In summary
This article provides an overview of what is considered engaging in cartel behaviour in Malaysia with reference to recent decisions made by the Malaysian Competition Commission (MyCC).
Discussion points
- What amounts to cartel behaviour
- What are the available defences
- Burden and standard of proof
- Extra-territorial application
- Exception to section 4 of the Act
- Cartel prohibition outside of the Act
- Penalties
Referenced in this article
- Malaysian Competition Commission (MyCC)
- Competition Act 2010 (Act)
- Malaysian Competition Commission Case No. 700-1/2/1/2021, Competition Commission v Dindings Poultry Development Centre Sdn Bhd & 4 Ors (Chicken Feed) [Decision dated 11 December 2023][1]
- Malaysia Competition Commission Case No. 700-1/3/1/2019, Competition Commission v Langkawi Auto Express Sdn Bhd & 4 Ors (Langkawi Ro-Ro) [Decision dated 17 December 2021][2]
- Malaysia Competition Commission Case No. 700-1/2/6/2017, Competition Commission v SAL Agencies Sdn Bhd & 6 Ors (7 Warehouse) [Decision dated 26 July 2021[3]
- Malaysian Competition Commission Case No. 700/1/1/17/2017, Competition Commission v Agenda Eksklusif Sdn Bhd & 6 Ors (Safety Equipment) [Decision dated 30 August 2024][4]
- Malaysian Competition Commission Case No. 700-1/1/109/2019, Competition Commission v Dutamesra Bina Sdn Bhd & 7 Ors (Construction & Flood Mitigation) [Decision dated 25 February 2025][5]
Prohibition of cartel activities
Cartel activities are prohibited under section 4(2) of the Act, which provides that a horizontal agreement between enterprises that has the object to:
- fix, directly, or indirectly, a purchase or selling price or any other trading conditions;
- share market or sources of supply;
- limit or control:
- production;
- market outlets or market access;
- technical or technological development; and
- investment;
- perform an act of bid rigging.
is deemed to have the object of significantly preventing, restricting or distorting competition in any market for goods or services.
What amounts to cartel conduct or activities may vary and will be further discussed below.
Deeming provision
Section 4(2) of the Act contains a deeming provision, meaning that once the prerequisite facts have been established, the deeming provision is automatically triggered and comes into effect, and the horizontal agreement in question shall be deemed to have the object of significantly preventing, restricting or distorting competition in the market. Consequently, the prohibition under section 4 of the Act has been infringed.
Conduct that may amount to a cartel
Cartel conduct may come in many forms, including the following.
Price-fixing agreements
Price fixing agreements may involve fixing either the price itself or an element or component of a price. It is irrelevant to a finding of infringement that the prices subsequently negotiated with individual customers differ from what was agreed.[6]
Section 2 of the Act defines the term ‘agreement’ as any form of contract, arrangement or understanding, whether legally enforceable, between enterprises, and includes a decision by an association and concerted practices.
As such, section 4 prohibition applies to agreements that are legally enforceable or non-enforceable agreements, whether they are written or oral. An agreement can also be implied from the participants’ behaviours. Even if an enterprise does not adhere to the terms of the agreement, the purported anti-competitive agreement would still fall under the section 4 prohibition.
As a background, the Chicken Feed case is in relation to the investigation of conduct in suspected collusion between certain poultry feed millers regarding the price of poultry feed.
The Langkawi Ro-Ro case is in relation to the investigation of suspected infringement of section 4 of the Act by participating in agreements through two memorandums of understanding that had as their object of significantly preventing, restricting or distorting the competition in relation to the market of the provision of vehicle transportation via roll-in, roll-off (ro-ro) vessels in Langkawi, Kedah Malaysia (the Infringing Agreements) from 31 December 2017 until 14 September 2020.
The 7 Warehouse case is in relation to investigations of suspected infringement of section 4 prohibition by participating in an agreement that has as its object the prevention, restriction or distortion of competition in relation to the market of the provision of handling services of long-length and heavy lift of import and export cargo in Port Klang, Malaysia from 22 May 2017 until 9 January 2020.
The Procurement of Life-saving and safety equipment case is in relation to the investigation of engagement in agreements and/or concerted practices, which involves performing acts of bid rigging.
In the Chicken Feed case, MyCC revealed in its investigation that the parties are members of the Malaysian Feedmillers Association (MFA). MFA regularly organises monthly meetings where its members convene to exchange ideas, discuss industry trends and address pertinent issues in the industry.
In its analysis, MyCC examined the increase in the quantum of poultry feed (with maize and SBM as the main ingredients) prices and observed that all four parties raised their prices at a similar rate of quantum.
Concurrently, MyCC found that the announcement dates of the price increase in relation to each of the four parties were made in very close proximity to each other.
