Can A Company Put Its Competitors At A Competitive Disadvantage?
What happens when a company, that holds a dominant position in a trade or possesses a significant power, uses its dominance and puts other companies in similar trade at a competitive disadvantage?
This issue was dealt with in the High Court case of MYEG Services Sdn Bhd & Anor v Competition Commission & Anor. We will briefly look at it below.
Brief facts of the case
MyEG Services Bhd and MyEG Commerce Sdn Bhd (a subsidiary of MyEG Services) entered into an agreement with the Malaysian Government whereby they will provide services for the renewal of Temporary Employment Visas for foreign workers online.
At this juncture, it must be noted that in order to apply for a renewal of a temporary employment visa, the employer of a foreign worker must, amongst others, purchase three mandatory insurance policies for their employees (MyEG Commerce entered into multiple agency agreements with a couple of insurance companies to act as its agent to transact the mandatory insurance).
Complaints arose (it was alleged) when MyEG Services, as the sole provider for the renewal of the visas, abused its position by only allowing employers to purchase the mandatory insurance through MyEG Commerce.
MyEG Services subsequently move away from this stance. However, MyEG Services also told the employers that if the employer chooses to purchase the mandatory insurance through MyEG Commerce, the process (of approving the visa) would be “faster and easier” as compared to if the employer chooses to purchase the mandatory insurance from their preferred insurance company.
After one too many complaints, MyCC (an entity that is empowered by law to investigate and impose penalties on anti-competitive behaviors) stepped in, investigated, and found that MyEG Services and MyEG Commerce had infringed section 10 of the Act by abusing their dominant position in the Visa renewal market by applying different conditions to those insurance company that does not have an agency agreement with MyEG Commerce and those that have an agency agreement with MyEG Commerce to transact the mandatory insurance. Both were fined as a result of the investigation.
Both MyEG Services and MyEG Commerce appealed the decision of MyCC to the Competition Appeal Tribunal (“CAT”) to review MyCC’s decision. At the end of the review, CAT affirmed MyCC’s decision.
The court’s decision
Dissatisfied with the decision of CAT, MyEG Services and MyEG Commerce filed a judicial review in the High Court. Nonetheless, the High Court dismissed the judicial review and affirmed both MyCC and CAT’s decision.
The court’s rationale
In coming to its decision, the Court held that:
- MyEG Services and MyEG Commerce effectively eliminated competition in the downstream market when they did not grant equal access to the downstream market i.e. the insurance group.
- Subsequently, by applying two sets of conditions to the two insurance groups (one with an agency agreement and one without), MyEG Services and MyEG Commerce have effectively put one insurance group at a disadvantage- employers would automatically choose those insurance companies with an agency agreement with MyEG Commerce as compared to those without to facilitate their employee’s insurance transaction.
- Even though the conditions were not imposed upon the downstream market i.e. the insurance group without an agency agreement with MyEG Commerce, both MyEG Services and MyEG Commerce as a dominant concession holder in the upstream market has a special responsibility to ensure that the competition is not impaired in the downstream market.
And there you have it, hopefully, you learned something new today!!
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