Jurisdiction - Malaysia
Reports and Analysis
Malaysia – Spring-Clean Your Operations, Give Yourself A Head Start.

26 January, 2015

 
 
2014 saw competition authorities worldwide ramping up their enforcement efforts with total fines of over USD 5bn in cartel penalties.
 
Not only are the fines increasing in magnitude, the integration of businesses on a global scale has also spurred and reinforced transatlantic co-operation between the US and EU authorities, which is further strengthened by MoUs with the competition authorities of Canada, Japan, Korea, Brazil, Russia, China and India. Interactions between competition authorities are also intensified through platforms such as the International Competition Network, a multilateral forum for over 100 world enforcers, and the OECD Competition Committee, which facilitates discussion on common cases and concerns. Newer competition regimes including Malaysia are also strongly encouraged to join the cooperation network, allowing them to benefit from knowledge transfer and assistance of others.
 
Indeed, the Malaysia Competition Commission (MyCC) has also ramped up its enforcement efforts in its first 3 years of operations, actively investigating over 15 of the numerous complaints it has received.
 
MyCC’s scoreboard in 2014 includes:
 
  • Financial penalties of MYR 20.7m on cartels;
  • Its first proposed decision for abuse of dominance;
  • Investigations into vertical restraints;
  • The use of interim measures during investigations;
  • Extension of enforcement into East Malaysia; and
  • New guidelines on leniency and penalties.
 
With the impending introduction of the goods and services tax (GST) this coming April, MyCC has warned businesses that it would clamp down on those taking advantage of GST to collectively fix prices.
 
By now, you should be familiar with the mantra that infringement of the Competition Act 2010 can cost you 10% of your worldwide turnover for the duration of the infringement. This can relate as far back as 2012’s revenues and could be amplified by fines in other jurisdictions.
 
Refreshing Compliance
 
If you’ve already got a compliance programme, here’s how to spike it up. If you don’t have one, the sooner, the better!
 
  • Tone from the top. Without commitment to compliance from senior management, compliance tends to slip between the cracks. It’s important for management to understand the risks and to buy-in to the need for compliance. The trend towards imposing personal liability and imprisonment in other jurisdictions should bring home the urgency.
  • Legacy conduct and contracts also attract liability. Even pre-Competition Act practices, like ghosts of the past, can come back to haunt you. Furthermore, leniency regimes are powerful tools to get companies to confess and provide damaging evidence implicating other cartel members in exchange for immunity from or a reduction in financial penalties. But applications for leniency require complex consideration, so do seek advice before embarking on this.
  • Vet agreements & consider the actual practice. Ever so often, people sign agreements with full compliance clauses, but the actual practice belies the window-dressing. Remember that the authorities will investigate the conduct, too. We find that effective training helps mitigate the risks, as does internal whistle-blowing.
  • Consider the economic effect. Seemingly innocuous clauses (e.g. give me your best price, restrictions in advertising) may have anticompetitive outcomes, and should be analysed in the context of the relevant market.
  • Avoid corporate amnesia. Investigations may delve deep into past conduct, but because personnel move on, it may become difficult to dig up information to defend or justify a decision. Establish a practice of properly documenting rationale and economic data.
 
Find Your Balance
 
The interesting, and sometimes bewildering aspect of competition law compliance is finding the right balance, being pro-business and not being overly conservative. The good news is that not every restraint that you discover is necessarily anti-competitive. Competition law weighs the net economic benefits visa-vis the detriments to competition, and in some cases, what may look anti-competitive on its face, can be permissible. Seeking legal advice would thus allow you to compete fairly and confidently.
 
Zicolaw Logo-Pantone 

For further information, please contact:

 

Sharon Tan, Partner, ZICOlaw

sharon.suyin.tan@zicolaw.com

 

ZICOlaw Competition & Antitrust Practice Profile in Malaysia

 

Competition & Antitrust Law Firms in Malaysia 

Comments are closed.