MyCC Guideline Series: Chapter 1 Prohibition – Anti-Competitive Agreements

By Fatin Ismail

The Competition Act 2010 is an act to promote economic development by promoting and protecting the process of competition, thereby protecting the interests of consumers. It also prohibits anti-competitive conduct.

“Anti-competitive” means the agreement has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services in Malaysia or in any part of Malaysia.

At the heart of the Act lies Chapter 1 Prohibition, which targets agreements or practices that significantly restrict competition in any Malaysian market. Agreements here include any form of contract, arrangement or understanding whether legally enforceable or not, which includes decisions by associations and concerted practices.

This first instalment unpacks the core concepts behind Chapter 1, explains what qualifies as an “agreement”, and highlights the types of conduct that are automatically treated as prohibited cartel behaviour.

What is Prohibited under Chapter 1?

Section 4(1) of the Competition Act prohibits any horizontal or vertical agreement that has the object or effect of significantly preventing, restricting or distorting competition.

In simple terms, businesses must not collaborate in ways that harm competition – whether deliberately or indirectly.

“Agreement”

An “agreement” does not need to be written or legally binding. It includes:

• Oral arrangements
• Informal understandings
• Decisions made by trade or industry associations
• “Concerted practices” – coordination through communication or signalling

Even silence can be dangerous. For example, if competitors discuss a price increase at a meeting and no one objects, this may already constitute an agreement.

Concerted Practices

A concerted practice exists where competitors substitute genuine competition with cooperation. Examples include:

• One firm announces a price increase and others following without independent justification;
• Sharing future pricing intentions; and
• Informal “signals” about market behaviour

Businesses must always ensure that their pricing and market decisions are made independently.

“Market”

The relevant market is not defined by business convenience, but by consumer substitution. If consumers would switch to another product after a 5–10% price rise, that product is part of the same market. Markets may be national or highly localised (e.g. ready-mix concrete due to transport constraints). Competition from imports is also taken into account.

Prohibited Agreements

Section 4(1) of the act prohibits both horizontal or vertical agreements. Horizontal agreements are made between enterprises at the same level of production, which normally means competitors in the same market whereas vertical agreements between buyers and sellers at different stages of the production and distribution chain.

Section 4(2) introduces prohibits certain agreements and is deemed as anti-competitive. Once these are proven, the MyCC does not need to show any anti-competitive effect. These include agreements to:

1. Fix prices or trading conditions;
2. Share markets or sources of supply;
3. Limit or control:
   • Production;
   • market access;
   • technology development;
   • investment;
4. Rig bids or tenders.

“Significant Effect” Test

Not every agreement is prohibited. The MyCC uses a significance test with a “safe harbour” in place for otherwise anti-competitve agreements or association decisions.

An agreement is generally not considered significant if:

• competitors’ combined market share is below 20%;
• parties to agreement are not competitors and respective parties have below 25% in their respective relevant markets.

Horizontal agreements such as information-sharing, advertising restrictions and standardisation arrangements are prohibited if they significantly restrict competition. Sharing future prices, discounts or commercial strategies is particularly high-risk because it reduces market uncertainty and may facilitate collusion, especially in concentrated markets. Similarly, trade association rules that ban truthful advertising can weaken competitive rivalry, while standard-setting arrangements may become anti-competitive if they suppress innovation or create barriers that prevent new players from entering the market.

Vertical agreements, although generally less harmful, become problematic where one party has market power. The MyCC adopts a strict approach towards resale price maintenance, particularly minimum or fixed resale prices imposed by suppliers, and even “recommended” or “maximum” prices may be unlawful if they serve as focal points for collusion. Non-price restrictions such as tying, exclusive purchasing obligations, exclusive territories or customer allocation, and up-front access payments for shelf-space or distribution networks may also breach the Act if they foreclose competitors or block access to the market.

Cartel Behaviour

Common Forms of Cartel Behaviour which are deemed prohibited include:

1. Price fixing: agreeing on selling prices, discounts, fuel surcharges or price increases
2. Market sharing: dividing customers or territories between competitors
3. Limiting output: agreeing on production quotas during downturns
4. Bid-rigging: Taking turns to win tenders, cover bidding, or bid suppression.

These practices destroy genuine competition and are treated as serious infringements. The agreements are deemed to “have the object of significantly, preventing, restricting or distorting competition in any market for goods or services.” For these horizontal agreements in particular, the MyCC will not need to examine any anti-competitive effect of such agreements.

Extra Territorial Application

Pursuant to section 3 of the Competition Act 2010, the Act not only to conduct within Malaysia, but also to conduct outside Malaysia if the said conduct has an effect on competition in Malaysia if it affects competition within Malaysia. Foreign companies are therefore not beyond the MyCC’s reach.

Conclusion

In conclusion, businesses should ensure that all pricing and commercial decisions are made independently. Sales and marketing staff should also be trained to not to discuss prices or market strategies with competitors. Another prudent step that can be taken is to keep records justifying pricing decisions and enterprises are encouraged to review participation in trade associations carefully.

The full guidelines can be accessed here.

Published on 14 January 2026