A missed opportunity for judicial review for the Malaysian Competition Commission

(February 20): Following the Asian financial crisis of 1997, competition law was adopted as legislation in major ASEAN economies in the first half of the past two decades. In Malaysia, the Competition Act 2010 came into force in 2012, with the Malaysian Competition Commission (MyCC) being mandated by Parliament to implement and enforce competition law. The MyCC plays the important role of not only enforcing competition law, but also advocating and educating the Malaysian public about this legislation by appreciating the benefits of competition against the constraints of past industry practices of direct relationships and monopolistic “state champions”. .

Competition law around the world aims to maintain the competitive process within markets. Where there are oligopolies, the law ensures that cartel activities such as price fixing are controlled, while monopolies are controlled by prohibiting predatory practices. Ultimately, the consumer benefits when there is a healthy level of competition. Malaysia, in adopting this legal concept, has benefited from more than a century of jurisprudence. The legal concept finds its history in the United States where it is known as antitrust law. Passage of the Sherman Antitrust Act in 1890, buoyed by growing discontent with monopolization and cartel practices in the oil and railroad industries, formalized the restriction into written law.

In the European Union (EU), competition law was formalized under the Treaty of the European Community in 1957. Through in-depth analysis of the complex interplay between economics, politics and law, competition US and EU courts have played a vital role in the development of this area of ​​law. Antitrust/competition commissions themselves are a key player in prosecuting and bringing to court important cases, which raise new issues as markets and technology develop by leaps and bounds. In 2004, the European Commission’s proposed fine of €497 million against Microsoft was the largest in its history and raised key concepts such as open source software and access for competitors to participate in a platform. dominant such as Windows. Tech giants such as Facebook and Google have also been targeted in both jurisdictions over concerns about advertising data usage practices.

In 2014, the MAS-AirAsia case was MyCC’s first major decision on alleged violations of market-sharing bans, with a principal fine of RM10 million imposed on each entity. Competition law in Malaysia has benefited from the multiple levels of courts traversed by this long-running case, in particular the interpretation of Malaysia’s unique provision under section 4(2) of the Competition Act , which automatically considers certain horizontal (competitor-to-competitor) agreements such as price-fixing and market-sharing to be a trade barrier and a breach of law, and questions regarding the extent to which the MyCC might s rely on the deeming provision to avoid in-depth analysis of the market and the actual effects of these anti-competitive measures.

The prospect of this case and a new bill in Federal Court, the nation’s supreme court, for legal advice ended on February 9 when the Federal Court denied MyCC leave to appeal. against the decision of the Court of Appeal. decision.

The main effect of the Court of Appeal’s decision, left untouched, is that while aggrieved parties (like MAS/AirAsia) can go to court, MyCC itself cannot, thus limiting in Malaysia the expanded role of the courts in the development of this important area of ​​law and the types of cases brought before the courts.

The MAS-AirAsia case

The MyCC plays the role of investigator, judge and executioner. This is Parliament’s clear intention when reading the 2010 Act. In making its decision, Section 40 of the Competition Act empowers MyCC to impose financial penalties and other appropriate guidelines. Section 51 provides that aggrieved parties may appeal to the Competition Appeal Tribunal (CAT) against the decision of MyCC. The Competition Act therefore provides for a legal remedy against the decisions of the MyCC. The members of the CAT are personalities appointed by the Prime Minister who, according to him, have relevant expertise in “industry, commerce, economics, law, accounting or consumption”. The CAT is independent of the MyCC and only acts as an appeal tribunal.

Although the Competition Act provides that the CAT’s decision is final and binding, the court’s inherent supervisory jurisdiction nevertheless leaves open the possibility for an aggrieved party to seek judicial review from the courts, a route provided by Order 53 of the 2012 regulations for parties injured by decision of public authorities (in this case the CAT). In the MAS-AirAsia case, however, the CAT ruled against MyCC, leading MyCC to seek judicial review in the High Court.

Although MyCC was successful in the High Court, the Court of Appeal, in subsequently allowing MAS and AirAsia’s appeal, made an important decision: MyCC has no standing to seek a judicial review against a decision of the CAT because the MyCC cannot be said to be prejudiced by the decision of the CAT. The Court of Appeal ruled that the MyCC, being a “quasi-judicial” body, could not challenge its superior, the CAT. Here are excerpts from that decision:

[44] Under the statutory scheme of law, the CAT is the appeal authority for MyCC. Therefore, the MyCC must show deference and respect to his superior’s appeal decision and comply with the decision of the CAT. For the MyCC to ignore or challenge the decision of its own appeal authority would be administrative insubordination of a kind contrary to the entire legislative scheme of the Act. Parliament may, by express provision, provide MyCC with an alternative means of challenging the decision of its own appeal authority, but Parliament has not seen fit to do so in this case.

