Competition law is often overlooked by business owners and directors, yet it plays an important role in how companies operate in Malaysia. The Competition Act 2010 exists to promote fair competition and prevent business practices that harm consumers and the market.
Many breaches occur not due to bad intentions but because businesses are unaware that certain conduct is prohibited.
What Competition Law Regulates
Competition law focuses on two main areas.
① It regulates agreements between businesses that may restrict competition.
② It controls how companies with strong market power behave.
The Malaysia Competition Commission (MyCC) is responsible for enforcing these rules. Businesses that breach the law may face investigations, penalties, and reputational damage.
Agreements That Restrict Competition
Businesses are not allowed to enter into arrangements that limit competition. This includes agreements to fix prices, divide markets, limit output, or rig bids.
An agreement does not need to be written to be illegal. Verbal understandings or informal arrangements may still be caught if they affect how businesses compete. Even discussions at industry events or casual meetings can create risk if sensitive business information is shared.
Abuse of Market Power
Holding a strong position in the market is not illegal by itself. Problems arise when a business uses that position unfairly.
Examples include charging excessive prices, refusing to supply without justification, applying different terms to similar customers, or blocking competitors from entering the market. These actions may attract scrutiny if they distort fair competition.
Why Directors and Business Owners Should Pay Attention
Breaches of competition law can result in heavy penalties. Fines can reach up to ten percent of worldwide turnover during the infringement period.
Investigations may also disrupt daily operations and damage business reputation. Directors and senior management may be questioned, and enforcement actions can attract public attention.
Common Risk Areas
Many competition issues arise unintentionally. Common risk areas include:
• Pricing discussions with competitors
• Collaboration or joint ventures without legal review
• Distributor or reseller arrangements that restrict pricing
• Exclusive dealing arrangements without clear justification
Businesses should be cautious when dealing with competitors, even in informal settings.
Reducing Competition Law Risks
Awareness is key. Business owners should ensure employees understand what conduct is not allowed.
Practical steps include reviewing contracts regularly, seeking advice before working with competitors, keeping records of commercial decisions, and providing basic training for management teams. Preventive measures are often far less costly than dealing with enforcement actions later.
Competition law applies to businesses of all sizes in Malaysia. Knowing the basic rules helps owners and directors make informed decisions, compete fairly, and avoid unnecessary legal exposure.
Simple awareness and careful practices can go a long way in protecting a business from serious consequences.
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