OCTOBER 17  — The recent probe by the Malaysian Competition Commission against seven pharmaceutical companies for unethical practices is lauded. They had allegedly given special prices to bigger pharmacies while pushing smaller ones out of business. 

These kind of practices, if found to be true, have a profound effect on the accessibility and pricing of medication for the consumers. 

It is a known fact that the pharmaceutical industry itself is a billion dollar business. I believe the Domestic Trade, Cooperatives and Consumerism Ministry under the minister, Datuk Seri Hamzah Zainuddin, and the Competition Commission are serious about protecting the consumers from unethical market manipulation and unfair practices.

It is heartening that the minister is concerned that drugs sold are safe and affordable. I believe his ministry and the Competition Commission can play an important role in ensuring that a fair and real market price exists in various business sectors. For example, there is a long time suspicion that prices of properties, especially housing, have been artificially priced.

I believe, however, that many business entities are unaware of the Competition Act 2010 and even the existence of the Competition Commission, and this where greater public exposure is required.

While our economy is essentially a market based economy, businesses are always tempted to dominate the market, influence pricing and profit maximise. In this quest they may undertake certain practices which are considered unethical because they tend to distort competition which in turn may affect the consumer’s accessibility to best products and best prices.

The Competition Act 2010, therefore, was passed by Parliament for the express purpose of promoting economic development by promoting and protecting the process of competition. The Act envisages that competition, coupled by ethical market practices, would protect the interests of the consumers.

The Act provides for various offences and infringements that are committed by business entities. The penalties under the Act can be as serious as a fine not exceeding RM10 million and/or a term of imprisonment not exceeding five years. It is noteworthy that when the company commits an offence under the Act, any person who is a director, chief executive officer, chief operating officer, manager or other similar officer of the company may also be charged or jointly charged in the same proceedings with the company.

Malay Mail's front page report on Oct 11. The writer says more awareness should be given to the Competition Act 2010 and the Competition Commission. 

The officers of the company so charged, however, have a defence if they are able to prove that the offence was committed without their knowledge connivance or consent and that they had taken all reasonable steps and exercised due diligence to prevent the commission of the offence.

The interesting and the untested part of the Act is section 64. It provides that any person has the right of private action against an enterprise if they had suffered a loss or damage as result of infringements of any of the prohibitions in Part II of the Act by a company. In other words, this person can bring a civil action to claim for reliefs in the courts.

Part II of the Act sets out several anti-competitive practices or actions by business entities which are prohibited. For example, agreements between enterprises which operate at the same level of production or distribution chain with the objective of price fixing, limiting or controlling production are deemed to have the objective of distorting competition. Similarly, agreements between these enterprises to control or limit market outlets, technological developments and even investment are considered as attempts to restrict competition. Such acts are considered as infringements of the prohibitions under the Act.

While it is accepted that some companies may become dominant in the market, the Act prohibits it from engaging, whether independently or collectively, in any conduct which amounts to an abuse of a dominant position in any market for goods and services. 

The Act sets out various scenarios which may be deemed to be an abuse of dominant positions. I presume the purpose of preventing the abuse of dominant position in the market is to prevent monopolistic behaviour which would distort market prices and even costs of productions. Such control or manipulation of prices and costs of production will not only make the consumer at the mercy of price fixing but other smaller firms may also be squeezed out of business and thereby eliminating competition.

To ensure the monitoring of behaviours of enterprises in the market and enforcement of the Act, the Competition Commission Act 2010 provides for the establishment of a Competition Commission with extensive powers. It is noteworthy that the members of the commission are made up of at least three to five members who have experience and knowledge in matters relating to business, commerce, law, economics, competition, consumer protection and any other suitable qualification as the minister may determine. It also consists of four members who represent the government.

I believe, the Competition Commission plays an important role in safeguarding the proper functioning of the market forces. It is important that the market is not manipulated by goods and services providers at the expense of the consumers merely to maximise their profits or to monopolise the market.

* Jahaberdeen is a senior lawyer and founder of Rapera, a movement which encourages thinking and compassionate citizens. He can be reached at rapera.jay@gmail.com.

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.