Based on the above, MyCC made a finding that there are agreements and/or concerted practices among the parties to fix the quantum of poultry feed (with maize and SBM as the main ingredients) prices.
In the Langkawi Ro-Ro case, MyCC’s investigation revealed that the parties were engaged in agreements and/or concerted practices to fix prices, to discuss and to exchange price information in connection with the provision of vehicle transportation via ro-ro vessels in Langkawi. The objective of the infringing agreement is primarily to avoid a price war between the competing companies. The parties further informed the Commission that the purpose of the infringing agreements was to agree on a uniform fare for the provision of vehicle transportation via ro-ro vessels in Langkawi to avoid losses and increase profitability to the parties.[7]
In the 7 Warehouse case, one of the parties claimed that there was no conspiracy to fix the price (as the meeting between the parties was not held in private) was rejected by MyCC.[8]
Additionally, liability can also be attributed to the enterprises even if the owner or the managing director did not participate in the act. The conduct of an employee who is generally authorised to act on behalf of the enterprise is sufficient to bring liability to the enterprise.[9]
Concerted practices
The section 4 prohibition also applies to concerted practices. According to section 2 of the Act, a concerted practice includes ‘any practice which involves direct or indirect contact or communication … between enterprises’. Conduct may be considered a concerted practice even when parties had not reached an agreement in advance on a common plan but later adopt or adhere to the collusive device that facilitates the coordination of their behaviour in the market. Direct contact or communication may include the sharing of strategic information and commercially sensitive information. A concerted practice exists, even if enterprises do not enter into an agreement.[10]
In the Chicken Feed case, the MyCC found that exchanging sensitive information allows the parties to coordinate their pricing strategies. Although this coordination between the parties led to a situation where there is diversity in discounts, it does not prevent the parties from collectively setting a fixed quantum of price increase for poultry feed. The shared information can create a tacit understanding among the competitors, influencing their pricing decisions.[11]
Information sharing coupled with parallel behaviour may also amount to concerted practice. In Chicken Feed, this can be reflected from analysis of WhatsApp conversations, call logs, email correspondence and handwritten notes that demonstrate that the parties entered into agreements and/or engaged in concerted practices to fix the increments in poultry feed (with maize and SBM as the main ingredients) prices in Malaysia during the infringement period.[12]
Additionally, in Chicken Feed, MyCC rejected the argument that the parties employed the use of discounts and rebates to their customers as a way to stay competitive. This is because the applications of discounts and rebates were only to selected customers and not to everyone.[13]
Bid rigging
Bid rigging entails a collusive agreement among bidders that significantly prevents, restricts or distorts competition in a tendering process.[14] The conduct of bid rigging can occur by cover bidding, cover pricing, bid suppression, bid rotation and market division.[15]
In the Safety Equipment case, MyCC found evidence of coordinated practices among bidders aimed at manipulating the tender process. Forensic data revealed that tender documents were created and submitted around the same time, with nearly identical pricing structures. Agenda Eksklusif submitted the lowest bid in the first round, suggesting a prearranged outcome. The investigation uncovered the sharing of sensitive information, the involvement of common parties and uniform pricing adjustments, all pointing to concerted efforts to distort competition.[16]
The procurement division of the Ministry of Defence (MINDEF) oversees the management of the procurement processes. These activities involved the procurement activities for multiple projects and involved the following multiple infringing parties:
- Agenda Eksklusif Sdn Bhd (Agenda Eksklusif);
- Star Apax Enterprise;
- Nekad Waja Resources (Nekad Waja);
- Spectron Sdn Bhd (Spectron);
- Teknokrat Makmur Enterprise (Teknokrat);
- Prospectrum Sdn Bhd (Prospectrum); and
- NK Panorama Enterprise (NK Panorama).
Among the justifications raised by Agenda Eksklusif and Spectron and Agenda Eksklusif and Teknokrat were that they are in a subcontracting relationship.
However, MyCC decided that the alleged subcontracting agreements were not genuine and cannot justify the parties’ sharing of sensitive tender prices and details. Each of the parties entered an agreement to fix directly or indirectly the bid prices and, by submitting those bids, performed an act of bid rigging.[17]
Based on MyCC’s findings, the subcontracting agreement was entered after Spectron won the tender and not before. Without a formal subcontracting agreement there was no valid reason for Agenda Eksklusif and Spectron to discuss the tenders, especially sensitive information on prices.[18]
Additionally, Agenda Eksklusif, Star Apax and Nekad Waja contended that there is no horizontal agreement because they constitute a single economic unit (SEU). The parties argued that, based on the principle of decisive influence as applied in Langkawi Auto Express Sdn Bhd, a relationship other than that between a parent company and a subsidiary could fall within the scope of the doctrine of SEU.
