the asean competition conference session 5: comparisons of competition regimes in asean bali,...

The ASEAN Competition The ASEAN Competition ConferenceConferenceSession 5: Comparisons of Competition Session 5: Comparisons of Competition Regimes in ASEANRegimes in ASEAN

Bali, IndonesiaBali, Indonesia

15-16 November 201115-16 November 2011

Lim Chong Kin

Director

Head, Competition & Regulatory Law Practice Group (Corporate)

Head, Telecommunications, Media & Technology Practice Group

COMPARISONS OF COMPETITION REGIMES IN ASEAN

• Looking back. Take stock of significant developments in competition policy and law in the last 5 years in ASEAN.

– Informs us about where we stand relative to each other, and to the rest of the world, and how to improve.

• Looking forward. More countries in ASEAN likely to introduce competition policy and law in the next 5 years (ASEAN AEC Blueprint 2015).

– Understand differences and impact on businesses (e.g. may unwittingly raise business compliance costs with more, and very different, regimes within ASEAN).

ASEAN MEMBER

COUNTRY

GENERAL COMPETITION

LAW/NAME OF

LEGISLATION

COMPETITION

AUTHORITY

PROHIBITION ON

RESTRICTIVE

AGREEMENTS

PROHIBITION ON ABUSE

OF DOMINANCE PROHIBITION ON ANTICOMPETITIVE MERGERS/TYPE

OF NOTIFICATION PROHIBITION ON

UNFAIR PRACTICES LENIENCY

PROGRAM

PENALTIES

BRUNEI No No Only Brunei's telecommunications sector is subject to competition regulation.

CAMBODIA No No No No No No No ---

INDONESIA

Yes Law of the Republic of Indonesia Number 5

year 1999 Concerning Prohibition of

Monopolistic Practices and Unfair Business

Competition

Yes The Commission for the Supervision of Business

Competition (“KPPU”)

Yes Chapters III & IV set out

the prohibited agreements and

activities

Yes Chapter IV & Chapter V set out the prohibitions

on monopolies and abuse of dominance

respectively

Yes See Article 28/ Mandatory notification for post merger (i) asset value above 2.5 trillion Rupiah

and/or (ii) sales value above 5 trillion Rupiah. 20 trillion Rupiah combined asset threshold applies

to the banking sector

No Separate regulation under the Law on

Consumer Protection No.8 of

1999

No

Administrative directions and fines from 1 billion to 25 billion Rupiah; and criminal sanctions including fines of up to 100 billion Rupiah or a maximum 6-month jail term in lieu of a fine

LAOS No No Decree No.15/PMO on competition was issued in 2004 to promote a fair business environment. The Decree has not been implemented to date. However, there are plans to reform the

Decree and adopt a comprehensive law on competition.

MALAYSIA

Yes Competition Act 2010

(Effective January 2012)

Yes Competition

Commission of Malaysia (being set up)

Yes Section 4 prohibits

anticompetitive agreements

Yes Section 10 prohibits abuse of dominance

No

No Separate regulation under the Consumer Protection Act 1999

Yes

Administrative directions and fines up to 10% of the worldwide turnover of

the enterprise for the period of infringement

MYANMAR No No No No No No No ---

PHILIPPINES No No Competition issues in the Philippines are addressed through several different laws that are enforced by the respective sector regulators. No

Administrative directions, fines and/or jail terms under the respective

sectoral legislation

SINGAPORE Yes

Competition Act (Cap. 50B)

Yes Competition

Commission of Singapore (“CCS”)


anticompetitive agreements

Yes Section 47 prohibits abuse of dominance

Yes See Section 54/Voluntary notification;

notification encouraged where post merger combined market share is (i) 40% or more; or

(ii) between 20% – 40% and the combined market share of 3 largest firms is 70% or more

No Fair trading and

consumer protection are regulated by separate statutes

Yes

Administrative directions and fines of up to 10% of the turnover in Singapore for each year of

infringement, up to a maximum of 3 years

THAILAND Yes

Trade Competition Act B.E. 2542 (A.D. 1999)

Yes Trade Competition

Commission


specific types of anticompetitive

agreements


specific behaviours by dominant operator

Yes See Section 26/Mandatory notification once thresholds met (Thresholds to be released)

Yes Section 29 prohibits acts against fair and

free competition

No Jail term of up to 3 years and/or fine of up to 6 million Baht; and double

penalty for repeated offences

VIET NAM Yes

Law on Competition No.27/2004/QH11

Yes Viet Nam Competition Council & Competition

Administration Department

Yes Section 1 of Chapter II prohibits specific types

of competition restriction agreements

Yes Section 2 of Chapter II prohibits specific acts

by dominant enterprise or monopoly

Yes Article 18 prohibits concentrations that result in a

combined market share of 50%, unless exempted/ Mandatory notification where combined market share is 30% – 50%

Yes Chapter III prohibits

acts of unfair competition

No

Administrative measures and/or fines up to 10% of total turnover of

organisation or individual in the financial year preceding the year of

infringement

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3


Comparisons across ASEAN• General lack of consistency in competition laws across

ASEAN

• Examples:

1. Differing analytical approach: Form v. Effects basedForm-based approach Effects-based approach

• More certainty in terms of what is permitted but more rigid in application.

