This update is relevant to SMEs and the larger, more established businesses operating in Malaysia, as it reinforces the legal framework surrounding competition law and the importance of compliance.
On September 11, 2024, the Shah Alam High Court dismissed a judicial review application by five warehouse operators who had challenged the Malaysian Competition Commission’s (MyCC) 2021 infringement decision concerning price-fixing cartel activities at Port Klang. This ruling affirms MyCC’s findings and the financial penalty of RM1.043 million imposed on the operators. The decision signals the importance of maintaining competitive business practices by emphasizing the legal risks of anti-competitive behaviour.
Case Background
The case originated from a MyCC investigation in 2017, which uncovered illegal price-fixing agreements among several warehouse operators concerning the handling of long-length and heavy-lift import and export cargo at Port Klang. MyCC ruled in 2021 that these actions violated Section 4 of the Competition Act 2010, resulting in the imposition of a RM1.043 million financial penalty. While two operators accepted the decision, five contested it, leading to the judicial review.
This is the second failed attempt by the operators to overturn MyCC’s decision, having previously lost an appeal before the Competition Appeal Tribunal (CAT) in 2021. The High Court upheld both MyCC’s findings and the CAT’s ruling, affirming that the operators had breached Section 4 of the Competition Act, which prohibits agreements between enterprises that significantly prevent, restrict, or distort competition. Specific anti-competitive practices, such as price-fixing, market-sharing, and bid rigging, are highlighted in this section as actions that distort the competitive market environment.
The Court found that the warehouse operators were not entitled to any relief, effectively reinforcing MyCC’s role in regulating and penalizing anti-competitive behaviour in the marketplace.
Implications for Businesses
- Clear Warning against Anti-Competitive Practices: The High Court’s decision sends a strong message that anti-competitive conduct, such as price-fixing, will not be tolerated. This creates a fairer competitive environment, where businesses of all sizes, especially smaller companies and startups, can operate without the threat of established players manipulating market conditions through illegal means.
- Importance of Competition Laws: The ruling underscores the necessity for businesses to actively comply with competition laws. Companies must ensure that their pricing strategies and market conduct align with the legal framework to avoid significant penalties or legal actions from regulatory bodies like MyCC.
- Increased Scrutiny and Enforcement: With MyCC’s ongoing vigilance and enforcement activities, businesses can expect more rigorous monitoring of their pricing policies and operational practices. Companies should maintain transparency and vigilance in their dealings to ensure they remain compliant with competition regulations.
The High Court’s dismissal of the judicial review strengthens MyCC’s position as a regulatory authority and highlights the importance of adhering to competition laws in Malaysia. Businesses, regardless of size, should relook into their commercial agreements, pricing policies, legal terms with suppliers, distributors and customers through the lenses of competition law, and remain cautious about their pricing strategies and market practices to avoid punitive actions. This decision ultimately promotes a more competitive and transparent business environment.
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This article was written by Toh Jia Yi (Associate) from Donovan & Ho’s corporate and commercial practice group.
Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds. Feel free to contact us if you have any queries.
