The reception of competition law within the community in Malaysia is still at its early stage of introduction although Competition Act has been legislated since 2010. It is surprising that the subject that aims to benefit consumers as a whole is not wholly known to the public. Generally, competition law regulates how business entities operate in their industry and deliver an outcome that positively affects other entities in the field, which is their competitors and consumers. All in all, it governs how business firms compete with one another.

To put it into examples, say company A monopolises the sale of chicken in one area, such as a neighbourhood called Taman Utama. The said company made an agreement with other chicken suppliers to not supply in Taman Utama. Consequently, the sale of chicken in the area belongs only to company A. In effect, company A could raise the price of chickens without losing customers, since customers would have no alternatives to purchase their supplies.

And that is only one way to look at it. Besides the increasing price, the quality of products could also decline as company A would no longer be motivated to improve. Why would they? Their sales are secured. In the end, customers are left with pricier and less quality chicken with no other options to choose from.

From the standpoint of other suppliers who wanted to expand their business in Taman Utama, with company A monopolising the area, the suppliers would be discouraged from entering the market. Which means less profit for them, that could possibly kill their business. As such, company A has not competed fairly, as a result, it has created domino effects to the detriment of consumers and its competitors. This is what competition law aims to prevent.

Circling back to the agreement made between company A and other suppliers, the agreement itself is prohibited by section 4 of Competition Act. The aforementioned section forbids agreements between firms that restrict, distort or prevent competition whereby infringement would be penalised by Malaysian Competition Commission. Thus, firms regardless of their size and sector should take into account the governing law to ensure their practice is aligned with the legislation in place. An example of the possible penalty can be seen in the case of MyEG, whereby Malaysian Competition Commission imposed RM9.64 million with a daily penalty of RM7,500 for MyEG’s non-compliance to Competition Appeal Tribunal’s decision.

Conclusively, this relatively new area of law is focused on the welfare of the community entirely, ensuring the market in Malaysia is on par with international standards so consumers would be able receive innovative products and services at competitive prices and business firms would be able to compete with one another on merits. Nevertheless, the agreement made by company A is just one example of anti-competitive agreement that is prohibited by competition law, there are exhaustive scope that the law covers such as, the abuse of dominant firms and price-fixing, which is a term where business enterprises collude to set prices of products and services, rather than allowing the free market to set the prices naturally.

Article Disclaimer: The contents written above and/or in this website do not constitute a legal advice and should not be relied upon by any parties as such. Please reach out to us for further enquiries.

Leave a Reply

Your email address will not be published. Required fields are marked *