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Malaysia’s Business Competition Attitude

By Ravichandran D. J. Paul

KUALA LUMPUR, Jan. 1 (PNA/Bernama) — Welcome Jan 1, 2012, the start of the new year and the date where the Competition Act 2010 comes into effect to foster healthy competition among businesses and promote investor confidence in Malaysia.

Malaysia is the fourth Asean nation to introduce specific rules to govern competition and ensure fair market play after Indonesia and Thailand introduced similar legislation in 1999, and Singapore in 2004.

Today there are more than 100 competition laws in the world, with the first legislation piece can be traced back to the famous Sherman Anti-Trust Act passed in 1890 by the US Congress.

Many will recall the famous United States vs. Microsoft civil suit filed pursuant to the Sherman Antitrust Act on claims that Microsoft Corporation had abused its dominant position to eliminate its opponents in marketing the company’s offerings.

Back home, the Malaysian Competition Commission (MyCC) has already raised eyebrows when it indicated that its first task after the law came into effect is to look for anti competitive elements following the share swap deal between Malaysian Airlines (MAS) and AirAsia.

Nonetheless, in the present day context, the Competition Act 2010 brings Malaysia on par with the developed nations of the world.

The Competition Act is designed not only to promote efficient functioning of the markets but will also benefit the man on the street with competitively priced goods and services engendered by healthy competition.

THE WORKINGS

The MyCC chairwoman Tan Sri Norma Yaakob during a recent talk organized by International Chamber of Commerce Malaysia noted that there are two major prohibitions under the legislation, i.e. anti competitive agreements and abuse of dominant positions.

“This Act is intended to promote a competitive environment and give foreign investors more confidence in the country’s business practices.

“Most crucial is that the Act will govern all firms, including government-linked companies (GLCs).

She emphasized that the law was not designed to inhibit business but to create a level playing field for industry players.

As for some organizations, she pointed out the competition law is nothing new. Malaysian Airlines is a good example where it successfully countered the “anti-competitive behavior” claim by the European Commission in 2010. Another 11 foreign airlines were not so lucky as the Europe’s competition watchdog slapped a fine totaling almost 800 million euros (1.1 billion US dollars) after finding they had coordinated pricing on their cargo business.

THE DOS AND DON’TS

At the domestic level, companies have to be familiar with the dos and don’ts of the Competition Act and appear more vigilant.

She said it might be useful to review existing internal processes, procedures and behavior to ensure compliance with the Act.

Companies were also advised to look at existing agreements that might run foul of the law. It might be good practice to establish a competition compliance program within the organization itself to manage these issues effectively.

Most important, the companies and their representatives have to be reminded not to engage in discussions that might be viewed as anti-competitive in nature. This would entail communications in relation to price-fixing, bid rigging etc.

“This is crucial, as a breach of the Act can hurt the company and disrupt business operations and not to mention a loss of reputation as well as a hefty fine up to 10 per cent of the enterprise’s worldwide turnover,” she said.

“Competition Act is part of the building blocks for us to compete on the global front. For the year 2011 our efforts paid off,” she said.

Malaysia had jumped five spots to 18th from 23rd in the World Bank’s ranking for 2011 in Ease of Doing Business on the back of reform under the New Economic Model, coming in fifth among all East Asian economies behind Singapore, Hong Kong, Korea and Thailand.

“We regained 21st place ranking in the World Economic Forum’s Global Competitiveness Index in 2011 after falling to 26th in 2010,” she said.

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