Still Sharing Price Information With Your Competitors? Stop It Now!
17 February 2018
Keep your friends close, and your enemies closer. Instead of competing against each other, and declaring price war by lowering prices and shedding blood to undercut other competitors, little do we know, it is a common underground practice where competitors secretly gather behind closed door to discuss and agree on prices they would impose on consumers. Through a cartel, they artificially manipulate and inflate prices for goods and services – leaving consumers with no better options, but to simply purchase from either one of them.
It sounds like a perfect evil plan until the Malaysia Competition Commission (MyCC) knocks on your front door, initiates an investigation under Section 14 of the Competition Act 2010, and imposes a financial penalty of whopping 10% of your business’ worldwide turnover during the period of infringement.
To put 10% of worldwide turnover into context, it is best to illustrate with a Proposed Decision issued by the MyCC against the General Insurance Association of Malaysia and its 22 members for being parties to an agreement for fixing parts trade discounts and labour rates for repair workshops. Lonpac Insurance Bhd, one of the 22 members amongst Etiqa Insurance Berhad, AIG Malaysia Insurance Berhad and AIA Berhad, has received a Notice of Proposed Decision issued by the MyCC, proposing to impose a financial penalty of RM8,301,445 on Lonpac for the alleged infringement.
Most enterprises are guided by the misconception that only multi-million companies should be concerned with the Competition Act 2010. Truth to be told, ‘MyCC will not hesitate to take swift and stern action against all enterprises whether big or small that are found to be engaged in such anti competitive practice’ states MyCC in the most recent proposed decision issued on 8.2.2018, against 7 tuition and day care centres for collectively agreeing to fix and standardise the fees charged for the tuition and day care services in the SS19 Subang Jaya area. ‘This shall serve as a clear message and deterrent to others from following suit.’
Therefore, avoid sharing your price information with your competitors, or participate in any meeting with competitors where sensitive price information is exchanged or discussed, because ‘an agreement could also be found whereby competitors attending a business lunch listen to a proposal for a price increase without objection’, stated in the MyCC’s Guidelines on Anti-Competitive Agreements.
1.MyCC’s Guidelines on Anti-competitive Agreements | 2. Press Statement MyCC Issued A Proposed Decision Against PIAM And Its 22 Members | 3. Proposed Decision under Section 36 of the Competition Act – Infringement of Section 4(2)(a) of the Competition Act by 7 Tuition and Daycare Centres | 4. LPI Capital 4Q2017 Announcement