The Harmonisation of ASEAN
Competition Laws and Policy from an Economic Integration Perspective

By Dr. Lawan Thanadsillapakul

The Malaysian laws relating to unfair competition are obviously not systematically enforced, however, and, old and fragmented as they are; they are unlikely to be able to deal adequately with the anti-competitive business practices of modern global firms. It is noteworthy that the Malaysian laws on take-over and mergers do not apply to contracts made or performed outside Malaysia that might have an effect on market structure or power within the Malaysian economy and injure other competitors, unless the contract expressly states that the Malaysian laws in Malaysia will apply.(24) Add to this the fact that there are no controls or regulations over contracts relating to exclusive dealings, monopolisation, franchises and price fixing, and there can be little doubt that the existing laws would ineffectively and inadequately control any restrictive business practices of firms that occurred under the impact of increasing competition among firms operating in the ASEAN as a result of liberalisation.

Nonetheless, Malaysia, along with other ASEAN members, is seeking to craft a proper competition law and policy. The Ministry of Domestic Trade and Consumer Affairs (MDTCA) has drafted a policy paper and prepared a bill dealing with fair trade and competition in Malaysia.(25) The Eighth Malaysia Plan (RMK-8) provides the mandate of a fair trade or competition policies and laws; it states the need for policy and law to forestall anti-competitive conduct such as collusion, cartel price fixing, market allocation and abuse of market position and to prevent firms from protecting or expanding their market shares by means other than greater efficiency in producing what consumers want. While no comprehensive competition law and policy is yet in effect, separate policies are currently implemented by specific government agencies dealing with privatisation and corporatisation; licensing of industries; domestic and national trade policies; foreign participation and ownership policies; and sectoral regulators. However, in 1998 and 2000 two sectoral competition laws were passed on communication and energy, respectively. Malaysia is aware of the need carefully to weigh the benefits of competition law for the nation's development requirements against the need to ensure that the law is not used unfairly to benefit any international body or developed country.(26) This clearly expresses the fundamental view of Malaysia in cautiously dealing with the competition issue. This sentiment is in common with other ASEAN members' lack of competition culture.

· Myanmar likewise has no competition law or policy as such, nor is one apparently on the policy makers' immediate horizon. (27) The ambivalence towards competition law and policy in this country may be fuelled by legitimate concern about the risk of dominance of foreign investors were the inward flow of foreign direct investment to be liberalised, by scepticism as to the benefits of competition and by a fear of losing national identity or sovereignty. The Myanmar government is however seeking a solution that will balance the interests of competition with the existing economic structure. Like other countries in the region, Myanmar lacks a competition culture, the country having, for three decades now, applied an inward-looking policy and operated a closed-door form of socialism, and transition is slow. Any competition law in Myanmar would place consumer welfare at the heart of its policy. Regarding the economic efficiency aspect of national competition law, the particular characteristics of the country must be taken into account. As to market competition, educational levels are low, information is asymmetrical, the private sector is under-developed, the distribution of wealth is skewed, and so on.(28) Clearly therefore, Myanmar will need "escape clauses" or exceptions, (29) and at any rate time to develop both the economic structure and legal framework needed for the elaboration of an effective competition law and policy.

· In the Philippines, there are some laws(30) that regulate or prohibit monopolies and restraint of trade or unfair competition. The Philippines 1987 Constitution provides that
"the State shall regulate or prohibit monopolies when the public interest so requires, no combinations in restraint of trade or unfair competition shall be allowed."(31)

There are other general and specific laws that prohibit and regulate the consequences of acts in restraint of trade. In particular, Article 186 of the Revised Penal Code R.A. 3815 (1930) punishes monopolies and combinations in restraint of trade:

The revised Penal Code imposes a penalty of imprisonment or a fine or both upon:

· Any person who enters into any contract or agreement, or takes part in any conspiracy or combination in the form of a trust or otherwise, in restraint of trade or commerce or to prevent by artificial means free competition in the market.

· Any person who monopolises any merchandise or object of trade or commerce, or combines with any other person or persons to monopolise that merchandise or object in order to alter the price by spreading false rumours or making use of any other artifice to restrain free competition in the market.

