Legislation > Policy
Policy

FAIR TRADE PRACTICES POLICY

Objectives

The Fair Trade Practices Policy (FTPP) was approved on 26 October 2005 to seek the following policy objectives:

  1. Promote and protect competition in the market;
  2. Create dynamic and competitive entrepreneurs;
  3. Provide fair and competitive market opportunities for businesses;
  4. Prohibit anti-competitive practices including those originating from outside the 5. Malaysian territory and affecting the domestic territory;
  5. Prohibit unfair trade practices in the economy;
  6. Promote rights of SMEs to participate in the market place;
  7. Promote consumer welfare; and
  8. Encourage socio-economic growth, generate efficiency and equity.

Scope of FTPP

The FTPP will not address:-

Sovereign functions of the Government; and all actions and measures attributable to the state that seeks to encourage socio-economic growth to generate efficiency and equity.


Trade Practices Prohibited Under the Fair Trade Practices Bill (FTPB)

The proposed FTPB will prohibit the following conduct :-

  • Abuse of Dominant Position

    Conduct which abuse one's position as a monopoly or monopolization, such as predatory pricing, exclusive dealings, excessive pricing and tied selling. These can lead to inefficiencies and raise costs to the economy and society.

  • Hard Core Cartels

    In a market dominated by few producers (oligopolistic), firms might find it profitable to collude to fix prices, allocate markets, limit production, and engage in bid rigging in order to maximize their profits. These firms also aim to restrict entry of new firms in the market or cause existing firms to exit the market due to their inability to compete.

  • Anti-Competitive Practices

    Anti-competitive agreements which seek to restrain and eliminate competition such as retail price maintenance, collusive tendering and restraints on production or sale.


Organization Structure for the Enforcement Authority

To implement the FTPB, a framework for an enforcement system will be set up as follows :-

Fair Trade Practices Commission (FTPC) comprising of Commissioners who are government officials and other members who have experience in and knowledge of matters relating to business, industry, commerce, law, economics, public administration, fair trade, competition, consumer protection or any other suitable qualification. The Commission will be serviced by an administrative body.Fair Trade Practices Appeal Tribunal to be established to review decisions taken by the Commission if referred to it by parties; and Judicial review to the High Court.


Fair Trade Practices Commission

The FTPC that is proposed will have to be autonomous at the Federal level so that supervision on firms and industries could be carried out effectively. The FTPC will be responsible to promote competition and eliminate anti-competitive activities within the economy. It would be headed by a Chairman and assisted by Commissioners from different professional background. Details of the proposed structure and function will be outlined in the FTPB.


Fair Trade Practices Appeal Tribunal

A Fair Trade Practices Appeal Tribunal will be set up to hear cases that are referred to it by parties who are dissatisfied with the decision of FTPC. Details of the said Tribunal will be spelt out in FTPB.


Judicial Review to the High Court

Existing procedures for judicial review will be applied to competition cases.

The scope of the above mentioned policy was modified in 2009 to address only competition issues. Thereby, the original Fair Trade Practices Bill, which contained elements to address unfair trade practices, became what is now known as the Competition Law 2010 while the Fair Trade Practices Commission is now known as the Malaysia Competition Commission (MyCC). The major change in the new policy/act is that there are no provisions to address unfair trade practices.