| (1) | What is the status of the proposed competition policy in Malaysia? |
Competition policy in Malaysia currently exists at a very nascent stage.There is no comprehensive competition policy at the national level which cuts across all economic sectors.Competition policy has been applied in two economic sectors, namely the communications and multimedia sector and the energy sector.
Efforts to introduce a national fair trade policy and law predate attempts to implement competition policies at the sectoral level. Officials from the Ministry of Domestic Trade and Consumer Affairs (�he Ministry) began studying the possibility of introducing a national fair trade policy as early as 1991. The need to introduce a national fair trade policy have been recognized in the Eighth Malaysia Development Plan (2001-2005).Efforts towards this end is expected to be completed by the end of the Eighth Plan Period.
To support the need for such a policy, empirical evidence of anti-competitive conducts and their significant impact on domestic economy are required. Taking this into account, the Ministry commissioned the Malaysian Institute of Economic Research to conduct a study to assess the extent of anti competitive conduct in the country.
The empirical evidence gathered in the study does indicate that a significant number of industries in the manufacturing sector are highly concentrated. They include several sub-industries in the food, wood, chemical, rubber, plastic and transport industries. While these are not direct evidence of anti- competitive conduct, they provide some partial indication that the structural (market) conditions for anti-competitive conducts certainly exist. More direct evidence further indicates that the more prevalent types of restrictive business practices that can be found in the manufacturing sector include exclusive dealings and resale price maintenance. In addition, there is also some evidence of collusion to set floor prices in the sector.Though this may be so, more substantive evidence is needed to confirm these practices.Further research on the impact of such practices on the market is needed.
The Ministry has also intensified its competition advocacy program in the last two years to consult the private sector and officials from other ministries on the need and benefit of sucha policy.
| (2) | Though Malaysia does not have a comprehensive competition policy, does competition regulations exist in certain sectors? |
THE COMMUNICATIONS SECTOR
Section 133 of the Communications and Multimedia Act 1998 contains a general prohibition of �ny conduct which has the purpose of substantially lessening competition in a communications market��.The Communications and Multimedia Commission (CMC) has issued guidelines to clarify the meaning of �ubstantial lessening of competition�� and define �ominant position��.
In addition to the general prohibition in section 133, collusive agreements to fix rate, share market, boycott suppliers or competitors are specifically prohibited in section 135.These collusive agreements are prohibited per se.
Section 136 further prohibits product or service tie-in arrangements in the communications market.Product or service tie-in arrangements in the communications market are also prohibited per se.
Where any infringement of the prohibition occurs, the CMC is empowered to instruct the offender to cease the conduct or to implement remedial measures. The CMC may also seek to obtain an interim or interlocutory injunction against the offender and obtain the permission of the Public Prosecutor to prosecute the offender in the Sessions Court.
Refer to www.cmc.gov.my
THE ENERGY SECTOR
In contrast, provisions for the enforcement of competition policy in the energy sector remained only broadly defined in the Energy Commission Act 2001.The Act provides that one of the functions of the Energy Commission is �o promote and safeguard competition and fair and efficient market conduct or, in the absence of a competitive market, to prevent the misuse of monopoly or market power in respect of the generation, production, transmission, distribution and supply of electricity and the supply of gas through pipelines�� (Section 14).
CONSUMER PROTECTION ACT 1999
The Act prohibits certain practices that are not only unfair to consumers but also addresses unfair means for businesses to gain a competitive advantage over its rivals.It also prohibits the making of false or misleading representation with respect to the sale of goods and services.The Act also contains provisions relating to safety standard of goods, implied guarantees with respect to goods and services and product liability. The Act also establishes the Consumer Claims Tribunal to hear and determine disputes relating to any violation of the consumer� right referred by the Act.
THE SECURITIES INDUSTRY
In the securities sector, the Securities Commission (SC) Act 1993, does not directly address competition issues. The SC examines and approves mergers and takeovers of listed companies to consider the viability, capability, suitability of a company and the public� interest before allowing such M & As. Although the rights of minority shareholders are protected with rules of fair conduct, nevertheless the question of market structure which emerges from such an M & A is not considered.
| (3) | What are the main challenges faced by Malaysia in formulating a comprehensive competition policy? |
Among the challenges/problems that are being faced by the Ministry are as follows:
- With respect to government agencies, the main challenge is the lack of understanding on competition policy issues and its role in the economy.
- The private sector is also apprehensive about the types of business practices that will be considered anti-competitive or restrictive such as resale price maintenance and exclusive dealing. They are unsure about exemptions that would be granted under the proposed legislation.
- Lack of capacity in terms of manpower and institution in formulating and enforcing a Competition Act for Malaysia.