Contributed by Cassandra Lee and Jeremiah Gurusamy
This highly-interesting session discussed a relatively new area of law in Malaysia. The session was moderated by Shila Dorai Raj and the panel was made up of distinguished speakers: Ragunath Kesavan, Wong Tat Chung and Anand Raj.
Ragunath Kesavan (Commissioner of the Malaysia Competition Commission, and a partner in Kesavan) started the ball rolling by giving a comprehensive summary of competition law in Malaysia, which he said is based on the EU competition legislation. He pointed out that the two governing pieces of legislation in the area of competition law in Malaysia are the Competition Act 2010 and the Competition Commission Act 2010. The Competition Act 2010 prohibits three matters: horizontal agreements, vertical agreements, and abuse of dominance. Kesavan pointed out that the Malaysia Competition Commission (“MyCC”) has come up with three guidelines relating to market definition, horizontal and vertical agreements, and abuse of dominance.
He spoke of the problems and issues surrounding competition law in Malaysia. He pointed out that there was a lot of apprehension, especially from businesses, towards the Competition Act 2010. This apprehension, according to him, is due to fear, and specifically, fear of the idea of doing business based on merit. Kesavan said that all these are misapprehensions of the new Act caused by misinformation of what the Act is all about.
This highly-interesting session discussed a relatively new area of law in Malaysia. The session was moderated by Shila Dorai Raj and the panel was made up of distinguished speakers: Ragunath Kesavan, Wong Tat Chung and Anand Raj.
Ragunath Kesavan (Commissioner of the Malaysia Competition Commission, and a partner in Kesavan) started the ball rolling by giving a comprehensive summary of competition law in Malaysia, which he said is based on the EU competition legislation. He pointed out that the two governing pieces of legislation in the area of competition law in Malaysia are the Competition Act 2010 and the Competition Commission Act 2010. The Competition Act 2010 prohibits three matters: horizontal agreements, vertical agreements, and abuse of dominance. Kesavan pointed out that the Malaysia Competition Commission (“MyCC”) has come up with three guidelines relating to market definition, horizontal and vertical agreements, and abuse of dominance.
He spoke of the problems and issues surrounding competition law in Malaysia. He pointed out that there was a lot of apprehension, especially from businesses, towards the Competition Act 2010. This apprehension, according to him, is due to fear, and specifically, fear of the idea of doing business based on merit. Kesavan said that all these are misapprehensions of the new Act caused by misinformation of what the Act is all about.
Kesavan pointed out that the Competition Act 2010 is not intended to merely protect consumers. The main aim of the legislation is to encourage free and fair competition. MyCC has no powers to regulate consumer protection.
Wong Tat Chung (a partner in Wong Beh & Toh) spoke on the differences in competition law in Malaysia with that in India, Singapore and Australia. He pointed out that although India's and Malaysia's competition laws are similar, the former deals with merger controls.
Notably, there is a compulsory notification system where parties of mergers and acquisitions that exceed certain thresholds will have to notify the Indian Commission, which has the powers to make various orders, not limited to approving or disapproving the merger and/or acquisition. In Singapore, vertical agreements are not prohibited under the Singaporean regime, as it is believed that vertical agreements tend to have more beneficial effects. Finally, in Australia, the Australian Commission regulates not only competition law but also consumer law. The Australian competition law adopts different definitions of a cartel and merger control regime, under which it is not mandatory to notify the Commission of mergers but parties may apply to the Commission for clearance. In Australia, no clearance will be granted if the Commission substantially believes that it may impede competition.
Wong was of the view that the Competition Act 2010 is very pervasive and can catch all walks of lives. Therefore, professionals need to be well informed of the Act.
Anand Raj (a partner in Shearn Delamore & Co) compared the EU competition legislation with the Malaysia Competition Act 2010. He went through a comparison of the opening words and substantive language between the Malaysia Competition Act 2010 and the EU Treaty, and concluded that there are a lot of similarities in both. Therefore, European cases on competition law will be very persuasive in Malaysia. He pointed out that interestingly, there is no criminalisation of cartels in Malaysia but it is yet to be seen whether Malaysia will follow the footsteps of countries that have criminalised cartels.
