It has been a difficult few weeks for Malaysia as we navigate a new norm amidst the COVID-19 outbreak. The majority of people are abiding by the government’s Movement Control Order (“MCO”) by staying home, cancelling plans, and avoiding crowded spaces.

Many companies have begun alternative work arrangements enabling their employees, where possible, to work remotely from home. This measure, though keeps the wheel turning, does not help those in the retail, manufacturing or production sectors where operations have come to a grinding halt. Even those in e-commerce will soon begin to experience interruptions as stock piles dry up.

No exceptions during COVID-19

In this period of crisis, businesses with the best of intentions, want to take care of their customers and their employees. Worries creep in on how they can continue to pay salaries, rent, creditors and other commitments without generating any output. Companies may, at first instinct, want to discuss with their counterparts and peers within the industry for insights to the best practices or approaches to protect their stakeholders, reduce business risks and ensure continuity of their business. They may also be inclined to approach trade associations to hold meetings or discussions to attempt to control and manage the situation. Some of the discussions may inevitably centre on issues of supply, distribution and pricing or areas for collaborations.

It is understandable for businesses to seek out ways of trying to maximise returns, especially when there were protracted periods of interruptions due to the MCO. The need to ensure optimum business efficiency may unwittingly lead them to explore or collaborate with competitors. However, amidst these activities, businesses are reminded to be mindful of the provisions of the Competition Act 2010 (“Act”), which continue to remain in full force and thus far, no provisions have been suspended. The Act does not carve out any special exemptions during this period and to date, the Malaysian Competition Commission (“MyCC”) has not made any statements or formal decision to that effect.

Remain vigilant while co-operating with peers

As such, pursuant to the Act as it stands now, it can be illegal to attend a meeting with other businesses, including trade association meetings where business strategies, especially prices are discussed. Companies are reminded, amongst others, NOT TO:

• discuss the prices that they may charge;
• agree with competitors not to sell below a minimum price to help protect profit margins;
• agree between themselves not to sell to the same customers;
• agree between themselves what territories they will operate in;
• tell their distributors that they will stop supplying them if they choose to sell or advertise below the recommended retail price;
• agree to limit supply;
• announce detailed business plans or strategies; or
• if you are a dominate player in the market
• unfairly squeeze out any suppliers or distributors by refusing to buy or supply them; or
• raise prices unfairly to the detriment of consumers.

These actions are deemed anti-competitive and violations under the Act carry hefty fines of up to a tune of 10% of worldwide turnover of the company.

Industries in focus

During this MCO period and thereafter, it is anticipated that the MyCC will pay extra attention to the food industry and other consumer-related goods and services including banking, transportation and fast moving consumer goods sector. MyCC has recently completed its industry review on the food sector and is currently conducting a review of selected wholesale and retail products in the services sector.

Companies should be mindful of any proposed action which may tantamount to any of the foregoing. Proper consultation should be made if uncertain or unclear about how business operations may be affected by the applicable competition laws.

Key Global Competition Update from Dentons Offices

Most global regulatory authorities have maintained the need for strict compliance, exceptionally some jurisdictions including the UK, New Zealand and Indonesia have announced measures to accommodate COVID-19-related industries.

• In the US, all business entities are reminded that there are no COVID-19 or exigent circumstances exception to the antitrust laws.
• In the UK, as part of a wider package of measures designed to help supermarkets address the challenges raised by COVID-19, the UK government announced on 19 March 2020 that it will legislate to relax aspects of UK competition law temporarily.
• In Turkey, the Turkish Competition Authority has recently re-emphasised the importance of competition rules in times of crisis by pointing out that “artificial” price hikes in goods and services (i.e. as observed in the fresh vegetable and fruits market) shall constitute an infringement and noting that they would not refrain from taking necessary measures.
• In Indonesia, the competition authority had announced a series of measures in response to the COVID-19 outbreak. Businesses appointed by the government to assist in disaster management work would be exempted from competition law while action will be taken against those found to hamper the disaster management process. The authorities have reiterated against practice of cartels or excessive pricing and/or hoarding protective equipment, other health products and food-crop commodities needed by the public.
• In New Zealand, the Commerce Commission has issued a relaxation of competition rules for businesses selling essential goods and services.

Client Resources Hub

For more information, our COVID-19 Client Resources Hub is available to the public, as part of Dentons' global commitment to help our clients and our communities navigate this pandemic's legal and business challenges.

Zain & Co. acknowledges Associates Toh Gim Phaik and Aishah Sakinah Mazlan for their contributions to this article. For further information or any related inquiries, please contact our Partner, Salwah Abdul Shukor.