s investigation concluded that the Collaboration Agreement violated Section 4 of CA 2010 by enabling market sharing and joint management control, restricting competition in the Malaysian air transport services market. MyCC imposed penalties of RM10 million on each airline.

• CAT overturned MyCC’s decision, but the High Court later reinstated MyCC’s penalties.
• The Court of Appeal, however, reversed the High Court decision and ruled in favor of the airlines.
• MyCC’s appeal to the Federal Court was dismissed on several grounds:
  • MyCC lacked locus standi to challenge CAT’s decision, as it was not an aggrieved party under the Malaysian Aviation Commission Act (MAVCOM).
  • The alleged infringement occurred before CA 2010 came into force (1 January 2012), with no retrospective application.
  • The Collaboration Agreement could have been exempted under Section 5 for yielding net economic benefits to consumers.

Ultimately, MyCC’s appeal was dismissed, and RM30,000 in costs were awarded to the airlines.

3. MyEG Services Bhd & Anor v Competition Commission & Anor⁹

This case involved MyEG Services Berhad (MyEG), the exclusive provider for the renewal of Pas Lawatan Kerja Sementara (PLKS) permits for foreign workers. Employers were allegedly forced to purchase mandatory insurance from MyEG Commerce, which had an exclusive agency agreement with RHB Insurance Berhad.

MyCC found that MyEG abused its dominant position by giving preferential verification treatment to its own insurance products, disadvantaging competitors.

• MyCC imposed a daily penalty of RM7,500 on MyEG.
• MyEG’s appeals to CAT, the High Court, Court of Appeal, and Federal Court were all unsuccessful.

The courts found MyEG’s conduct harmed competition by leveraging its dominance in the upstream market to benefit its downstream services, increasing its commissions and distorting the insurance market.

Anticipated Amendments to CA 2010: Introduction of a Merger Control Regime

Currently, mergers and acquisitions (M&A) are not regulated under CA 2010. However, unregulated mergers risk:

• Market monopolization, reducing competition;
• Higher consumer prices, impacting purchasing power and cost of living.

MyCC’s Consultation Paper (April 2022) proposed amendments to introduce a Merger Control Regime, excluding industries regulated by Bank Negara Malaysia, the Securities Commission Malaysia, and the Communications and Multimedia Commission (MCMC).

Key Features of the Proposed Merger Control Regime:

• Prohibition: Mergers that substantially lessen competition (SLC) in Malaysian markets will be prohibited.
• Definition of Merger: Includes mergers, acquisitions, and joint ventures that integrate previously independent enterprises.
• Hybrid Regime:
  • Mandatory notification for mergers exceeding Applicable Thresholds; failure to notify may incur penalties up to 10% of the transaction value.
  • Voluntary notification for mergers below the threshold.
• Suspensory Effect: Mergers requiring notification cannot be implemented before MyCC approval.
• Review Period: MyCC must issue decisions within 120 working days from the acceptance of a complete notification. Silence from MyCC post-review period results in deemed approval.
• Commitments: Merging parties may offer commitments to mitigate anti-competitive effects, pausing the review for up to 60 working days.
• Investigative Powers: MyCC can investigate non-notified mergers upon complaints or ministerial directives, with the authority to impose penalties or remedial directions.

While these proposals were expected to be tabled in October 2022, Malaysia’s Parliament dissolution delayed the process. As of now, no draft amendment bill has been publicly released.

Conclusion

The recent decisions by MyCC, CAT, and Malaysian courts, along with the anticipated Merger Control Regime, signal increased regulatory vigilance and enforcement in Malaysia’s competition law framework.

Businesses must:

• Regularly review their commercial practices to ensure compliance with CA 2010; and
• Prepare for the potential implementation of merger control regulations that will impact joint ventures, mergers, and acquisitions.

Proactive compliance and strategic legal counsel will be essential as Malaysia’s competition law landscape continues to evolve.