However, this argument was rejected by MyCC as section 2 of the Act states that a parent company and its subsidiaries are regarded as a single economic unit within which the subsidiaries lack real autonomy in the market. MyCC found that these conditions were not met.[19]
Although the principle of decisive influence provides that there may exist a relationship other than that of a parent‑subsidiary relationship, it is not applicable in this current situation.[20] The intention of the tendering process is to ensure the procurer receives genuine, independent and competitive bids. Colluding and manipulating the tendering process, giving the procurer a false impression of the market’s competitive nature, would make a mockery of the section 4 prohibition.[21]
MyCC then referred to Delhi Jal Board v Grasim Industries Ltd & Others,[22] which provided as follows
The Commission notes that these two companies are separate legal entities and that they participated in these tenders individually and separately. Where two or more entities of the same group decide to separately submit bids in the same tender, they have consciously decided to represent themselves to the procurer that they are independent decision making centres and independent options for procurement. They will, under such circumstances, have to comply with the provisions of the Act in letter and spirit. Any argument by such entities to the effect that they decided to submit separate bids but the prices were decided by the same person, which fact is not known to the procurer, cannot be used to escape the provisions of law. Such a behaviour, apart from manipulating the price discovery process of public procurement, is contrary to the objective of the Act and should be condemned. Accordingly, ABCIL and GIL cannot avoid the responsibility cast under Section 3(3)(d) read with Section 3(1) of the Act under the garb of belonging to the same group.
In Construction and Flood Mitigation, MyCC commenced an investigation pursuant to section 15 of the Act. The complaint alleged the existence of anti-competitive arrangements in relation to the submissions of bids for two road construction projects procured by the Public Works Department (also known as Jabatan Kerja Raya (JKR)).
The parties involved are:
- Dutamesra Bina Sdn Bhd (Dutamesra);
- IDX Multi Resources Sdn Bhd (IDX);
- Kiara Kilat Sdn Bhd (Kiara);
- Mangkabumi Sdn Bhd (Mangkabumi);
- Menang Idaman Sdn Bhd (Menang Idaman);
- Meranti Budiman Sdn Bhd (Meranti Budiman);
- NYL Corporation Sdn Bhd (NYL); and
- Pintas Utama Sdn Bhd (Pintas Utama).
During the investigation, it was found that the same parties were involved in agreements and/or concerted practices to perform bid rigging in a different tender project, namely, Rancangan Tebatan Banjir Sungai Buloh, where the procurement process is conducted by the Department of Irrigation and Drainage (JPS).
The finding of infringement is also based on the body of evidence such as the preparation of tender documents by Mangkabumi for all parties, Mangkabumi acting as the ultimate decision-maker for all parties, submission arrangements by Pintas Utama, the discovery of physical proof in the form of documents, the exchange of pricing information and email correspondence between the parties.[23]
MyCC is of the view that procurement procedures are designed to ensure fair and healthy competitive bidding among the bidders. This notion corresponds with a fundamental principle in competition law whereby enterprises are expected to act independently when determining their conduct in the market. Therefore, an essential feature of a competitive tender process is that each interested bidder prepares and submits its bid independently of the other bidders. Tender bids submitted as a result of collusion or fraudulent cooperation between bidders who are competing for the tender will distort competition. We take the position that, in law, such collusion or fraudulent cooperation amounts to performing an act of bid rigging.[24]
Among the contentions raised by some of the parties are that they did not receive any monetary or financial benefits and that neither of the parties possessed the capability to influence the tendering process. Additionally, the decision to award the tenders was made based on merit.
However, this argument was rejected by MyCC as the assertions do not negate MyCC’s findings pursuant to section 4(2)(d) of the Act provides as follows[25]
- A horizontal or vertical agreement between enterprises is prohibited insofar as the agreement has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services.
- Without prejudice to the generality of subsection (1), a horizontal agreement between enterprises which has the object to— …
- perform an act of bid rigging, is deemed to have the object of significantly preventing, restricting, or distorting competition in any market for goods or services.
Defence – public distancing
Liability can be attributed to an enterprise even if it is only a recipient of the information, unless the enterprise distances itself from the unlawful initiative.[26] The concept of public distancing in cartel cases allows an enterprise that has attended anti-competitive meetings to evade liability by showing that it had publicly distanced itself from the anti-competitive discussions.[27]
However, the mere fact that an enterprise may have played only a limited part in setting up the agreement or concerted practice or may not be fully committed to its implementation, or participated only under pressure from other parties, does not mean that it was not a party to the agreement or concerted practice.
In Langkawi Ro-Ro, on the evidence, the Commission found that Dibuk Cargo Services Sdn Bhd (Dibuk Cargo) had participated in an informal discussion that led parties to come to an understanding prior to the signing of the infringing agreement.
