Seminar on Competition Act

Speech by Tan Sri William Cheng

23rd February 2012 9.00 am

Distinguished speakers of today’s seminar,

Ladies and Gentlemen,

Good Morning.

First of all, on behalf of ACCCIM, I would like to extend our warmest welcome to everyone present here today. I would also like to convey our special thanks to the speakers and the panelists for taking valuable time off to be with us today to share their experience and knowledge. Our invited speakers, Ms. Dhaniah Binti Ahmad, who heads the Legal Unit of the Malaysia Competition Commission (MyCC), and Mr. Chris Jose, who is a partner of the Freehills Legal Practice from Australia, are experts in the subject of Competition Law, and they have years of experience and contributions in this area. Ms. Dhaniah Binti Ahmad and Mr. Chris Jose will be providing information and analysis of the Competition Act, which has recently come into force in Malaysia. Mr. Chris Jose will also be discussing the Malaysian Competition Law from the perspective of the Australia Competition Law. By the end of the day, we believe the participants present will be able to better understand the contents of the Competition Law and its impact on their businesses.

Ladies and Gentlemen,

I believe that many of the participants present here today are not quite aware of what the Competition Act is all about, or the implications of the Act on their businesses.

So what is the Competition Act?

Generally, the Competition Act is a law that governs all the economic activities in every sector of Malaysia’s economy. In effect, the Competition Act regulates the practices of all business entities, including domestic and international business entities operating in Malaysia. The Competition Act is aimed at promoting and protecting the competitive process by changing business practices. However, this Act is not restricted to monopolistic and cartel practices, but encompasses all forms of businesses, ranging from international companies to Small and Medium Enterprises, hypermarkets to airlines, and including enterprises such as media institutions, banks, insurance companies, private hospitals, accounting firms, legal firms etc. In essence, almost all industries are subject to the regulation of the Competition Act.

Ladies and Gentlemen,

The Competition Act 2010, which came into force on Jan 1, 2012, is conceived to prevent businesses (or a small set of companies – oligopolies) from exploiting their dominant market position to engage in price fixing in attempt to monopolise the market. Nonetheless, the Competition Act 2010 governs the practices of all business activity in Malaysia, and thus its enforcement is expected to bring enormous impact to large, medium and small enterprises. This is especially so for small and medium enterprises, which in terms of percentage of total establishments account for about 99% of all businesses in Malaysia. As of now, we can surely say that almost all business activities will be affected by the Act. As such, the business community really needs to look into this issue seriously.

It is a known fact that the global trend of legislating Competition Laws has become increasingly common in recent years. Currently, more than 160 countries have established Competition Laws or similar laws in order to promote a fair competition practices among businesses. The common objectives of these Competition Laws are to curb monopolistic price fixing, to create a fairer and more transparent business environment, to safeguard the quality of products and services, and to offer more choices for consumers through fair competition of businesses.

Although the enforcement of Competition Act aims to promote a competitive environment and vitality of Malaysian businesses, I hope that the Government could review some of the provisions in the current form of the Competition Act, and provide reasonable exemption to the SMEs from the Act. The main reason being that the SMEs are operating in an increasingly intense competitive environment within the globalised economy, and are subject to peculiar problems and challenges compared to larger enterprises. To cite an instance, the SMEs do not have the capacity to absorb the regulatory pressures exerted by the Competition Act, and are limited by their lack of professional and legal back up required to comply with the Competition Act. The additional challenges presented by the Competition Act will make an already difficult business environment worse for the SMEs, and hence it is likely that many SMEs in Malaysia may face difficulties too great for them to continue operating. In view of the haste in implementation of the Competition Act, many businesses still do not fully comprehend the complexity of the Act, and in fact, some businesses are not even aware of its existence. It is therefore natural that there is much uncertainty and concern within the business community.

In view of this, ACCCIM would like to propose that the Government and Malaysia Competition Commission provide adequate exemptions to SMEs from the Act. This will allow the SMEs concerned to achieve growth, and develop in capability and scale to the level that is ready for full regulation by the Competition Act.

I believe that the participants in this seminar will be able to learn and benefit from the invaluable information and guidance provided by the two speakers, gain a better understanding of the Competition Act, and voice out their constructive views concerning the Competition Act.

Thank You.