Competition Law In Brief

Posted on 15 April 2015

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Malaysia is relatively a new jurisdiction in the development and enforcement of competition law. The principal legislation, i.e. Competition Act 2010, is enforceable from 2012.

Competition law, also known as antitrust law or antimonopoly law, which is promoting market competition by regulating anti-competitive conducts of the commercial entities.

Therefore, the commercial contracts within the jurisdictions which practice competition law, shall not incorporate any of the anti-competitive elements. Otherwise, the whole contract could be void, the parties to the contract could be fined.

What is anti-competitive practice?

The definition of the prohibited anti-competitive practice could be different from one jurisdiction to another. However, in general, the practices could be categorized in the following categories.

Horizontal Agreement

The agreement between the competitors, in fixing the standard market price, to share the markets at the agreeable portion, to restrict the productions of each other, or any other conduct may harm market competition.

Vertical Agreement

The agreement between players at different levels of market, e.g. between manufacturer and reseller on the resale price maintenance to the consumer, or between supplier and customer on restriction supplies to customer’s competitors, or any other conduct may harm market competition.

Abusive Behavior

Abusive behavior by the monopolist or the dominant player, e.g. reduces its prices to less than cost in order to drive a competitor out of the market, or to deter a competitor from entering the market, so that it can subsequently charger a higher price.

Mergers

The market player acquires its main competitor and resulted the consumer deprived from choices and may have to pay a higher price.

Stricter enforcement

As the competition law develops, the national enforcement agency has become more experience and comprehensive in tackling anti-competitive practice. Therefore, the corporate counsel need to pay attention to commercial practice and ensure the commercial contracts and policies are comply with the local competition laws.

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