introduction of Competition Act in Malaysia has been
enthusiastically awaited and long overdue and is poised to make
Malaysia a more competitive nation and a dynamic place to do
15 years in the making, the Act will be enforced on Jan 1, 2012. It
contains several provisions including prohibition against
anti-competitive agreements and abuses by dominant players, and
power to conduct market reviews.
Act complements the Price Control and Anti-Profiteering Act 2010,
which came into enforcement on April 1, 2011 that oversees the
determination of maximum, minimum or fixed price-controlled goods or
fully implemented, Malaysia will be in alignment with over 100
jurisdictions globally – mainly in developed countries – that
have anti-trust laws. The Act will create a business environment
conducive to greater competition that will reshape the behaviors of
businesses in the country for the better.
having such an Act by itself is not a guarantee for more business
and trade, it certainly helps enhance confidence among investors,
businesses and traders in Malaysia as a country that promotes
healthy competition and innovation, supports entrepreneurship and
advocates fairness in business.
the maritime sector, shipping activities and port operations will no
doubt be influenced by the introduction of the Act.
will be pleased to know that cut-throat freight charges imposed by
liner shipping companies and the collusion among companies to
influence certain market conditions will be curbed by the Act.
arrangements between ports and their users favouring the latter
(based on volume of business), for example giving priority to empty
over laden boxes, may also be under the scrutiny of the Act.
Likewise, preferential berthing or other special treatments given by
port operators to their users, some of which hold shares in the
terminals where they call, may also be subjected to the Act.
kind of market force
from the Act, a new kind of market force will be unleashed and will
make its mark on the maritime sector.
is foreseen that the fulfillment of objectives of the Act will lead
to a streamlining of ports in the country and better allocation of
scarce and huge amount of resources. This will curtail
“competition of attrition” among our ports and will lead to
greater specialisation of services that can generate higher revenues
and margins for port operators.
business environment without “guided competition” that regulates
anti-competition activities leads to haphazard distribution of
cargos and inefficiency along the supply chains; something which
Malaysia can ill-afford at a time when competition among nations to
attract cargos and shipping lines is getting keener.
this end, the recent announcement by the Joint Global Shippers Forum
to promote anti-trust laws in Asia should make governments sit up
and take note. Similar laws have been enacted in Europe, for example
regulating liner shipping, and in the United States to regulate
arrangements among carriers but Asian countries have not taken the
cue to bring their practice into line with Europe and US to protect
shippers from shipping lines’ anti-competition practices.
October 2008, liner shipping companies have lost their privileged
status under European Union (EU) competition law arising from the
abolishment of the liner conference block exemption. The exemption
allowed “horizontal price-fixing” and similar agreements between
liner shipping companies. In areas where the liner consortia block
exemption does not apply, all cooperative arrangements are carefully
and individually vetted under the competition provisions of the
European Council Treaty.
competition regime, while lauded by shippers, in the EU liner
shipping context is not without problems, though.
shipping companies have had to reconfigure their discussion
agreements and business strategies to accommodate the abolishment of
the block exemption so generously accorded to them before the
enactment of the EU competition law. This has led to greater
competition among them in the EU trade, which in turn is lauded by
was reported that Hong Kong’s OOCL, a powerful player in the liner
shipping trade, cautioned against implementing anti-trust laws that
act as an impediment to shipping lines from developing solutions and
rationalisation exercises to deal with capacity overhang. While
stopping short at endorsing price-fixing conferences, the company
lamented that anti-trust laws have restricted liner companies from
collectively discussing issues affecting the liner trade.
coming from the world’s 11th largest container shipping operator
(based on 2010 ranking) is noteworthy. OOCL’s grouse echoes that
of many other liner companies which fear that the onslaught of open
competition will adversely affect their business.
anxiety is echoed by the recent recommendation of Singapore
Competition Commission for the Singapore government to extend the
block exemption to allow liner conferences to continue their trade
until December 2015, with minor changes. This was made on grounds
that anti-trust exemptions remain the norm for the global liner
trade and most of Singapore’s trading partners. Getting into the
act are Australia and Japan, which are also looking to apply
competition rules on liner shipping.
the Act coming into play, companies operating in the maritime sector
are expected to make a major leap forward and be at their “best
business behaviors”. Operating in a borderless theatre,
Malaysia’s maritime sector, which facilitates 95% of the
nation’s trade, is expected to lead from the front in realising
the targets of the Act, in line with the aspiration to make Malaysia
a regional shipping and logistics hub and a globally competitive
an open but small economy, Malaysia must put in place an
institutional framework that will not only lure investors and
businesses but also to align local companies with international best
practices to enable them to compete globally.
skeptics of anything good introduced by the Government would be
hard-pressed to argue against the virtues of the Act. However, those
who will be affected by the Act must keep to the letter and the
spirit of the Act, which must be strictly enforced without fear or
favour, to ensure its optimal effectiveness and the attainment of
dynamism generated in the marketplace by the injection of greater
competition and innovation through the Act can only be good for a
country that is racing against time to become a fully developed
nation by 2020. Sharp focus will be trained on the maritime sector
to help fulfill this lofty ambition.
Khalid is a senior fellow at Maritime Institute of Malaysia.