World Wide Enforcement - Competition Law - Lecture Slides, Slides of Competition Law and Policy

Download World Wide Enforcement - Competition Law - Lecture Slides and more Slides Competition Law and Policy in PDF only on Docsity! World-wide enforcement – More than 130 countries already have competition laws Highest individual UK fine to date GBP122 million in Aug 2008 (BA, fuel surcharges) Highest EU cartel fine to date EURO 1.4 billion in 2008 (Car Glass manufacturer) Largest recent US cartel fine USD 700 million in 2005/06 (DRAM semiconductor memory products) INTEL fine on abuse of dominance EURO 1.06 billion on May 2009 Microsoft fined for bundling EURO 497 million in Mar 2004 and further EURO 899 million for not paying earlier fine in Feb 2008 Docsity.com MALAYSIA BOLEH ! Back home in Malaysia Docsity.com What does the Competition Act do? Anti-competitive agreements such as price-fixing, market sharing, bid-rigging, limiting or controlling production Abuse of a dominant position such as unfair pricing, tying/bundling, refusal to deal, predatory pricing Docsity.com S.3 – Scope of Application Functionality approach - “commercial activities” Private or Public authority when carrying out “commercial activity” Ownership or Status irrelevant Effect on competition in any market in Malaysia - extra territorial application Importance Docsity.com Definition of "commercial activity" • Facts/ Circumstances based • Ownership/ Entity irrelevant S3 - Definition of commercial activity "negative listing" approach – wide coverage (maximise scope) • government authority • principle of solidarity • purchase of goods not for an economic activity Docsity.com Definition of "enterprise" • “enterprise” - any entity carrying on commercial activities relating to goods or services, and for the purposes of this Act, a parent and subsidiary company shall be regarded as a single enterprise if, despite their separate legal entity, they form a single economic unit within which the subsidiaries do not enjoy real autonomy in determining their actions on the market; • Single economic entity doctrine - ECJ in Viho vs Commission (1996) • Why definition important? - immunity from competition law - considered to be internal arrangement - penalty computation Docsity.com Definition of "market" “market” means a market in Malaysia or in any part of Malaysia, and when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first- mentioned goods or services What is the relevant market? Docsity.com Market definition test Hypothetical monopolist test - would customers substitute to other products or to other suppliers elsewhere if producers of a product were to raise prices by 5 to 10 per cent (would there be competitive constraint - profitability) Docsity.com S4 Prohibitions - Anti – competitive agreements •Section 4 of the Competition Act 2010 (Act 712) (“Act”) prohibits horizontal agreements and vertical agreements between enterprises where such agreements have the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services Section 4 Prohibition Horizontal or vertical agreements Object or effect Significant prevention, restriction or distortion of competition Docsity.com Definition of ‘agreements’ • Need not be in the form of formal agreement – Contracts, understanding, whether or not legally enforceable – “concerted practices” or "gentleman's handshake" – Decision of associations Docsity.com Meaning of concerted practice ICI vs Commission (usually referred to as Dyestuffs case) (1972) "a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition" Main elements: 1. Mental consensus - direct or indirect contact/conduct 2. Factual based (similar behaviour/circumstantial evidence) 3. Differentiate with independent parallel behaviour/oligopoly defence Consider the following: (a) Fixing of prices by companies. “Coincidently” identical price increase, decision to increase made during similar timing and same modus operandi (b) Golf Gathering among competitors. Casual discussion about future prices, output but no agreements were reached. Docsity.com Meaning of 'object' or 'effect' 'Object' Type of Agreement Types of agreement the anti-competitiveness of which can be determined simply from their object – deemed to have the purpose of restraining competition – unnecessary to prove agreement would have an anti competitive effect – subjective intention irrelevant Benefits for MyCC: (a) Certainty of activities (b) Need not prove agreement has an adverse economic effects (demonstrate extensive empirical evidence) (c) Focus on proving existence of an agreement (resources) Docsity.com Meaning of 'object' or 'effect' 'Effect' Type of Agreement Where it is not possible to say that the object of an agreement is to restrict competition, it is then necessary to conduct an extensive analysis of its effect on competition in the market before it can be found to infringe section 4 CA 2010 Factors to consider in conducting analysis: (a)Determine type of agreement (b)Define the relevant market - product and geographical market (c)Determine whether access to the market was impeded (d)Determine whether agreement contributor to the foreclosure effect Docsity.com Stay Away !!!! Horizontal agreements: •to fix prices •to limit/share markets •to limit sales/production •to bid rig •to exchange current or future price information •collective exclusive dealing •perform group boycott Vertical agreements: •to fix resale prices to wholesalers/distributors/retailers The Object Box Docsity.com Price cartel Users and Consumers Entrepreneur A Entrepreneur B Entrepreneur C Entrepreneur D Decision of selling price among competitors Docsity.com Case – Price cartel Discussion of Express Bus Agencies Association (EBAA) case 3 November 2009 (CCS 500/003/08) • Minimum selling prices • Fuel and insurance surcharge • 16 coach operators and EBAA fined a total of SGD1.69 million for price fixing Docsity.com Case – Price fixing • JJB Sports Plc vs Office of Fair Trading – Competition Appeal Tribunal CAT 17 2004) - Concerning price fixing of England and Manchester United F.C. football jersey by retailers (Umbro Holdings Limited, Manchester United Plc, Allsports Limited, JJB Sports Plc) - Retail price of football jersey increased by £20 (detrimental to consumers) Total fine imposed: £ 14.92 million Docsity.com