Understanding the Competition Act 2010 in Malaysia:
Key Provisions and Scope

The Competition Act 2010 (“Competition Act”) is the primary legislation governing competition law in Malaysia, aimed at fostering fair competition and preventing anti-competitive conduct. The Malaysia Competition Commission (MyCC), a statutory body established under the Competition Commission Act 2010, is responsible for enforcing and administering the Act.

Scope of the Competition Act 2010

The Competition Act applies to all commercial activities that impact competition in any market in Malaysia, regardless of whether the activities take place within or outside Malaysia.

However, certain commercial sectors are exempt from the Competition Act, as they are governed by their own sector-specific regulations:

Exempted Sectors and Regulatory Laws:

1. Communications and Multimedia Sector – Regulated under the Communications and Multimedia Act 1998.
2. Energy Sector – Governed by the Energy Commission Act 2001.
3. Petroleum Sector – Covered under the Petroleum Development Act 1974 and Petroleum Regulations 1974, specifically for upstream operations (exploration, extraction, and production of petroleum).
4. Aviation Sector – Falls under the jurisdiction of the Malaysian Aviation Commission Act 2015.

Commercial Activities Outside the Scope of the Competition Act

The Competition Act also does not apply to:

• Governmental authority activities (whether direct or indirect).
• Solidarity-based activities, such as charitable organizations and cooperative initiatives.
• Purchases of goods or services that are not intended for economic resale or business operations.

Key Prohibitions Under the Competition Act

The Competition Act 2010 enforces two primary prohibitions against anti-competitive behavior:

1. Prohibition of Anti-Competitive Agreements (Section 4)

The Competition Act prohibits both horizontal and vertical agreements that prevent, restrict, or distort market competition.

Hardcore Anti-Competitive Agreements (Section 4(2))

Certain agreements are deemed automatically anti-competitive due to their serious negative impact on market competition. These are referred to as “hardcore prohibitions” and include:

• Price-Fixing Agreements
  • Direct or indirect agreements to fix purchase or selling prices or impose uniform trading conditions.
• Market Sharing Agreements
  • Agreements between businesses to divide or allocate customers, geographic areas, or supply sources.
• Restrictions on Market Competition
  • Agreements that aim to limit or control:
    • Production levels
    • Market access or outlets
    • Technological advancements
    • Investment and expansion opportunities
• Bid Rigging Arrangements
  • Any form of collusion in bidding processes, including prior agreements between competitors to manipulate bid results.

2. Prohibition of Abuse of a Dominant Position (Section 10)

The Competition Act 2010 prohibits businesses from abusing their dominant market position to eliminate competition or exploit consumers.

Common abusive practices include:

• Predatory pricing – Selling goods or services below cost to drive out competitors.
• Price discrimination – Imposing unfair pricing schemes to harm competition.
• Exclusive dealings – Requiring customers to buy only from a dominant supplier.
• Tying and bundling – Forcing customers to purchase additional products or services to access a desired product.

Conclusion

The Competition Act 2010 serves as a crucial legal framework to promote fair competition, prevent anti-competitive conduct, and protect consumer interests in Malaysia. Businesses must ensure compliance with its provisions, particularly regarding anti-competitive agreements and abuse of dominance.

As MyCC increases enforcement efforts, businesses should regularly review their commercial agreements and market practices to avoid penalties and legal repercussions.

For further legal guidance on competition law in Malaysia, consult a competition law expert or visit MyCC’s official website for compliance updates.