• Examples: Thailand, Indonesia, Vietnam

• More self-assessment required (less certainty), but more flexible (more economics-based).

• Examples: Singapore, Malaysia


2. Differing competition policies

Competition policy driven by each country’s own economic pursuit and reflective of political and social conditions.

3. Differences in substantive aspects of law– Treatment of vertical agreements

• e.g. excluded under restrictive agreements & practices (Singapore); included under restrictive agreements & practices (Malaysia).

– Threshold for dominance• e.g. Indonesia (between 50-75%); Singapore (60%);

Thailand (combination of market shares & turnover); Vietnam (30-75%).


– What constitutes an abuse of dominance • Subject to a ‘substantial market power’ test (e.g.

Singapore, Malaysia); list of prohibited conduct (e.g. Vietnam, Thailand, Indonesia).

– Exemption criteria • Subject to a ‘net economic benefit’ test (Singapore,

Malaysia); specified conduct (Indonesia); hybrid of both (Vietnam).

3. Differing institutional set-up

– Role of competition authority and courts

• e.g. some authorities with dual role as investigator and adjudicator; other institutional set-ups with responsibilities split between the authority (investigate) and courts (adjudicate).


Challenges faced by foreign investors

• Challenges at two levels:

– at individual country level; and

– at regional level.


Country level challenges

What do businesses want?

• Access to markets and freedom from anticompetitive behaviour.

• Generally but cautiously welcome adoption of competition law.

But ALSO double-edged sword!

• Regulatory transparency & certainty (at the country and regional level).


Regional level challenges

Reality Check

• With disparate competition law regimes, businesses may find it harder and more costly to operate in ASEAN.

• 10 member countries = 10 disparate sets of laws?

???


New role of advocacy • Advocacy (narrow role) = competition authorities reaching

out to the business community.

• Advocacy (wider role) = advocating harmonisation of competition law.

• No need to reinvent the wheel:

– Start with what is already available.

– Member countries looking at introducing competition policy and law should use best practices (e.g. ASEAN Regional Guidelines).

MODELS OF HARMONISATION

Towards an ASEAN model?Not advocating that ASEAN adopts the EU model.

– i.e. supra-national competition regulator, harmonised law.– But about recognising that despite the challenges, some

harmonisation is possible.

Challenge is to ensure a balance between country-specific features and broad harmony.

– Short term goals: improve transparency; commonality in merger procedures; strengthening networks.

– Medium term goal: greater consistency in analytical approach (e.g. a more economics-based application of the law).

HARMONISATION: THE NEXT STEP FORWARD

Short term goals• Improving Transparency and Certainty

– Take practical steps (e.g. publishing decisions, translating decisions into English).

– Issue guidelines (with English translations) to help businesses understand how law will be applied (e.g. how investigations will be conducted).

– Implement consultation process to garner regular feedback from stakeholders (e.g. seek views before issuing guidelines and policies).

– Set up a one-stop portal on all cases, guidelines, news updates and consultation papers from ASEAN authorities. Good to take stock of resources available and consolidate to maximise benefits (e.g. ICN templates, APEC database)


Short term goals• Harmonising Merger Control

– Design a common filing form that can be used across ASEAN.

• Can still retain individual filing thresholds, but to the extent that filing is needed, the same form/information is provided.

– Sync procedures – will provide business certainty given time-sensitive nature of mergers.

• e.g. similar filing timelines; and similar phases of review (a 2-phase process).


Medium term goal• Working towards some consistency in analytical approach

– Its been done before!

• e.g. EU has gradually moved towards more a economic-based application of the law, and is now more similar in its analytical approach to the US than before.

– Set up a working group to identify key areas for harmonisation.

• Identify and get a consensus on what is practical and achievable in the short and medium term; and

• Set clear timelines and milestones for implementation.

THANK YOU

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the asean competition conference session 5: comparisons of competition regimes in asean bali,...

Documents

competition authority

competition laws

asean likely

years asean aec blueprint

conduct indonesia hybrid

vertical agreements

substantial market power

economic pursuit