Tuesday 28 May 2024
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This article first appeared in The Edge Malaysia Weekly on May 24, 2021 - May 30, 2021

CAN the Malaysia Competitions Commission (MyCC) challenge a decision by the Competitions Appeal Tribunal (CAT) that is unfavourable to the commission? Two recent cases with conflicting outcomes have left stakeholders bemused as to the legal position.

The Federal Court is set to make a ruling on this as MyCC has indicated to The Edge that it is appealing a decision last month by the Court of Appeal (CoA) to set aside a RM10 million fine each imposed on Malaysia Airline System Bhd (MAS) and AirAsia Bhd by MyCC.

In 2014, MyCC had imposed the fine on the two airlines following their short-lived collaboration in 2012. A fine was imposed on both airlines after the commission found that they had breached the market-sharing prohibition under Section 4(2) of the Competition Act 2010 by entering into an agreement to share markets in the air transport services sector within Malaysia.

Subsequently, both airlines appealed to CAT and in February 2016, the tribunal allowed their appeals, setting aside MyCC’s decision and RM10 million fine.

MyCC then filed for a judicial review at the High Court, which, in December 2018, reversed CAT’s decision and re-imposed the fine.

MyEG Commerce and MYEG Services Sdn Bhd were fined a total of RM9.34 million

However, in its April 27 decision, the Court of Appeal overturned the High Court’s decision, with the three-member appellate bench ruling that MyCC could not review a decision by CAT.

Given the importance of the April 27 decision and its impact on MyCC, CEO Iskandar Ismail told The Edge that the commission has decided to file an application for leave to appeal to the Federal Court to determine the finality of the case.

Iskandar said the case of MAS and AirAsia was one of the earlier court battles undertaken by MyCC since its formation under the Competition Commission Act 2010.

“MyCC is seeking leave to appeal for further clarification on MyCC’s right to challenge the CAT decision. This interpretation or finality in the decision is crucial to MyCC as it would affect the organisation’s function,” he said.

Iskandar: MyCC is seriously looking at bid-rigging in government projects

Journal highlights upshot of CoA judgment

Iskandar has instructed Lim Chee Wee Partnership to file an application for leave to appeal. The commission has 30 days from the date of the CoA ruling to file the questions of leave.

Iskandar pointed to an article that appeared in the Global Competition Review (GCR) over the decision, which he indicated could be troubling for MyCC if correct in its interpretation.

In the article, Anand Raj, a partner at law firm Shearn Delamore & Co, said the upshot of the April 27 decision suggests that if an enterprise loses an appeal against an infringement decision before the tribunal — and is asked to pay the fine — it can ask the High Court for leave to apply for judicial review as a person “adversely affected” under the law.

“The CoA decision seems to suggest that MyCC cannot challenge a loss before the tribunal as it is not considered to be ‘adversely affected’,” Raj said.

“If that is the correct interpretation of the court’s ruling, then MyCC would be able to appeal against a loss at the High Court but not a loss before the CAT. This might result in an unusual situation where the MyCC may be the only competition agency in the world that can make a finding, lose an initial appeal and then be unable to take the case any higher,” he said.

Iskandar said the interpretation of the law is crucial for MyCC to function further as CAT should be considered a separate entity altogether and not within MyCC.

He declined to reveal further details as the appeal for leave to the Federal Court is pending.

In civil appeals to the apex court, a litigant has to obtain leave or permission — based on questions of law posed — to ensure the appeal is not frivolous, vexatious or an abuse of the court process.

Conflicting CoA decisions affecting MyCC

Appellate judge Datuk Hanipah Farikullah, who led the bench in allowing MAS’ and AirAsia’s appeal, said that MyCC should have abided by CAT’s decision, and not file for judicial review to challenge the tribunal’s decision at the High Court.

“They (MyCC) cannot challenge its appellate authority,” ruled Hanipah.

The court further ruled that MyCC was not an aggrieved party under Order 53, Rule 2 of the Rules of Court, to initiate a legal challenge against the decision by CAT. Moreover, it said the threshold for MyCC to initiate a judicial review had not been breached.

Six days after the CoA judgment on the airlines, another appellate court affirmed a decision by MyCC and CAT.

In the appeal by MyEG Commerce Sdn Bhd and MyEG Services Sdn Bhd, the CoA upheld a decision by MyCC and CAT to impose a fine of RM9.64 million in total on the companies for violating the competition law in that they had abused their dominant position to sell mandatory insurance related to temporary employment permits for foreign workers (Pas Lawatan Kerja Sementara or PLKS).

Justice Datuk Zabidin Mohd Diah said the bench was unanimous in holding that there was no error and misdirection that warranted the appellate court’s intervention in the case. The bench also agreed that MyEG had a right to challenge the CAT decision.

“We unanimously agree with the learned High Court judge, that there was no irregularity or illegality in the findings which upheld the decision by CAT made in December 2017. MyEG had abused its position and not entered a level playing field as their action can harm competition.

“The financial daily penalty imposed by MyCC was not manifestly excessive,” said the judge.

The decisions appear to suggest that companies can appeal or file a judicial review at the High Court to challenge decisions by CAT.

However, MyCC’s standing is less clear as the appellate court’s decision on MAS and AirAsia appears to suggest that the commission is not deemed an aggrieved party by the court.

Ensure level playing field

On a different note, Iskandar revealed that one of the major areas that MyCC is seriously looking at currently is bid-rigging in government projects, and that it endeavours to ensure proper competition in the tendering of projects to prevent leakages that are costly to both the government and the public.

“Studies have shown that 25% of leakages in government procurement result in sub-standard products or services and cause some projects to be white elephants. This is something that we want to avoid, and to educate that bid-rigging has an adverse effect on the market.”

Bid-rigging involves every stage from the tender process, cover pricing and suppression of information to sub-contracting of such projects.

For MyCC to function effectively, Iskandar said that the commission needs to be expanded from the present 80-strong workforce — centred in Kuala Lumpur — to cover the whole of Malaysia.

He said compared with other jurisdictions like Singapore, Indonesia, Hong Kong or Australia, based on the population ratio, MyCC has far fewer staff to ensure a level playing field for consumers.

Crediting the formation of MyCC to a former chief justice who in the last decade predicted competition would be a major focal point in judicial review applications, Iskandar observed: “He was right in his foresightedness and as a result, MyCC was set up, joining the rest of such similar commissions in the world.”

 

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