Jurisdiction - Malaysia
News
Malaysia – Competition Highlights.

10 February, 2014

 
 

Malaysian Competition Commission (“MyCC”) Grants Conditional Block Exemption For Liner Shipping Agreements

 

On 19 December 2013, following studies into the shipping industry and consultations with stakeholders and relevant government agencies, the MyCC has issued a conditional Block Exemption Order (“BEO”) for liner shipping arrangements. The agreements subject to the exemption are Vessel Sharing Agreements (“VSA”) and Voluntary Discussion Agreements (“VDA”) between liner operators made within Malaysia or which have an effect on the liner shipping services in Malaysia. There are various conditions attached to the exemption of VSAs and VDAs including, inter alia, that they do not contain any elements of price fixing and are for a reasonable period of time only. In addition, the agreements have to be filed with MyCC.

 

VSAs and VDAs typically involve coordination between shipping operators in respect of their capacity and schedules and could involve the exchange of detailed market and commercial data. Such activities, if not otherwise exempted, fall foul of section 4 of the Competition Act 2010, which prohibits such anti-competitive agreements. The decision to exempt these agreements was because they gave rise to significant identifiable benefits, which include the frequency and quality of shipping services. However, VSAs will not benefit from the BEO if they contain arrangements on rates of tariffs charged.

 

Notably, the BEO only exempts transport services provided by liner operators for ocean transport, and excludes intra-modal transport services. Thus, any inland carriage of goods, including services provided by logistics providers, forwarders, depot operators, truckers, railroads, off-dock consolidation service providers, and off-dock storage and warehousing service providers are not exempt. Separately, the BEO does not provide immunity where parties abuse their dominant position.

 

The proposed BEO was issued further to an application filed by various associations in Malaysia in December 2011. The BEO is expected to be in force for three years from the date the order is published in the Gazette, and will be reviewed two years from the date of its commencement. As at the date of this Update, the BEO has not been gazetted.

 

MyCC Issues Draft Guidelines On Leniency And Financial Penalties

 

On 15 January 2014, MyCC issued two separate sets of Guidelines for public consultation: the Draft Guidelines on Leniency and the Draft Guidelines on Financial Penalties. Whilst the draft Guidelines on Financial Penalties are very brief and do not provide much detail on the aggravating and mitigating factors used by MyCC when calculating the amount of the fines to be imposed, the draft Leniency Guidelines include details on the procedure to be followed, the conditions that can be imposed on the leniency applicant, and the stage at which unconditional leniency will be granted. However, it is not clear from the draft whether leniency will only be granted to the first leniency applicant or otherwise, a point that will hopefully be addressed further to the public consultation.

 

MyCC Probes Alleged Cartel Behaviour In Ice And Stationery Markets

 

The MyCC has launched preliminary investigations into the ice manufacturing and stationery industries for alleged price-fixing. On 24 December 2013, 26 ice manufacturers had published an advertisement in a local newspaper advertisement their decision to increase the prices of edible tube ice by 50 sen per bag and RM2.50 per block from January 2014. In a similar move, on 27 December 2013, the Federation of Stationers and Booksellers declared that the price of stationery will be increased come the first quarter of 2014.

On 21 January 2014, MyCC issued interim measures to prohibit the 26 ice manufacturers from implementing the agreed price increase. No similar action has been taken, as yet, against the Federation of Stationers and Booksellers.

 

Schedule 1 To The Competition Act Amended

 

With effect from 1 January 2014, Schedule 1 of the Competition Act 2010 has been amended to exclude commercial activities regulated under the Petroleum Development Act 1974 and the Petroleum Regulations 1974 from the application of the Competition Act insofar as such activities are “directly in connection with upstream operations comprising the activities of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore Malaysia”.

 

 

For further information, please contact:

 

Kuok Yew Chen, Partner, Christopher & Lee Ong
yew.chen.kuok@christopherleeong.com

 

Yon See Ting, Partner, Christopher & Lee Ong
see.ting.yon@christopherleeong.com

 
Competition & Antitrust Law Firms in Malaysia

Comments are closed.