Written 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.
In this part, we delve into Chapter 2 of the Competition Act 2010 which prohibits enterprises from abusing a dominant position in any market for goods or services in Malaysia. The objective is to prevent conduct that distorts competition and harms consumers, while allowing legitimate competitive behaviour.
Dominance
MyCC assesses dominance in two stages:
- whether an enterprise is dominant in a relevant market; and
- whether it has abused that dominance.
“Dominant Position” means a situation in which one or more enterprises possess such significant power in a market to adjust prices or outputs or trading terms without effective constraint from competitors or potential competitors
Dominance refers to significant market power that allows an enterprise to act independently of competitors, customers, or market constraints. While a market share above 60% is generally indicative of dominance, market share alone is not conclusive.
MyCC also considers factors such as barriers to entry, buyer power, product differentiation, innovation, regulatory constraints, and the threat of potential competitors.
Market shares are the starting point for assessing dominance, as they reflect the outcomes of existing competition. A large market share may result from superior efficiency and innovation, or from anti-competitive conduct. Importantly, even where dominance has been achieved through legitimate means, an enterprise may still engage in anti-competitive acts in the future. Under section 10(4) of the Competition Act 2010, market share is not conclusive of dominance, what matters is whether the enterprise currently has significant market power and the ability to act independently of competitive pressure.
In general, MyCC considers a market share above 60% to be indicative of dominance, but this must be assessed in the context of the correctly defined relevant market and other competitive constraints.
Beyond market shares, MyCC evaluates additional competitive factors that may limit or enhance market power. These include the degree of product differentiation, buyer behaviour, and the role of innovation. In differentiated markets, market shares may be a poor proxy for competitive strength, as products may not be close substitutes. Where products have “must-have” status or customers are locked in, enterprises may have greater pricing power. Similarly, in innovation-driven markets, a firm with a relatively low current market share may nonetheless possess substantial market power if it controls new or patented technology that is rapidly displacing existing products.
MyCC also considers constraints imposed by potential competitors, powerful buyers, regulation, and collective conduct. The threat of new entry can significantly restrain market power, unless barriers such as economies of scale or scope, regulatory restrictions, limited access to essential inputs, network effects, high sunk costs, or exclusionary conduct by incumbents make entry difficult. Buyer power may offset seller dominance in markets with large or concentrated purchasers, while regulation may constrain prices but not necessarily non-price conduct. Finally, dominance may be exercised collectively, where two or more enterprises with significant market power act in parallel in a way that excludes equally efficient competitors, although such cases are expected to be rare.
Abuse of Dominance
Abuse of dominance generally falls into two categories:
- exploitative; and
- exclusionary conduct.
Exploitative conduct includes practices such as excessive pricing or unfair trading conditions, particularly where market forces are unlikely to correct the imbalance.
Exclusionary conduct, on the other hand, involves behaviour that prevents equally efficient competitors from competing, ultimately harming consumers through higher prices, reduced quality, or less innovation.
Common examples of abusive conduct include predatory pricing, price discrimination, exclusive dealing, loyalty rebates that foreclose the market, refusal to supply or grant access to essential facilities, buying up scarce inputs, and anti-competitive bundling or tying.
Dominance and Abuse in Separate Markets
A dominant enterprise may also abuse its position by leveraging dominance in one market to distort competition in another, such as cross-subsidising predatory pricing or refusing to supply essential inputs to downstream competitors.
Can Conduct be Justified?
Not all conduct by a dominant enterprise is prohibited. Behaviour that has reasonable commercial justification or constitutes a legitimate response to competition may be permitted. The burden of proof lies on the enterprise to demonstrate such justification, for example where refusals to supply are due to non-payment or capacity constraints.
Conclusion
Chapter 2 aims to strike a balance between preventing anti-competitive conduct and preserving incentives for innovation and efficiency. Enterprises with significant market power are encouraged to conduct regular self-assessments and implement compliance measures to ensure their conduct remains within the boundaries of competition law.
Published on 19 January 2026