MyEG loses appeal at the Competition Appeal Tribunal

This case is particularly interesting if we look at it from the aspect of MyEG having imposed different conditions to equivalent transactions in the processing of mandatory insurances….,

reinforcing the fact that if a service provider having a dominant position must not dictate differential in transaction terms where given everything being equal.

Hope you guys have a good read of the material….

The Competition Appeal Tribunal (CAT) has dismissed My EG Services Bhd’s (MyEG) appeal against the Malaysia Competition Commission’s (MyCC) decision to fine it RM2.27mil for allegedly abusing its dominant position in how it managed online foreign workers permit (PLKS) renewals.

In a filing with Bursa Malaysia, the e-Government services provider said the tribunal had on Thursday upheld the MyCC’s decision with a consequential amendment.

In addition to the financial penalty of RM2.272mil for the infringement periods of Jan 5, 2015, to Jan 22, 2015, and May 2, 2015, to Oct 6, 2015, there is an additional daily penalty amounting to RM7,500 computed from June 25, 2016, to Dec 28, 2017.

MyEG is also to cease and desist immediately from imposing different conditions to equivalent transactions in the processing of mandatory insurances for online PLKS renewal applications.

Furthermore, it must provide an efficient gateway for all its competitors in the market for the sale of the mandatory insurances and allow the other competitors to compete at the same level within 60 days.

MyEG said its board had reviewed the CAT’s decision with the company’s legal counsel and intended to seek a judicial review and also apply for a stay against the CAT’s decision.

“The board of directors wishes to reiterate that the CAT’s decision is not expected to have any material financial and operational impact to the company,” it added.

According to MyCC’s statement in June last year, it found that MyEG, together with its wholly-owned subsidiary MyEG Commerce Sdn Bhd, had infringed the Competition Act 2010 by “abusing its dominant position in harming competition in the downstream market in which MyEG Commerce is participating as an insurance agent for online PLKS renewal applications.”

The competition authority said different conditions were imposed to equivalent transactions with its competitors to the extent that it had harmed competition in the downstream market for the sale of mandatory insurances.


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1 comment for “MyEG loses appeal at the Competition Appeal Tribunal

  1. Vijay
    December 31, 2017 at 09:18

    MyCC sheds light on MyEG’s abuse of market position
    December 29, 2017 19:40 pm +08
    KUALA LUMPUR (Dec 29): The Malaysia Competition Commission (MyCC) today shed light to the reasoning behind the penalty imposed on MY E.G. Services Bhd (MyEG) for infringing the Competition Act 2010.

    “MyEG Commerce Sdn Bhd, a subsidiary of MyEG, had entered into an agency agreement with RHB Insurance to act as an agent for RHB Insurance Bhd to sell, among others, mandatory insurances for the renewal of temporary employment permits for foreign workers (PLKS),” said MyCC in a statement today.

    “MyCC’s decision arose from its findings that the Appellants’ (MyEG) conduct had resulted in faster renewal times for customers who chose to purchase mandatory insurances from RHB Insurance via the Appellants for the renewal of PLKS due to the fact that there was automatic verification for the said insurances purchased from RHB Insurance,” it added.

    On the other hand, customers who choose to undertake similar service from other non-agent insurance companies will experience extra verification steps being imposed by MyEG which resulted in longer renewal times, said MyCC.

    “This in turn created pressure on the customer to purchase mandatory insurance from RHB Insurance via the Appellants,” it said.

    MyEG said in a bourse filing yesterday that the Competition Appeal Tribunal (CAT) had dismissed the company’s appeal against the decision by MyCC.

    The decision by CAT, said MyCC, affirmed the latter’s decision and imposed on MyEG financial penalties totalling RM6.14 million. “However, the total amount may increase should the Appellants fail to comply with CAT’s directions,” said MyCC.

    The penalties comprise a financial penalty of RM2.72 million as at June 24, 2016, and daily penalty of RM7,500 from June 25, 2016 to Dec 28, 2017.

    Other terms enforced on MyEG include for the company to “cease and desist immediately from imposing different conditions to the equivalent transaction in the processing of PLKS mandatory insurances renewal applications”, said MyCC, failure of which will cause MyEG to add to the daily penalty.

    MyEG is also required to provide an efficient gateway (Online Renewal System Services) for all its competitors and potential new entrants that offer the service within 60 days beginning Dec 28, it added.

    “It has been MyCC’s objective from the beginning to ensure that companies in a dominant position do not abuse their position as this could have a very negative impact on consumers and the national economy as a whole,” said MyCC chief executive Datuk Abu Samah Shabudin.

    “MyCC will continue, without fear or favour, to be vigilant in ensuring competition law is adhered to and will not hesitate to take firm action against those who violate the law,” said Abu Samah.

    MyCC added that it is currently actively targeting cartel activities — companies that engage in price fixing, setting trading conditions by way of rebates and discounts, and market allocation and sharing.

    “Some of the companies that were investigated by the MyCC for cartel activity include players from the aviation industry, ice manufacturing, logistics and sand traders,” it said.

    It also pointed to pending judicial review of the CAT’s decision in the case between MyCC against Malaysian Airline System Bhd (MAS) and AirAsia Bhd (AirAsia). “The hearing for the said judicial review will be held on March 7, 2018,” it said.

    Shares of MyEG closed one sen or 0.45% lower to RM2.23 today, giving it a market capitalisation of RM8.04 billion.

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