[45] The MyCC, in carrying out its quasi-judicial functions of weighing the evidence before it and making a decision that is binding under the law, takes a neutral and impartial position before its appeal authority within of the CAT and its task is to help the CAT reach a just and fair decision. He takes no partisan position and has no personal or official interest in the confirmation or reversal of his order made in his quasi-judicial capacity.

With respect, the conclusion that the MyCC must give preference and respect to the appeal authority of its superior, and that such a challenge would constitute “administrative insubordination of a kind contrary to the entire legislative scheme of the Act”, may not be entirely accurate. Although creatures of the same status, the MyCC and the CAT are distinct organs playing very different roles. They have distinct functions and their members do not overlap.

By making its own decision, the MyCC is not subordinate to the CAT in these functions. The CAT plays no role in this process. The CAT only acts as an appeal body in the event that a party appeals against the decision of MyCC. Once a case is before the CAT, the MyCC no longer has a determinative or “quasi-judicial” role. This role of MyCC ends once its decision is made. The procedure before the CAT is adversarial. By defending the very decision it has already reached, MyCC cannot be expected to be disinterested. MyCC’s decision, when submitted to the CAT, is therefore akin to a claim in civil proceedings before the court, which MyCC must plead and defend.

Malaysia rather unique

A disappointing and bizarre consequence of the MAS-AirAsia case is that the role of Malaysian courts in developing this area of ​​law is limited – only cases where MyCC and CAT decisions are aligned come before our courts. Where a complainant successfully challenges MyCC’s decision to the CAT, that case will never be taken to court for guidance.

This makes Malaysia quite unique compared to other countries with robust competition regimes, where the law is brought before and its development driven by the courts. In the United States, the Federal Trade Commission and the Department of Justice initiate legal proceedings to enforce antitrust law. In the EU, appeals against the commission’s decision are also taken directly to the General Court and then to the Court of Justice on appeal.

Jurisdictions such as the UK, Singapore and Australia have adopted a procedural framework similar to that of Malaysia, in which there is a statutory appeal tribunal. Unlike Malaysia, however, in these jurisdictions appeals from the commissions – from the court to the courts – are expressly provided for in their statutory law.

Thus, in all other major jurisdictions with competition law, the commission is always the opponent in court, and competition law is inevitably taken to court. The role of the court in developing key concepts, even when the parties initially have their disputes settled outside the court, is common in common law. For example, many important contractual principles have been developed by parties taking an arbitrator’s misapplication of the law to court.

A final enigma arises. In judicial review proceedings before the courts, there must always be an opposing party. If a legal challenge is brought by a complainant against the CAT’s decision, does the CAT then become (to the exclusion of MyCC) the opposing party, playing an active role in the High Court process and defending its decision? Does he appoint a lawyer?

Definitely not. The CAT is purely an appellate tribunal, and this is where the very concerns of a tribunal that maintains its disinterest should arise. In the MAS-AirAsia judicial review proceedings initiated by MyCC, CAT was unrepresented and played no role in the proceedings. MAS and AirAsia played the role of opponents.

Or do the MyCC and CAT then switch roles once in the High Court, from opposing party and court respectively in the appeal stage of the CAT, to a single joint party in the High Court? It would be a strange change of hat to accommodate the limitations of judicial review.

These issues were not considered by the Court of Appeal and it is unlikely that the drafters of the Competition Act considered these issues. Under the status quo, MyCC’s role in competition law enforcement as a regulator would be significantly reduced compared to its peers in other jurisdictions – being a regulator that cannot defend its own decisions. It remains to be seen whether the MyCC will continue to challenge this restriction in court, or whether Parliament will remedy the situation with a legislative amendment to expressly allow an appeal against the CAT’s decision by either party. Otherwise, Malaysia remains at odds with the practices of established competition regimes around the world, which routinely involve the courts.

Mervyn Lai (LL.M (Dist) Competition Law, University of Glasgow) is a partner in the law firm Tommy Thomas.