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 other methods of disposition of goods, who shall
organise a cartel.(33) When a violation is committed
by a corporation, its officials or employees, or in the case of a foreign
corporation or association, its agent or representative in the Philippines
who is responsible for the violation shall be held liable. Alien offenders
shall, upon conviction and after service of sentence, be deported forthwith
without further proceedings.
The
Philippines laws, even though there are several relating to unfair competition,
mainly focus on trade and do not cover investment. There is no regulation
of mergers and acquisitions. Most laws do not clearly stipulate the
amount of a fine or compensation in cases where competitors are injured.
There are no criteria to justify the behaviour of firms, which might
be regarded as unfair competition, and there is no measure to assess
how the public interest would be affected. Also there is no clear procedure
in the law for dealing with firms involved in unfair competition. In
sum, the existing laws appear inadequate to cope with the problems that
might arise occur once the ASEAN Investment Area is implemented.
·
Singapore does not have any anti-trust laws. It has for many years now
operated a free and open market economy and has always subscribed to
the economic philosophy that competition, both international and domestic,
is desirable and healthy for the economy. Singapore regards the world
as its market, and international competition as the "invisible
hand" which disciplines domestic efficiency, keeping Singapore's
companies on their toes.(34) Regarding trade and service
liberalisation, there are practically no tariffs and no quantitative
restrictions on imports in the goods sector. As to services, here again,
Singapore operates a liberal regime and maintains a level of openness
in a wide range of service sectors.
Singapore
does however have some laws and regulations that relate specifically
to competition on a sectoral basis. There is the Multi-Level Marketing
and Pyramid Selling Prohibition Act, which makes it an offence for any
person to promote or participate in a multi-level marketing scheme,
essentially schemes or arrangements that recruit participants in pyramid
selling on the chain-letter principle. Other than this however, there
is no anti-competition law in Singapore as such. Its open economy and
liberalised investment regime have been deemed sufficient to guarantee
free competition in Singapore.
·
Prior to 1999, Thailand had no comprehensive competition law(35) but did operate a range of separate laws and regulations relating to
competition to enhance trade and investment liberalisation. One of these
was the Investment Promotion Act 1977 governing investment and encouraging
foreign investment, which sought to promote a fair and non-discriminatory
business environment for both domestic and foreign investors. All such
investors were subject to the same standards and regulations.
However,
there were complaints from business operators that some types of anti-competitive
conduct considered illegal abroad were being perpetrated in Thailand.
At the same time, Thailand was under an obligation, as other members
of WTO, to further enhance trade and investment liberalisation, while
the Thai Constitution and the 8th National Development Plan also stated
that monopolisation must be eliminated. Thailand duly introduced a set
of three laws in 1999 to promote competition:(36) the Trade Competition Act B.E. 2542 (A.D. 1999), the Act on Prices of
Goods and Services B.E. 2542 (A.D. 1999) and the Anti-Dumping and Countervailing
Act B.E. 2542 (A.D. 1999) replacing the Prescription of Prices of Goods
and Anti-Monopoly Act of 1979. All three Acts set out to promote fair
and free trade within a competitive environment, and all essentially
operate on the principle of monitoring business
Part
6
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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).
(33)
The Price Act defines a cartel as a combination of or agreement between
two or more persons engaged in the production, manufacture, processing,
storage, supply, distribution, marketing, sale or disposition of any
basic necessity or prime commodity designed to artificially and unreasonably
increase or manipulate its price. There shall be prima facie evidence
of engaging in a cartel whenever two or more persons or business enterprises,
competing for the same market and dealing in the same basic necessity
or prime commodity, perform uniform or complementary acts among themselves
which tend to bring about artificial and unreasonable increases in the
price of any basic necessity or prime commodity or when they simultaneously
and unreasonably increase prices on their competing products, thereby
lessening competition among themselves.
(34)
Singapore's Competition Policy, Singapore Country Paper submitted by
the representative of Singapore to the East Asia Competition Policy
Forum.
(35)
Thailand firstly enshrined its anti-monopoly philosophy in Section 68
of the Constitution of the Kingdom of Thailand (1949) which provides
that "Private economic initiative shall be free, provided that
it is not inconsistent with the operation of public utilities. Monopolies
and private enterprises of public utility may be instituted only by
virtue of the power provided by law": Eibun-Horei-Sha, Inc, Antitrust
Legislations of the World, Eibun-Horei-Sha (Tokyo) (1960), 721.
(36)
See Background of the Thai Trade Competition Law: http://www.oecd.org/dataoecd/40/45/
2491524.doc. The Thai Trade Competition Act began with the enactment
of the Price Fixing and Anti-Monopoly Act of 1979.The
1979 Act is in two parts: one on price fixing, the other on anti-monopoly
actions The anti-monopoly part of the 1979 Act is aimed at promoting
fair competition. It empowers the Central Committee to look into business
structures that may create a monopoly and are conducive to restrictive
business practices. But since it created problems in terms of enforcement,
the Department of Internal Trade, which is in charged of the said Act,
separated the Act into two distinct Acts : The Price of Goods and Services
Act and the Competition Act. The Competition Act came into effect on
30 April 1999.