1. “Competition Policy & Law” For Malaysian Competition Commission (MyCC)
CUTS Institute for Regulation & Competition
Awareness Programme on
“Competition Policy & Law” For
Media & Government Agencies By
Malaysian Competition Commission (MyCC)
Kuala Lumpur
June 08 – 09, 2013
22 November 2018

2. Competition Policy & Law
- Hariprasad C G, CIRC
The views expressed herein are personal and not purported to reflect those of the CIRC
22 November 2018

3. What is Competition?
Competition occurs when two or more firms are pursuing the same objective at the same time
In a healthy market economy companies compete with each other to gain the purchase of the consumer
Competition then leads to:
Greater efficiency
Fair prices
Innovation
22 November 2018

4. Competition… Is a Dynamic Concept
Is an amalgam factors that stimulate economic rivalry
Is a tool to mount market pressure
Is a tool to penalise laggards..
And is a tool to reward the enterprising
22 November 2018

5. Competition Policy vis-à-vis Competition Law
22 November 2018

6. Goals of Competition Policy
Preservation and promotion of the competitive process
Efficiency in production and allocation of goods and services
Innovation and adjustment to technological change
Sustained economic growth
Protection of consumer interests
22 November 2018

7. Applicability of Competition Law
All undertakings engaged in manufacture, supply and distribution in the private sector
Public sector undertakings owned by the government or government undertakings
Statutory corporations
Undertakings under the management of controllers appointed by law
Cooperative societies
Financial institutions, banks
22 November 2018

8. Rubric of Competition Law
Competition law generally has four compartments :
Anti-competition agreements
Abuse of dominance
Mergers, amalgamations, acquisitions and take-overs
Fostering competition
22 November 2018

9. Is Competition Law Required at all..
With globalization, there is likely to be significant restructuring of manufacture, trade and services
Domestic consolidation and entry of foreign entities
Anti-competition practices may surface as a consequence
WTO fall out obligations need to be addressed
Regulatory and advocacy functions need to be posited
Without a cop, trade traffic may prejudice consumer interest
Competition law will be a cop and a friend
22 November 2018

10. (Car Glass manufacturer)
World-wide enforcement – More than 130 countries already have competition laws
Largest recent
US cartel fine
USD 700 million
in 2005/06
(DRAM semiconductor
memory products)
Highest EU
cartel fine to date
EURO 1.4 billion
in 2008
(Car Glass manufacturer)
Highest individual
UK fine to date
GBP122 million
in Aug 2008
(BA, fuel surcharges)
INTEL fine on
abuse of dominance
EURO 1.06 billion
on May 2009
Microsoft
fined for bundling
EURO 497 million
in Mar 2004 and further
EURO 899 million
for not paying earlier
fine in Feb 2008
22 November 2018

11. Encourages Innovation
BENEFITS OF COMPETITION
Decrease in prices
Telecom – Tariffs per second or minute have come down drastically
Improves Quality
Two Wheelers – from 30 kmpl to 100 kmpl
…and choices lead to consumer achieving better quality at lower prices eg. airtravel
India big market, leaders in growth
Economic Growth
Creates Choices
Witnessed across goods, be it electronics, mobiles, automobiles….
Encourages Innovation

12. Benefits of Competition
These benefits to consumers and producers can take place only if competition in the markets is free and fair.
But the competition in markets is not always fair; there may be distortions to the competition through anti-competitive behavior of the market players.

13. Prohibitions regime Market Behaviour Section 4 Section 10 Prohibition
Anti – competitive
agreements
Section 10
Prohibition
Abuse of dominant
position
Mergers
and
Acquisition
22 November 2018

14. S4 Prohibitions - Anti – competitive agreements
Section 4 of the Competition Act 2010 (Act 712) (“Act”) prohibits horizontal agreements and vertical agreements between enterprises where such agreements have the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services
Section 4
Prohibition
Horizontal or
vertical
agreements
Object or
effect
Significant
prevention,
restriction or
distortion of
competition

15. Definition of ‘agreements’
Need not be in the form of formal agreement
Contracts, understanding, whether or not legally enforceable
“concerted practices” or "gentleman's handshake"
Decision of associations
22 November 2018

16. Meaning of concerted practice
"a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition"
Main elements:
1. Mental consensus - direct or indirect contact/conduct
2. Factual based (similar behaviour/circumstantial evidence)
3. Differentiate with independent parallel behaviour/oligopoly defence

17. Horizontal agreement Manufacturer A Manufacturer B Horizontal
Distributor A
Distributor B
Horizontal
Agreement
Traditionally, competition policy regards horizontal agreements as being more objectionable as these agreements are made between competitors.
Some horizontal agreements are considered Hard Core and are absolutely prohibited (S4(2)).

18. Vertical agreement Manufacturer Wholesaler Retailer Vertical Agreement

19. Meaning of 'object' or 'effect'
'Object' Type of Agreement
Types of agreement the anti-competitiveness of which can be determined simply from their object
deemed to have the purpose of restraining competition
unnecessary to prove agreement would have an anti competitive effect
subjective intention irrelevant

20. Meaning of 'object' or 'effect'
'Effect' Type of Agreement
Where it is not possible to say that the object of an agreement is to restrict competition, it is then necessary to conduct an extensive analysis of its effect on competition in the market before it can be found to infringe section 4 CA 2010

21. Stay Away !!!! The Object Box Horizontal agreements: to fix prices
to limit/share markets
to limit sales/production
to bid rig
to exchange current or future price information
collective exclusive dealing
perform group boycott
Vertical agreements:
to fix resale prices to wholesalers/distributors/retailers

22. Vertical Restraints...mostly requires effect type analysis
Resale price
maintenance
(RPM)
A producer / manufacturer’s contractual requirement that its product
be retailed at a fixed or minimum price to consumers
Specification of a maximum price and/or recommended resale price (RRP)
is “usually OK” unless the specified price has the effect of fixing the retail
terms of sale or dampening retail price competition.
Exclusive
distribution
A manufacturer supplies its (branded) product to only one distributor
or wholesaler or retailer in a particular territory or geographical area
It may have the effect of preventing “downstream” market entry and
“intra – brand” competition
Selective
distribution
A manufacturer supplies its (branded) product to a limited number of
dealers who are contractually restricted from selling other brands
It may foreclose a market to inter – brand competition at the retail level
11/22/2018

23. 22 November 2018

24. Lets decide who will win
22 November 2018

25. Price cartel Users and Consumers Entrepreneur A Entrepreneur B
Entrepreneur C
Entrepreneur D
Users and
Consumers
Decision of
selling price
among
competitors

26. Abuse of Dominance a) Exploitative
Directly harm consumers. Ex – Excessive price
b) Exclusionary
Indirectly harm consumers foreclosing competitors and as a result increasing firms’ ability to increase prices to consumers. Ex –
Exclusive Dealing
Tying & Bundling
Predation
Refusals to Supply & Margin Squeeze (?) (vertical foreclosure of downstream rivals)
Denial of Market Access or Foreclosure of Raw Material Sources
22 November 2018

27. Is it fair competition?
22 November 2018

28. Whatever….
….The result is clear.
22 November 2018

29. 22 November 2018

30. Thank You
22 November 2018