PERCEPTION OF COMPETITION ACT AMONGST SMALL MEDIUM INDUSTRIES

The Competition Act 2010 was introduced to ensure that there is  healthy  competition in the market place. The Act prohibits two types of anti-competitive practices: anti-competitive agreement between enterprises and abuse of dominant position. The Federation of Malaysian Manufacturers (FMM) conducted a quick survey in May 2012, with two main objectives : (i) to examine corporate compliance practices amongst FMM members and (ii) to examine whether FMM member companies were at risk of any anti-competitive behaviour.

The survey covered a total of  2,311 FMM members , however only 386 responded, bringing this to a 16% response rate. While this may not be reflective of the actual outcome intended nevertheless it provides some indication of the issues raised with them. Out of the 386 respondents, 65.8%  were from large companies while the balance were from small medium industries.

The charts below shows the response to some of the questions put forth to them.



From this it can be inferred that  larger companies which have more resources in terms of facilities and human resources are able to put in place tools to address competition issues while SMIs may not.

The figure below shows that SMIs and large companies faced about the same risks . Both were of  the opinion that  price fixing was the main risk and resale price maintenance the least risk.  The second highest anti-competitive behavior was limit/control on market access or outlets which carried a total of 54 respondents comprising 23 SMIs and 31 larger companies.

The survey has shown that majority of the respondents were from large companies which were already taking measures to ensure compliance with Competition Act 2010. Efforts included setting up a compliance unit and appointing a compliance officer; and  training  of employees . However, it is interesting to note that 17.4 % have yet  to take any action to comply with the Act.

The risks faced by businesses from anti-competitive behavior are still low, i.e. affecting less than 20% of respondents. In terms of anti-competitive behaviour, price fixing tops the list, followed by limit/control on market access or outlets and limit/ control on production. Only a few FMM members face bid rigging and resale price maintenance risks.

Prepared by :

Prof Datin Hasnah Haron, Graduate School of Business, Universiti Sains Malaysia