Competition Law and Policy in Malaysia: Creating a Viable Market Economy

1. Competition Law and policy in Malaysia, 30 September 2010, Kuala Lumpur Speech by Hassan Qaqaya, HeadCompetition policy and Consumer Branch,UNCTADhassan.qaqaya@unctad.org

2. Competition Law and Policy as an integral part of good economic governance • Provides an efficient regulatory framework and practices; • Promotes creation of a viable market economy capable of competition on its own in global markets. • Provides a link between the political system and a competitive market economy.

3. The missions of the Competition agency: • Clearly define how the competition agency intend to implement the law; • Define its relationships with government, STOs, private sector and civil society; • The enforcement of the competitionlaw must be grounded in law and restraint by law.

4. The competition agency and business law • The competition agency as part of the legal reforms to protect private and public rights; • Respects due process and prevents arbitrary decisions; • Contibutes to legal certainty about conducting business; • Enforces the competition law in fair and transparent maners.

5. 1 Five Major Tasks for implementing the competition Act 2010 and the Competition commission ACT 2010: • Creating the authority responsible for enforcing the law • Drafting administrative regulations that describe how the competition office will operate

6. 2 • Drafting guidelines that describe how the competition office will use its substantive powers under the law • Building the expertise of courts/tribunal responsible for reviewing decisions by the competition office; and • Enhancing the capability of other institutions, such as professional associations, universities, that could support the operating the competition policy system.

7. Developing a Competition Advocacy Programme • Building institutions to support competition policy system: • University teaching of the competition law • Workshops/Seminars for lawyers • Training of judges

8. Establishing an Education and Communication Programme: • Educate consumers and business leaders • Communication with the media / TV • Publicise decision

9. Educating the Public ( consumers) • Educate consumers • Awareness Rights • Report anti-competitive-practices • Encourage and support the creation of consumer associations • TV, radio and media communications

10. Educating Business : • Timely access to information; • facilitates enforcement and compliance; • Information about rights and obligations; • Hard-core cartels; • Barriers to entry; • Abuse of dominance;

11. Educating Regulators : • Establish arrangements for consultations and coordination with sector regulators; • Promote consumer interests during privatisation of utilities; • Advocate coherence between competition and sector regulation; • Participate in public hearings on sector regulations.

12. The Tasks ahead • The provisions of the Malaysian Competition regime are set out in the Competition Act 2010 and the Competition Commission Act 2010. • The institutional framework to carry out the provisions of the regime can be established in three phases : • Preliminary phase - Initial Ministry activities e.g. obtaining short term budget, requesting housing for the Commission etc. • Phase I: Preparatory Steps - Appointing Commissioners, developing a work plan etc. • Phase II: Commencing Operations - Establishing Commission functions, hiring Commission employees and producing guidance and procedural rules.

13. The Competition Commission • The CCA establishes the Competition Commission (the "Commission"). The CCA sets out the Commissions functions and powers and details its composition, overall structure and financing. The Commission is the primary competition authority and is tasked with the investigation and enforcement of the infringements set out under the CA.

14. The Competition Commission Additional functions of the Commission include, inter -alia: • providing advice to the Minister and other public authorities on matters concerning competition, • alerting the Minister to the actual or likely anti-competitive effects of current or proposed legislation and to make recommendations to the Minister for the avoidance of these effects, [acting as an advocate for competition matters, • carrying out market studies on competition in the Malaysian economy, • educating and raising awareness of competition laws to people in commerce or trade as well as to the general public, and • considering and recommending competition law reform

15. The Competition Commission • To perform these functions, the Competition Acts give the Commission wide powers to obtain information and documentation, access records and data, carry out search and seizures, conduct hearings and impose interim measures and penalties on enterprises.