· Any person who, being a manufacturer, producer, processor of any merchandise or object of commerce from any foreign country, either as principal or agent, wholesaler or retailer, combines, conspires, or agrees in any manner with any person likewise engaged in the manufacture, production, processing, assembling or importation of such merchandise or object of commerce or with any other persons not so similarly engaged for the purpose of making transactions prejudicial to lawful commerce, or of increasing the market price in any part of the Philippines, of any such merchandise or object of commerce manufactured, produced, processed, assembled in or imported into the Philippines, or of any article in the manufacture of which such manufactured, produced, processed, assembled, or imported merchandise or object of commerce is used.

If the offence affects any food substance, motor fuel or lubricants or other articles of prime necessity, the maximum penalty will be imposed. In addition, the object of any of the above contacts will be subject to forfeiture by the government. When the offence is committed by a corporation, the directors or managers of the corporation of the agent or representative in the Philippines, in the case of a foreign corporation, who knowingly permitted or failed to prevent the commission of such offences will be held liable as principals.

The Penal Code gives a right of action to any person who suffers damage as a result of any act by any person involving unfair competition in agricultural, industrial or commercial enterprises or in labour, through the use of intimidation, force, deceit, machination or any other unjust, oppressive or highhanded method. Article 188 of the Code punishes the substitution and alteration of marks and trade names, and Article 189 provides criminal sanctions for unfair competition, fraudulent registration of marks or trade names, fraudulent designation of origin and false description. Republic Act 3247 (Prohibition of Monopolies and Combinations in Restraint of Trade) (1961) provides for recovery of treble damages for civic liability arising from anti-competitive behaviour. Furthermore, Republic Act 165 (1947) and Secs. 29 and 30 of Republic Act 166 (1971) (Trademark Law) provides civil remedies against unfair competition, false designation of origin and false description. Presidential Decree 49 (1972) (Copyright Law) penalises copyright infringement, while Republic Act 8293 (1997) (referring to the Intellectual Property Code and the Intellectual Property Office) and Republic Act 386 (1949), Civil Code of the Philippines stipulate the collection of damages arising from unfair competition. Republic Act 7394 (1932), the Consumer Act of the Philippines, imposes penalties for such behaviour as deceptive, unfair and unconscionable sales practices in both goods and credit transactions. The Philippines Corporation Code Batas Pambansa Blg 68 (1980) provides for rules and procedures to approve all combinations, mergers and consolidations. The Revised Securities Act, Batas Pambansa Blg 178 (1982), Republic Act No. 337 regulate Bank and Banking Institutions and other purposes (General Banking Act, 1948). Also the Business Names Act(32) punishes certain acts where no proper registration of the firm or business name or style is made with the Department of Trade or Industry. Republic Act No. 623 (1951) prohibits certain acts if performed without the written consent of the manufacturers, bottlers or sellers of duly stamped or marked bottles, boxes, kegs, barrels and other similar containers.

There are also special laws that regulate monopoly. Among these is Press Decree No. 576-A, which prohibits the ownership by one person or corporation of more than one radio or television station in one municipality or city, or of more than five AM and five FM radio stations or of more than five television stations in the country. Any violation is punishable by imprisonment or a fine or both, and will result in the cancellation of the franchise and the confiscation of the station and its facilities without compensation. Republic Act 7581 (1991) (Price Act) protects consumers by stipulating price manipulation as illegal acts. The Price Act imposes a penalty of imprisonment and a fine upon persons habitually engaged in the production, manufacture, importation, storage, transport, distribution, sale or

Part 5

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(24) CCH Asia Ltd. (1998), Doing Business in Asia. Bangkok, CCH Asia Limited.

(25) Malaysia Country Paper submitted to the East Asia Competition Policy Forum by Dr Sulaiman MAHBOB, Secretary General, Ministry of Domestic Trade and Consumer Affairs.

(26) Competition Policies/Laws, Malaysian Report to APEC.

(27) As reported by KHIN OHN THANT, "A Myanmar's Perspectives", East Asia Competition Policy Forum, February 2003, in ASEAN Conference on Fair Competition Law and Policy in the ASEAN Free Trade Area Competition Policy and Economic Growth in ASEAN Countries.

(28) Ibidem.

(29) For example, small and medium enterprises are encouraged to form clusters for economic scale and to be competitive. The government allowed small groups of private businesses for high cost infrastructure projects in the public interest and for economic scale. Such actions run counter to fair competition as defined in competition law and policy.

(30) The Anti-Competition Law and regulations in the Philippines presented in this article are compiled from various sources of the Philippines national law and from the Country Paper of the Philippines, in C.C.H. Asia Ltd, See also supra note 23.

(31) Section 29, Art. XIII of the Constitution.

(32) Act No. 3883 (1931).