Section 10 of the Competition Act 2010 prohibits a dominant enterprise from abusing its position, but it does not define abuse exhaustively. In practice, abuses fall into recognisable categories — some that exclude rivals and some that exploit customers. This article works through the main types and how each is assessed.

It assumes the enterprise is already established as dominant; if you need that foundation first, see our guides on abuse of dominant position and on defining the relevant market.

Key takeaways •Two families of abuse. Exclusionary abuses harm competitors; exploitative abuses harm customers. •Predatory pricing. Below-cost pricing to drive out rivals and recoup later. •Margin squeeze and refusal to supply. Using control of an essential input to foreclose downstream competitors. •Tying, exclusivity and discrimination. Leveraging dominance to distort competition in connected markets. •Justification matters. Objectively justified conduct, or genuine competition on the merits, is not abuse.

Predatory pricing

Predatory pricing is the classic exclusionary abuse: a dominant firm prices below its own cost to make the market unprofitable for competitors, forcing them out, and then raises prices once it is unchallenged. The difficulty is distinguishing predation from healthy price competition — low prices are usually good for consumers. Assessment therefore focuses on whether prices are below an appropriate measure of cost and whether there is a strategy to exclude rivals and later recoup the losses.

Margin squeeze

A margin squeeze arises where a dominant firm operates at two levels — supplying an essential input to downstream competitors while also competing with them downstream. By setting the wholesale input price high relative to its own retail price, it leaves too thin a margin for an equally efficient competitor to survive, even though no single price is obviously predatory. It is a particular risk in network and infrastructure industries.

Refusal to supply

Ordinarily a business may choose who it deals with. But a refusal to supply by a dominant firm can be an abuse where the input or facility is essential to compete, the refusal is likely to eliminate competition in the downstream market, and there is no objective justification. The same logic applies to constructive refusals — supplying only on unworkable terms — and to refusing access to an essential facility.

Tying and bundling

Tying is making the supply of one product conditional on taking another, unrelated product; bundling is selling products only together. For a dominant firm these can be abusive where they leverage power from one market into another, foreclosing competitors in the tied market. Not all bundling is unlawful — bundles often benefit consumers — so the question is whether the practice forecloses competition without sufficient justification.

Exclusivity and loyalty arrangements

Exclusive-purchasing obligations, loyalty rebates and similar arrangements can foreclose rivals when imposed by a dominant firm, by tying up a large share of demand or penalising customers who deal with competitors. Rebates that simply reflect genuine cost savings are generally acceptable; rebates designed to lock customers in and exclude rivals are not.

Exploitative abuses: excessive pricing and unfair terms

Not all abuse is about excluding competitors. A dominant firm can also abuse its position by exploiting customers directly — charging excessive or unfair prices, or imposing unfair trading conditions — because customers have nowhere else to go. Exploitative abuse is harder to assess (what is “excessive” is not obvious), but it remains within section 10, particularly where market power is entrenched.

Discrimination

Applying materially different terms to equivalent transactions can be an abuse where it places some trading partners at a competitive disadvantage — for example favouring a dominant firm’s own downstream arm over independent customers. The concern is distortion of competition between those who are treated differently, not mere commercial differentiation.

The role of objective justification

Across all these categories, a dominant firm can argue that its conduct is objectively justified — for example by genuine efficiencies passed on to customers, legitimate technical or safety reasons, or a proportionate response to competition — or that it is simply competition on the merits. Because the line between robust competition and abuse is fact-sensitive, dominant firms should document the commercial rationale for conduct that could be questioned, and take advice before adopting aggressive pricing or access policies.

See abuse of dominant position under the Competition Act 2010, defining the relevant market and assessing market power, and private enforcement and damages claims in Malaysia.

Frequently asked questions

What is predatory pricing?

Predatory pricing is where a dominant firm prices below cost to drive competitors out of the market, intending to recoup its losses later through higher prices once rivals have exited. It is a recognised abuse of a dominant position under section 10 of the Competition Act 2010.

What is a margin squeeze?

A margin squeeze occurs where a dominant firm that supplies an essential input to its downstream rivals sets the input price so high, relative to its own downstream price, that an efficient competitor cannot make a profit. It is a form of exclusionary abuse.

Is refusing to supply always an abuse?

No. A business is generally free to choose its trading partners. A refusal to supply by a dominant firm can be an abuse where access is essential to compete, the refusal would eliminate competition, and there is no objective justification.

What is the difference between exclusionary and exploitative abuse?

Exclusionary abuse harms competition by foreclosing or weakening rivals (for example predatory pricing or refusal to supply). Exploitative abuse harms customers directly (for example charging excessive prices or imposing unfair terms). Both fall under section 10.

Can a dominant firm defend its conduct?

Yes. Conduct that might otherwise look abusive may be objectively justified — for example on genuine efficiency or legitimate business grounds — or may simply be competition on the merits. The assessment is fact-sensitive.

Speak to NZSK’s competition law team If you have received a notice from MyCC, are reviewing an agreement or a contemplated deal, or want to put a compliance programme in place, our competition law team can help. Ng, Zainurul, Seke & Khoo (NZSK) Offices: Mont Kiara and Puchong Phone / WhatsApp: 016-557 4789 Email: [email protected] Web: nzsklegal.com