Alice Pham Director, CUTS Hanoi Resource Centre - Vietnam 8 June 2013 Kuala Lumpur 1

National Economy & Market Population of 28.86m (2011) (World Bank) 70% approx of population in West Malaysia 2

National Economy & Market Middle income country (per capita GDP of slightly more than US$ 8,600 in 2010) One of the fastest-growing economies in the world in the last half a century Upgraded itself out of ‘traditional’ natural-resource industries (rubber and tin), first into other natural resources (palm oil), then into processed natural resources (processed palm oil), and then into manufacturing (electronics and others) World’s third highest share of high technology exports (as defined by the World Bank) in total manufactured exports – 40% as of 2008 (Source: Ha-Joon Chang, 2011 – UNDP Lecture) 3

National Economy & Market Free market economy Strong government-led economic policy Prominent presence of government-linked companies – PROTON (car manufacturing) – MAS (airlines) – TM and Axiata (telecommunications & multimedia) – Sime Darby (plantations) 4

Market Liberalization and Sector-Based Regulations New Economic Policy (NEP) 1983: “Malaysia Incorporated” 1991: Privatisation Master Plan (PMP)  Creation of sector-based regulations and regulators – Communications and Multimedia Act 1996 (CMA 1998), Communications and Multimedia Commission Act 1998 (CMCA)  Malaysian Communications and Multimedia Commission (MCMC) – Electricity Supply Act 1990, Energy Commission Act 2001 (ECA 2001)  Energy Commission – Water Service Industry Act 2006  National Water Services Commission 5

Sectoral Approach to Competition Regulation MCMC issued 2 Guidelines & 1 Process document in 2000 – Guideline on Substantial Lessening of Competition – Guideline on Dominant Position in a Communications Market – Process for Assessing Allegations of Anti-Competitive Conduct ECA2001, Art. 14: The Commission shall have the following functions: (h) to promote and safeguard competition and fair and efficient market conduct or, in the absence of a competitive market, to prevent the misuse of monopoly or market power in respect of the generation, production, transmission, distribution and supply of electricity and the supply of gas through pipelines 6

Competition Policy and Law 2005: Fair Trade Practices Policy (FTTP) – Objectives – Scope – Trade Practices Prohibited Abuse of Dominant Position Hard-core Cartels Anticompetitive practices Fair Trade Practices Commission (FTPC) & Fair Trade Practices Appeal Tribunal  2010: Competition Act & Malaysian Competition Commission (MyCC) – no more prohibition on unfair trade practices 7

Competition Act 2010 Covering two main types of behaviours – Anti-competitive agreements (horizontal): price fixing, controlling of market share/production/ distribution and bid rigging are per se illegal (Sec.4) – Abuse of dominant position: imposition of unfair transaction price, refusal to supply, predatory pricing and entry deterrence strategies inter alia (Sec.10) Individual & block exemptions available: when the benefits to society exceed costs Distinctive features – No provision on mergers & acquisitions (M&As) – Exclusion of commercial activities covered under the CMA 1998 and the ECA 2001 – Vertical anti-competitive agreements mentioned & clarified in the MyCC guidelines 8

Institutional arrangements MyCC - An independent regulator to enforce the Competition Act 2010; has introduced 4 guidelines to this effect so far – market definition, – anti-competitive agreements, – complaints procedures, and – abuse of dominant position The MyCC also has the power to undertake “market reviews” to determine whether any of the market's features (or combinations of features) are preventive, restrictive or distortive of competition The Competition Appeal Tribunal to adjudicate cases where an appeal has been filed to review the decision of MyCC  having a legal status equivalent to the High Court where its judgment is final and binding 9

Case Studies Few reported cases: – The Cameron Highlands Floriculturist Association (CHFA) Case – The MAS-AirAsia Share Swap and CCF Agreement Case – The Master Builders Association Malaysia (MBAM) case – The poultry industry 10

Challenges Ahead Awareness raising in the communities – Media engagement Start-up challenges for a young competition authorities: Capacity building, Prioritization of cases, Building reputation & credibility, Garnering public support, etc Advocacy with other government bodies Scarcity of information and data Challenges posed by globalization, integration & international cooperation 11

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