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Competition Law Part 5

In Indonesia, there are no laws relating to unfair competition, monopolisation, or passing off which may affect rights in relation to industrial property in this country (this was probably due to the Soeharto regime during which the majority of business was under the control of and owned by the Soeharto family). Currently, unfair competition is controlled under Art. 1365 of the Civil Code, which provides that a wrongdoer whose conduct injures other people is obliged to pay compensation, and under article 382 bis of the Criminal Code:

Art. 382 bis of the criminal Code provides that: "Anyone who deceives the public or someone else with a purpose to obtain, maintain or add to his own benefit or that of his or another personís company, will be punished because of his unfair competition, with imprisonment for a maximum 16 months or fine of a maximum nine hundred rupiahs, if such acts injure his competitors or another competitor who competes with his competitor". 

However, the penalty recorded here is plainly ineffective: a fine of 900 Rupiahs is approximately 0.07 pounds, which really means nothing for a dominant company, and the imprisonment sentence of 16 months is inappropriate and unrealistic. Especially, the compensation under Civil Code is not clearly defined so it can be minimal because the firms that committed the offence can exercise their powerful influence on the courts concerned.

In Malaysia, there are no specific laws against unfair trading practices. There are piecemeal provisions in particular statutes such as The Hire Purchase Act 1967, The Price Control Act 1946, and The Control of Supply Act 1961 that provide some limited protection to the consumer in specific situations or transactions. In particular, Sec. 28 of the Malaysian Contract Act 1950 renders all covenants in restraint of trade void. However, there is no criterion for judging whether the covenants in question are reasonable, or if they are harsh or onerous or too wide. Apart from the above restriction, there are no controls or regulations over contracts relating to exclusive dealing, monopolisation, franchises or resale price maintenance. Where mergers are concerned, there are various requirements to be complied with in takeover and mergers, but these relate to the regulation of the shareholdings of a corporation in Malaysia. Section 179 of the Companies Act 1965 prescribes a panel on Takeovers and Mergers to provide guidelines on the acquisition, takeover and merger of a company. There is no significant imposition of fines or punishment on the firms involved in unfair competition. Contracts dealing with these types of conduct, insofar as they do not infringe any of the specific laws mentioned, are valid and enforceable. It is notable that Malaysian laws on takeover and mergers do not apply to contracts made or performed outside Malaysia unless the contract expressly states that the laws in Malaysia will apply (CCH Asia Limited, 1998).

However, these Malaysian laws relating to unfair competition are obviously not systematically enforced and might inadequately deal with anti-competitive business practices of modern global firms, since these laws are very old and fragmented. They also do not apply to contracts made or performed outside Malaysia that might have an effect on market structure or power within the Malaysian economy and injure other competitors. Moreover, there are no controls or regulations over contract relating to exclusive dealings, monopolisation, franchises and price fixing. So there is no doubt that existing laws would ineffectively and inadequately control restrictive business practices of firms if they occurred as a result of the increasing competition among firms operating in ASEAN flowing from liberalisation.

In the Philippines, there are some laws regulating or prohibiting monopolies and restraint of trade or unfair competition. The Philippines 1987 Constitution provides that "the State shall regulate or prohibit monopolies when the public interest so requires, no combinations in restraint of trade or unfair competition shall be allowed"(11).

Part 6


(11) Sec. 29 Art. XIII of the Constitution.