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The Ministry of Domestic Trade Co-operatives and Consumerism ("MDTCC") has promulgated the Guidelines on Foreign Participation in the Distributive Trade Services in Malaysia ("Guidelines") to regulate foreign participation in certain distributive trade sectors in Malaysia.
Under the Guidelines, all foreigners (except those in the manufacturing sector) intending to participate in the various regulated forms of distributive trade are generally required to seek the approval of the MDTCC. The MDTCC may impose certain equity or other conditions to grant such approval.
The Guidelines does not have the force of law although foreigners intending to participate in the regulated forms of distributive trade sector who choose not to comply with the Guidelines may encounter administrative consequences when dealing with Government bodies, thus deterring compliance.
The types of barriers vary depending on the scale and type of distributive trade, broadly be categorised into: (i) large-scale (e.g. hypermarkets, superstores); (ii) smaller-scale (e.g. specialty stores); and (iii) prohibitive form of distributive trade. For the large-scale and smaller-scale distributive trades, barriers may take the form of the prescribed minimum paid-up capital and percentage of bumiputera directorship, bumiputera participation in the distributive share, and formulation of employment policies to reflect the racial composition of the Malaysian population. The prohibitive forms of distributive trade are only reserved for Malaysians without any foreign participation.
Given that Malaysia is moving towards a globalised world, and many other economic sectors are gradually being liberalised by the Government to encourage competition, it remains to be seen whether the Government will liberalise the distributive trade sector in the country by eliminating the above barriers to encourage more foreign participation in the years to come.
The Malaysia Competition Commission ("MyCC") has finalised and published the Guidelines on Financial Penalties ("Guidelines") after a nationwide public consultation earlier this year. The Guidelines is based on the statutory framework of Section 17 and Section 40(1) of the Competition Act, 2010 ("Act"). Section 17(2)(b) grants MyCC powers to impose remedial relief including a financial penalty if it finds that there is an infringement of a prohibition in Part II of the Act. Section 17 of the Act grants the MyCC broad powers to carry out the performance of its functions under the Act and a specific power to impose a financial penalty for any infringement of the Act. Essentially, the quantum of the financial penalty to be imposed is at MyCC’s discretion as long as it does not exceed the statutory maximum established by subsection 40(4), which is 10% of the worldwide turnover of the infringing enterprise during the period of infringement.
The Guidelines lists factors that will be considered by MyCC in determining the amount of any financial penalty in a specific case. A non-exhaustive list of aggravating factors and mitigating factors are also provided.
The Malaysia Competition Commission ("MyCC") has finalised and published the Guidelines on Leniency Regime ("Guidelines") after a nationwide public consultation earlier this year. The Guidelines is based on the statutory framework of Section 41 of the Competition Act, 2010 ("Act"). Section 41 is the specific provision to assist MyCC in dealing with any cartel activity. It allows MyCC to grant a reduction of up to a maximum of 100 percent of any penalties that could otherwise be imposed on enterprises in breach of Section 4 and specifically subsection 4(2) of the Act.
The Guidelines on Leniency Regime clarifies that the leniency regime established under Section 41 is available only to an enterprise which admits to an infringement of the prohibition against a horizontal agreement with an anti-competitive object outlined in subsection 4(2) of the Act. This regime would also extend to enterprises belonging to a single economic unit named in the application as an applicant. MyCC will grant differing percentages of reductions of financial penalties, taking into consideration any circumstances including: (i) the fact that the enterprise was the first enterprise to come forward to the MyCC about an infringement; (i) the stage in the investigation, if any; (iii) the information or other form of cooperation to be provided; (iv) and the information already in possession of the MyCC.
The decision on the Malaysian Airlines ("MAS") and AirAsia Bhd's appeal to the Competition Appeals Tribunal ("CAT") over breach of the market-sharing prohibition in Section 4(2)(b) of the Competition Act, 2010 ("Act") is expected to be known in March 2015.
This is an appeal against the Decision of MyCC on 31 March 2014 which found Malaysian Airline System Berhad, Airasia Berhad and AirAsia X Sdn. Bhd. ("AAX") to have infringed Section 4(2)(b) of the Act by entering into an agreement that has as its object the sharing of markets within the air transport services sector in Malaysia. MyCC imposed on both parties a financial penalty of RM10,000,000.00 each. MyCC considered AAX as an enterprise that forms a single economic unit with AirAsia.
Both MAS and AirAsia have lodged an appeal to CAT against that Decision.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Christopher & Lee Ong
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Contacts: Lee Hock ChyeManaging PartnerD +603 2273 1919F +603 2273 8310hock.chye.lee@christopherleeong.comYon See TingPartnerD +603 2278 8311F +603 2278 8322see.ting.yon@christopherleeong.comFiona SequerahPartnerD +603 7958 8310F +603 7958 8311fiona.sequerah@christopherleeong.comLim Wee HannPartnerD +65 62320606wee.hann.lim@rajahtann.comYau Yee MingPartnerD +603 2278 8311F +603 2273 8322yee.ming.yau@christopherleeong.comKuok Yew ChenPartnerD +603 7958 8310F +603 7958 8311yew.chen.kuok@christopherleeong.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
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