What happens when competitors secretly agree on prices? Or when powerful companies quietly push smaller players out of the market? While such practices may not always be visible to consumers, these behind-the-scenes arrangements, often seen in Hollywood movies, do occur in real life and can significantly distort market competition. One of the most well-known examples of such conduct is the formation of a “cartel.”

A cartel refers to a combination of enterprises formed to control prices, limit production, divide markets or manipulate bidding processes. Operating discreetly, cartels are widely regarded as the greatest threat to competition law.

The Legal Framework

Competition law in Malaysia is primarily governed by the Competition Act 2010 (“Act”), which was passed by the Parliament of Malaysia in May 2010 and came into effect on 1 January 2012. The Act establishes a legal framework aimed at ensuring that businesses compete fairly and that markets remain open, transparent and dynamic for the benefit of both businesses and consumers. It is implemented by the Malaysia Competition Commission (“MyCC”), the regulatory authority responsible for investigating and taking action against businesses that engage in practices which restrict competition and undermine fair market conditions.

The Two Main Prohibitions

At its core, the Act focuses on two main prohibitions.

1. Anti-Competitive Agreements (Section 4) The first prohibition relates to the anti-competitive agreements between businesses (Section 4 of the Act). These agreements refer to any agreement, be it horizontal or vertical, that have the object or effect of significantly preventing, restricting, or distorting competition in any market in Malaysia. Common examples include price fixing, market sharing, bid rigging or limitation of production. For instance, if competing businesses agree among themselves to fix the price of certain goods or services, such conduct removes genuine price competition and may be considered a serious infringement under the Act.

2. Abuse of a Dominant Position (Section 10) The second prohibition concerns the abuse of a dominant position in the market (Section 10 of the Act). Having a strong market position is not unlawful in itself and a company will not be penalised for its dominance. However, a company that holds a dominant position must not misuse its market power to unfairly eliminate competitors or prevent new businesses from entering the market. Examples of abusive conduct may include predatory pricing, refusing to supply essential goods or services without valid justification, or imposing unfair trading conditions such as tied selling arrangements.

Enforcement and Consequences

The Act applies broadly to commercial activities in Malaysia, regardless of whether the company involved is local or foreign (Section 3 of the Act). The consequences of breaching the Act can be significant. In July 2022, the MyCC imposed a financial penalty totalling RM1.5 Million against eight enterprises for engaging in bid-rigging conducts involving IT projects procured by National Academy of Arts, Culture and Heritage (ASWARA), although part of the penalty was later reduced by the Competition Appeal tribunal (CAT).

The MyCC has the authority to investigate suspected infringements, impose financial penalties of up to 10% of a company’s worldwide turnover and issue directions requiring businesses to cease the anti-competitive conduct and remedy its effects.

Current Trends

In Malaysia, enforcement against anti-competitive practices is on the rise. The MyCC reported that financial penalties exceeding RM570 Million had been imposed on nearly 100 companies involved in cartel activities in July 2024. As of early 2026, the amendments to the Act to introduce a merger control regime are in the final stages, with the government aiming to table them in Parliament within the year to further strengthen the MyCC’s enforcement powers.

As Malaysia continues to enhance its competition framework, businesses must ensure their practices align with the principles of fair market competition while continuing to compete through quality, innovation and efficiency.