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The MyCC has, potentially, the power to help raise competitiveness within an ethical framework. But, says Errol Oh, it will take courage, commitment and competence

This article was first published in the November/December 2013 Malaysia edition of Accounting and Business magazine.

Some businessmen are ambiguous about competition. It depends on whether they are on the outside looking in or vice versa. Those new to the game passionately argue for a level playing field, cheering each time a barrier to entry is removed. However, once they have established a firm foothold, they strive to grab the largest possible slice of the pie and have no qualms taking out competitors who stand in the way of market dominance.

After all, it is in the nature of a business to seek profit maximisation, which is usually when its rivals have been subdued or when the fight for market share has eased.

Neither of these has to be a bad thing unless the lack of competition weighs down the economy by breeding inefficiency, smothering innovation and shortchanging consumers. In such a case, the government will have to step in to tame this inclination towards anti-competitive behaviour.

It took several years to take off but Malaysia now has a competition policy backed by statute. If enforced wisely and fearlessly, the Competition Act 2010 will help usher the country to its New Economic Model (NEM).

In a December 2010 report, the National Economic Advisory Council points out that to achieve the NEM goals of high income, inclusiveness and sustainability, the fundamentals of doing business in Malaysia have to change to enable the private sector ‘to step up and make a full contribution to growth’.

Part of this new approach is the promotion of healthy competition across and within sectors to revive private investment and market dynamism. This is why Malaysia is among the more than 130 countries that have a competition law regime.

The origin of the Competition Act goes back to 1995, when the Fair Trade Practices Bill was drafted. A decade later, the cabinet approved the Fair Trade Practices Policy. However, it was only in June 2010 that the Competition Act and the complementary Competition Commission Act were enacted. After an 18-month grace period to build awareness and readiness, the Competition Act came into force in January 2012.

Given that Malaysia’s competition policy is relatively young and is a pivotal component of the country’s economic transformation plan, it is fascinating to follow how the Malaysia Competition Commission (MyCC) is spearheading the implementation of the policy.

Competition law is complex and evolving. As one MyCC commisioner puts it, it is an economic law couched in the language of ethics and rights. The regulator has to study the effects of an infringement; it is not enough to proceed based just on the charge that the infringement happened. An additional challenge is that according to a recent study by the MyCC, less than 10% of Malaysian businesses are aware of competition law.

This is a situation that requires the right balance of advocacy and enforcement but as always, it is the latter that best reflects the will behind the law.

The MyCC’s first enforcement case was the 2012 non-penalty decision against an association of flower growers for price fixing. It was not big enough to be a defining moment for the commission, but there are pending cases whose outcomes can certainly send strong signals to the market.

With the Competition Act having been in force for almost two years, the MyCC says it will no longer take a soft approach in enforcement. That is a bold statement. Yes, we can be cynical about it. Or better yet, we can root for the commission. With courage, commitment and competence, it can help raise competitiveness within Malaysia. We should be more than pleased to see that happen.

Errol Oh is executive editor of The Star

Last updated: 5 Nov 2013