Legal News: Competition Act – Ignorance Is No Excuse

THE Competition Act 2010 (CA 2010) has been in force for over a year, and yet there are still a large number of businesses that are not complying with its provisions. Is this because they do not understand how it applies to their businesses or is it because they are part of an even larger number that still do not know of its existence. Either way, the Malaysia Competition Commission (MyCC) is concerned.

The CA 2010 received royal assent on June 2, 2010, but did not come into force until Jan 1, 2012. This 18-month moratorium was deliberate as the Government wanted to give businesses sufficient time to understand the new law and to make any changes required to their business practices.

The MyCC has worked hard to raise awareness and educate the Malaysian public, businesses and government on the existence of the CA 2010 and what it means.

Since the beginning of 2011, the MyCC has conducted more than 60 seminars, targeted at a wide range of interest groups from SMEs to government procurement officers to trade and business associations. This advocacy work continues with SME and bid-rigging roadshows planned for 2013.

In spite of this, many businesses still do not know of the existence of the law, while others believe it does not apply to them.

These are worrying facts. Is it that those who attended the seminars have not distributed the relevant information or do they think that their counterparts will not be interested or it is not of their concern?

To assist the public at large to understand the CA 2010, the MyCC has published four sets of guidelines explaining how key provisions of the legislation will be interpreted. For the man on the street, a Handbook for the General Public, a simplified non-legal guide to the CA 2010, was published last year.

Efforts are underway to publish a Guide for Businesses, which will offer more in-depth information about how the provisions of the CA 2010 are likely to be applied by the MyCC, together with practical and case examples.

Throughout this advocacy work, the MyCC has been stressing the need for Malaysian businesses to become competition-compliant. Yet a 2012 survey conducted by the Federation of Malaysian Manufacturers found that almost 20% had not taken any steps to comply with the CA 2010, albeit only 16% of businesses responded to that survey.

Given the nature of the advocacy work and publicity that MyCC has undertaken, it is difficult to accept that businesses are not aware of the existence of the CA 2010.

The MyCC is concerned that businesses, particularly small businesses, think the CA 2010 does not apply to them. This is something that is of particular concern as the CA 2010 applies to any entity that carries on a “commercial activity”. This is a broad concept and will cover almost all businesses, big and small, in Malaysia.

For small businesses, the burden of understanding and complying with the CA 2010 may seem insurmountable. This is where the trade associations can assist as they are the ones who are best placed to inform their members of the implications of the CA 2010 and help them to comply.

If trade associations themselves need to obtain a better understanding of the CA 2010, the MyCC can assist.

It is clear that many businesses do know about the CA 2010 and what it means. The MyCC received 12 complaints from businesses last year. It has five ongoing investigations, one request for a block exemption and two requests for individual exemptions. The MyCC is well-placed to continue to build on this initial work. Starting with only five staff members, the MyCC continues to grow in size and stature. It has recently opened its new office in Menara SSM at KL Sentral and now has a dedicated enforcement team.

Although still in its infancy, it has already made its first decision, finding the members of the Cameron Highlands Flower Association to be guilty of price fixing. No other competition authority anywhere in the world made its first decision in its first year of operation.

In Asean, it is way ahead of its neighbours. Vietnam took four years to make its first decision. Singapore took two years and Thailand still has not made a decision although its legislation has been in force since 1999. The MyCC has achieved international recognition for the work it has done in such a short time.

The MyCC will continue with its advocacy work as it recognises the important role this work plays. However, businesses must step up and take responsibility for their own compliance with the CA 2010. Neither the Act nor the process of competition compliance should be feared.

For those businesses that are not yet “competition compliant”, the message from the MyCC is clear. Its “soft touch” approach to enforcement came to an end on Dec 31, 2012. From now on, the MyCC will be imposing penalties on any businesses that are found to have infringed the CA 2010, particularly the hard-core cartel provisions.

Penalties can be up to 10% of worldwide turnover. Hard-core cartels (price fixing, market sharing, bid rigging and limiting production or supply) are the most serious infringements of competition law. In some jurisdictions these offences are considered criminal, punishable by individual fines and/or imprisonment.

Perhaps some businesses will only take the CA 2010 seriously when the MyCC starts to impose significant penalties on those found to be breaching the law. The MyCC does not intend to be a toothless tiger and will not be sympathetic to any claim that a business did not know that the law applied.

Ignorance of the law will not be an excuse. So do not be the first to feel the weight of the new law.

Source: The Star

Published:

By: Shila Dorai Raj

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