Kesavan had earlier stated that one of the problems with the Malaysian Competition Act 2010 is that it is still unclear whether compliance with soft regulations and guidelines from regulatory bodies such as Bank Negara Malaysia (e.g. the fixed Base Lending Rate) and the Bar Council (e.g. the Solicitors' Remuneration Order, "SRO") would be anti-competitive. Lim Chee Wee, President of the Malaysian Bar, later responded by saying that the enforcement of SRO is very difficult from a practical standpoint, and this issue will be discussed at the next AGM.
Wong, in response to a question on territorial agreements, said that corporations need to be mindful of competition law in other jurisdictions, as engaging in anti-competitive behaviour in respect of export to a particular country, may also be caught by competition legislation in that country.
Anand Raj said that MyCC has the powers to advise the government on its policies, and he opined that MyCC should advise the government to change its protectionist policies in the car industry.
Finally, Kesavan said that a change of mindset is required in Malaysia. The conditions imposed by the Act require liberalisation in many areas. He said, however, even the legal profession showed resistance to liberalisation. He was of the opinion that all Malaysians should look at how we can open up the Malaysian market. He conceded that this will take a long time considering that other jurisdictions took 20 to 30 years to do so.
Wong Tat Chung (a partner in Wong Beh & Toh) spoke on the differences in competition law in Malaysia with that in India, Singapore and Australia. He pointed out that although India's and Malaysia's competition laws are similar, the former deals with merger controls.
Notably, there is a compulsory notification system where parties of mergers and acquisitions that exceed certain thresholds will have to notify the Indian Commission, which has the powers to make various orders, not limited to approving or disapproving the merger and/or acquisition. In Singapore, vertical agreements are not prohibited under the Singaporean regime, as it is believed that vertical agreements tend to have more beneficial effects. Finally, in Australia, the Australian Commission regulates not only competition law but also consumer law. The Australian competition law adopts different definitions of a cartel and merger control regime, under which it is not mandatory to notify the Commission of mergers but parties may apply to the Commission for clearance. In Australia, no clearance will be granted if the Commission substantially believes that it may impede competition.
Wong was of the view that the Competition Act 2010 is very pervasive and can catch all walks of lives. Therefore, professionals need to be well informed of the Act.
Anand Raj (a partner in Shearn Delamore & Co) compared the EU competition legislation with the Malaysia Competition Act 2010. He went through a comparison of the opening words and substantive language between the Malaysia Competition Act 2010 and the EU Treaty, and concluded that there are a lot of similarities in both. Therefore, European cases on competition law will be very persuasive in Malaysia. He pointed out that interestingly, there is no criminalisation of cartels in Malaysia but it is yet to be seen whether Malaysia will follow the footsteps of countries that have criminalised cartels.
Kesavan had earlier stated that one of the problems with the Malaysian Competition Act 2010 is that it is still unclear whether compliance with soft regulations and guidelines from regulatory bodies such as Bank Negara Malaysia (e.g. the fixed Base Lending Rate) and the Bar Council (e.g. the Solicitors' Remuneration Order, "SRO") would be anti-competitive. Lim Chee Wee, President of the Malaysian Bar, later responded by saying that the enforcement of SRO is very difficult from a practical standpoint, and this issue will be discussed at the next AGM.
Wong, in response to a question on territorial agreements, said that corporations need to be mindful of competition law in other jurisdictions, as engaging in anti-competitive behaviour in respect of export to a particular country, may also be caught by competition legislation in that country.
Anand Raj said that MyCC has the powers to advise the government on its policies, and he opined that MyCC should advise the government to change its protectionist policies in the car industry.
Finally, Kesavan said that a change of mindset is required in Malaysia. The conditions imposed by the Act require liberalisation in many areas. He said, however, even the legal profession showed resistance to liberalisation. He was of the opinion that all Malaysians should look at how we can open up the Malaysian market. He conceded that this will take a long time considering that other jurisdictions took 20 to 30 years to do so.