Wednesday, July 20, 2011

Top Officers will Pay High Price if Found Guilty Under Upcoming Competition Act

Sourced from MLTIC:

Directors, company secretaries, chief executive officers and managers of companies will face strict liability of up to RM2 million or imprisonment of up to five years if found guilty for offences under the Competition Act which will come into force in Malaysia January 1, next year.

The Competition Act refers to prohibition of anti-competitive agreements and abuse of dominant positions in commercial activity which affect competition in Malaysia.

The Act, which is intended to protect the interests of consumers and promote economic development, applies to commercial activities within and outside Malaysia.

It includes fixing of prices, trading terms as well as limiting or control of production, market access, outlets or even technical and technological development.

The Malaysian Competition Commission which was set up this year has the power under the Act to conduct investigations on suspected offences, conduct raids and impose financial penalty.

Partner of law firm, Skrine & Co and head of the firm's Competition Law, Faizah Jamaludin said that the directors, CEOs, managers and secretaries will be deemed to have commited offences under the Act unless they prove that their act was committed without their knowledge and consent.

"They must also prove that they have taken reasonable precautions and exercised due diligence to prevent the commission of the offence," Faizah said during the Malaysian Institute of Chartered Secretaries and Adminstrators (MAICSA) annual conference here.

"Companies will also face penalty of up to RM10 million for offences under the Act," she said.

She emphasised that agreements that aim to fix prices and exert a monopolistic position would also amount to an offence under the Act even if these agreements are not formal in nature or verbally spoken between parties.