16. Scope of the CA 2010 • Malaysian competition regime is comprised of two pieces of legislation: the Competition Act 2010 (the "CA") and the Competition Commission Act 2010 (the "CCA") (together, the "Competition Acts"). • The CA lays out the substantive provisions of Malaysia's competition regime and contains two prohibitions. The first is set out in Chapter 1 which prohibits anti-competitive agreementsand forbids agreements between enterprises with the object or effect of preventing, restricting or distorting competition. The second is in Chapter 2 which prohibits the abuse of a dominant position by enterprises.

17. Preparing Guidelines • Guidelines on anticompetitive agreements • Guidelines on the scope of the Competition Act • Guidelines on anticompetitive agreements • Guidelines on relief of liability • Guidelines on abuse of a dominant position • Guidelines on the principles to be used in determining financial penalties or remedies imposed under section 40 of the Competition Act

18. Preparing Guidelines ../.. • Guidelines on applications for individual exemption and the cancellation or variation of individual exemptions • Guidance on the making of a complaint and on the handling of complaints under section 15 of the Competition Act • Guidelines on agreements of minor importance which do not significantly prevent, restrict or distort competition (de minimis) • Guidelines on market definition • Guidelines on Leniency programme

19. Exemptions • Guidelines on the scope of the Competition Act (section 3, section 13 and the Second Schedule to the Act) • A standard form should be developed as a priority for applications for individual exemption under section 6(1) of the CA.

20. Block exemptions • CA section 8(1). If agreements which fall within a particular category of agreements are, in the opinion of the Commission, likely to be agreements to which section 5 applies, the Commission may, by order published in the Gazette, grant an exemption to the particular category of agreements. • In addition to providing legal certainty to the private sector in the form of a safe haven, a block exemption saves competition authority resources which might otherwise be tied up in the assessment of applications for individual exemption. The Commission would therefore be advised to consider whether any block exemptions should be introduced at the same time as the CA comes into force at the beginning of 2012

21. Handling complaints • Introduce Guidance on the making of a complaint and on the handling of complaints under section 15 of the Competition Act. • This Guidance should include a standard form for lodging the complaint. For useful precedents in this area / • As regards the question “who might be eligible to lodge a complain”, section 15(1) CA provides the “Commission may, upon a complaint by a person, conduct an investigation”. • Given the rather unqualified reference to “person”, query whether the Commission should be advised to limit the persons who might make a complaint.

22. Guidance on determining penalties procedure on the issuance of penalties and fines • Many jurisdictions require that the competition authority considers the gravity and the duration of the infringement concerned in determining fines. • Also guidelines should provide the methodology for the setting of fines. Many jurisdictions follow a two-step methodology: • Step 1: the competition authority determines a basic amount of fine which normally reflects the value of the company’s sales, the degree of gravity of the infringement and the number of years of infringement. • Step 2: taking into account relevant circumstances, the competition authority may adjust the basic amount upwards or downwards.

23. The Competition Appeal Tribunal • The CA creates the Competition Appeal Tribunal (the "CAT) (see section 44). The primary role of the CAT is to review decisions of the Commission upon appeal by any person who is aggrieved or whose interest is affected by a decision of the Commission. • The CA also provides extensive powers to the CAT to allow the effective execution of its functions. Such powers include inter alia, the ability to summon parties, procure and receive evidence and require the production of information documents (see section 57). • Note that a decision of the CAT is final and binding on the parties to the appeal

24. The Prime Minister and Trade Minister • The Competition Acts also gives the Minister the power to: • make regulations aimed at complementing and enhancing the objects and purposes of the CA (see CA section 65); • monitor Commission finances (and CCA section 30); • compound offences; • amend by order the Second Schedule to the CA which specifies those activities not subject to the Chapter 1 and 2 prohibitions (see CA section 13); and • give to the Commission directions of a general character, consistent with the provisions of the competition laws, relating to the performance of the functions and powers of the Commission (see CCA section 18).

25. The role of external partners • Networking with other competition agencies, international organisations and ICN; • Access to expertise and knowledge; • Formal and informal bilateral and regional cooperation agreements on competition policy; • Peer learning, including peer review.

26. Thank you for your kind attention Hassan Qaqaya Hassan.qaqaya@unctad.org