Competition law update | A Stronger Grip On Associations

I read about the following article on Lexology recently, in which MyCC made mention of the likelihood that an association running foul of the Competition Act when discussing or working on initiatives or best practices concerning their members’ joint interests. Even joint statistical or pricing projects like what our industry has consolidated under the banner of Insurance Services Malaysia (ISM) may run foul of the Act. Perhaps the industry can now kiss goodbye to ISM coming out with some forms of persuasive pricing for the detariffed era.

Read and enjoy; but don’t forget to leave some comments behind!

MYCC TOUCHES ON ASSOCIATIONS AND THE MALAYSIAN COMPETITION ACT

On 20 May 2013, a Malaysian local newspaper published an article by the Malaysian Competition Commission’s Chief Executive Officer (“MyCC CEO”) concerning associations and the Malaysian Competition Act 2010 (“CA”).

Although it was acknowledged that associations could provide benefits to its members such as providing competition law training and assisting members on industry-wide issues, the MyCC CEO highlighted two potential areas of non-compliance by associations which are of particular concern to MyCC:
(1) sharing commercially sensitive information; and
(2) price-fixing.

The MyCC CEO noted that many associations commonly collect and disseminate industry data and statistics for their members. Where such information is commercially sensitive (for example, information on retail sales and market shares of members) and is disaggregated such that they can be easily attributed to specific members, competition law issues are likely to arise as such dissemination reduces the uncertainty that would normally exist in a competitive market. By comparison, if the information disseminated is historical (eg the information cannot influence future market behaviour), it is less likely to breach the CA.

The MyCC CEO also highlighted that an agreement to fix prices is a serious breach of the CA. Although it has been a common practice in Malaysia for members to look to their associations for direction or, at the very least, guidance on what prices should be charged, the MyCC CEO emphasised that such activity is now illegal under the CA. Instead, the MyCC CEO recommended that associations and their members adopt the best practice of not discussing prices or any pricing-related matters.

The MyCC CEO further suggested that associations could put in place a compliance policy that is available to all their present and potential members, which includes:
(1) reviewing their rules of admission, standard terms and conditions, codes of conduct and certification schemes to remove, for instance, conditions that have the effect of excluding players from the market and are therefore anti-competitive;
(2) creating lists of “dos” and “don’ts” to govern association meetings, to make clear to members what can or cannot be discussed; and
(3) requiring their members to complete competition law training.

The MyCC CEO indicated that MyCC would be looking to publish guidelines for associations in future, and in the meantime, recommended that associations seek independent legal advice when in doubt as to the way the CA applies to their activities.

In August 2013, MyCC stated that it had finalised the results of its study on the price-fixing and fee scales by associations and professional bodies, and would be publishing these on its website in due course.

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