MyEG's Penalty For Abuse Of Dominant Position

The Competition Appeal Tribunal upheld the Malaysian Competition Commission's decision that My E.G. Services Berhad and its wholly-owned subsidiary have abused their dominant position in the provision and management of online Foreign Workers Permit renewals.

On 28 December 2017, the Competition Appeal Tribunal ("CAT") upheld the Malaysian Competition Commission's ("MyCC") decision on 24 June 2016 that My E.G. Services Berhad ("MyEG") and its wholly-owned subsidiary, My E.G Commerce Sdn. Bhd. ("MyEG Commerce") have abused their dominant position in the provision and management of online Foreign Workers Permit ("PLKS") renewals.

Brief Facts and MyCC Decision

In 2012, MyEG signed an agreement with the Malaysian government to provide an online system for PLKS renewals. In order for a PLKS renewal application to be successful, an employer of foreign workers has to fulfil several conditions including the purchase of three mandatory policies for the foreign workers ("Mandatory Insurance"). MyEG Commerce is an agent for several insurance companies for the sale of the Mandatory Insurance.

The MyCC found that MyEG has abused its dominant position by engaging in various conduct, including:

MyEG, being the only platform for provision and management of online PLSK renewals had in effect made it compulsory for the employers of foreign workers to purchase the Mandatory Insurance from MyEG Commerce; MyEG had induced the employers of foreign workers to purchase the Mandatory Insurance from MyEG Commerce by implementing additional verification steps for employers who purchase these policies from other insurance companies for which MyEG Commerce was not an agent; and MyEG had leveraged its dominance in the upstream market of online PLKS renewal service, in the downstream market of sale of Mandatory Insurance. cease and desist immediately from imposing different conditions to the equivalent transaction in the processing of Mandatory Insurances for PLKS renewals;The MyCC imposed a total financial penalty of RM2,272,200.00 on MyEG ("Initial Penalty").

Decision

On 28 December 2017, the CAT upheld MyCC's decision and imposed a financial penalty of RM6,412,000 on MyEG and MyEG Commerce (comprising the Initial Penalty and a daily penalty of RM7,500 from 25 June 2016 to 28 December...