In fact, that the decision maker of Dibuk Cargo himself has informed MyCC that he agreed to the fixing of ro-ro vessel services fare despite the absence of knowledge on the infringing agreements, which intended to fix the vehicle transportation fares via ro-ro vessels to avoid a price war between the parties.[28]
For an enterprise to publicly distance itself from an anti-competitive agreement, the enterprise must express firmly and unequivocally to the other cartel members of its intention to distance itself from the anti-competitive conduct.[29]
In 7 Warehouse, MyCC found that the conduct of the parties refunding the excess payments did not amount to publicly distancing itself from the anti-competitive discussion.[30]
Defence – leniency regime
Section 41 of the Act provides for a leniency regime with a reduction of up to a maximum of one hundred per cent of any penalties, subject to the enterprise admitting its involvement in an infringement of any prohibition under subsection 4(2) and providing information or other forms of cooperation to MyCC.
Single continuous infringement
An infringement of section 4 of the Act may also come from a series of acts or continuous conduct. If it can be established that a set of individual agreements is interlinked in terms of pursuing the same objective or as part of a plan, that set can be characterised as constituting a single continuous infringement. MyCC is, therefore, entitled to impute responsibility for those actions based on participation in the infringement considered as a whole.[31]
In 7 Warehouse, MyCC considered each series of discussions as constituting a single continuous infringement, as the series of discussions were all in pursuit of a common objective.[32]
Burden and standard of proof
MyCC bears the burden of proving that an infringement under section 4 of the Act has been committed. The standard of proof to be applied is the civil standard, which is on the balance of probabilities.[33]
Extra-territorial application
Section 3(2) of this Act provides that this Act applies to any commercial activity transacted outside Malaysia that affects competition in any market in Malaysia.
Exceptions to section 4 of the Act
Section 3(4) of the Act provides several exceptions to the prohibition under section 4 of the Act. The exceptions extend to the following activities –
- any activity, directly or indirectly, in the exercise of governmental authority;
- any activity conducted based on the principle of solidarity; and
- any purchase of goods or services not intended to offer goods and services as part of an economic activity.
Additionally, the prohibition under section 4 of the Act shall not apply to specific industries or sectors listed below.
Cartel prohibition outside of the Act
There are also sector-specific statutes that prohibit cartel conduct, such as:
- the telecommunications sector, which is governed by the Communications and Multimedia Act 1998;
- the aviation sector, which is governed by the Malaysian Aviation Commission Act;
- the energy sector, which is governed by the Energy Commission Act 2001; and
- the upstream petroleum sector, which is governed by the Petroleum Development Act 1974.
Penalty
Enterprises that are involved in cartels may be subjected to a financial penalty not exceeding 10 per cent of the worldwide turnover of the company during the period of infringement pursuant to section 40(4) of the Act.
Additionally, MyCC may also require that the infringement cease immediately, specify steps required to be taken by the infringing enterprise, which appear to MyCC to be appropriate for bringing the infringement to an end, and give any other direction it deems appropriate.
Based on MyCC’s Guidelines on Financial Penalties, in determining the amount of financial penalty in a specific case, MyCC may consider some of the following factors:
- the seriousness of the infringement;
- the turnover of the market involved;
- the duration of the infringement;
- the impact of the infringement;
- the degree of fault (negligence or intention);
- the role of the enterprise in the infringement;
- recidivism;
- the existence of a compliance programme; and
- the level of financial penalties imposed on a similar case.
MyCC will begin by setting a base figure, which is the relevant turnover during the period of infringement, and then will adjust the figures based on the above factors.
For the purpose of computing financial penalty, MyCC will rely on the financial information submitted by the parties.
Conclusion
In September 2024, MyCC issued a Proposed Decision against 81 enterprises for their involvement in a price-fixing agreement concerning the provision of Umrah travel services in Malaysia.
In April 2025, MyCC issued a Proposed Decision against 22 enterprises for their involvement in a price-fixing agreement for the provision of childcare services in Kuala Lumpur and Selangor.
This significant enforcement action reflects MyCC’s ongoing commitment to combating anti-competitive practices and reinforces its zero-tolerance stance toward cartel behaviour.
The decision sends a strong signal to the business community that collusive conduct or cartel behaviour will not be tolerated, and that such practices will be met with strict enforcement measures under the Act.
Given this development, it is critical for both Malaysian enterprises and foreign businesses operating in Malaysia to remain vigilant and ensure that their business practices comply fully with Malaysian competition laws. Enterprises should:
- avoid any agreements (formal or informal) with competitors that may restrict competition;
- implement effective competition law compliance programmes;
- provide regular training to staff, especially those involved in pricing, marketing or strategic decision-making; and
- seek legal advice when in doubt about the competitive implications of commercial decisions.
Maintaining a proactive compliance culture is not only a legal obligation but also an essential part of safeguarding a company’s reputation and long-term viability in the Malaysian market.
Reference : The Asia-Pacific Antitrust Review – Global Competition Review