First three sets of Guidelines Issued under Malaysian Competition Law

INTRODUCTION

Five months after the Competition Act 2010 ("Act") came into force on 1 January 2012, the Malaysia Competition Commission ("MyCC") has issued the final version of three guidelines (collectively, "Guidelines") it had previously made available for public consultation last year. The Guidelines comprise of the following:

Guidelines on Chapter 1 (Anti-competitive Agreements); Guidelines on Market Definition; and Guidelines on Complaint Procedures. MyCC had invited comments on the draft versions of the Guidelines in a public consultation that took place between 24 November 2011 and 30 December 2011.

The Guidelines provide clarity on key procedural and substantive matters under the Act, and outline MyCC's enforcement approach and priorities with regard to the relevant provisions of the Act. Businesses should pay heed to MyCC's positions set out in the Guidelines to ensure that they have a holistic understanding of their competition compliance obligations in Malaysia.

This update summarises the key features of the Guidelines, discusses the salient changes between the draft and final guidelines, and briefly sets out the implications for businesses.

GUIDELINES ON CHAPTER 1 (ANTI-COMPETITIVE AGREEMENTS) ("CHAPTER 1 GUIDELINES")

Chapter 1 of the Act sets out the prohibition against anti-competitive arrangements or understandings, decisions by associations and concerted practices (collectively, the "agreements"). Both anti-competitive agreements with competitors (also known as "horizontal agreements"), and anti-competitive agreements between undertakings at different levels of the production or distribution chain (also known as "vertical agreements") are prohibited if they have the "object or effect of significantly preventing, restricting or distorting competition in any market" in Malaysia.

Horizontal agreements such as price-fixing, bid-rigging, market sharing, and limiting/controlling production will be regarded as having the object of restricting competition, and will be considered anti-competitive without MyCC having to assess the actual effects of these agreements. To help the industry better understand the types of agreements prohibited by object, the final Chapter 1 Guidelines elaborates on what types of behaviour would be regarded as price-fixing, bid-rigging, market sharing and limiting/controlling production.

MyCC reminds businesses that

"enterprises should avoid communicating with competitors about price or engaging in any kind of joint conduct that could restrict competition...sales and marketing people in the field... should not talk to competitors about price etc at association meetings or in the market". Further refrains include, "enterprises should ensure that those making decisions on pricing, record the basis on which they make their decisions", in order to "avoid possible future...