Insurers given till end of this month to contest MYCC decision

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The Malaysia Competition Commission (MYCC) says general insurers have until the end of the month to contest its initial decision to impose an RM 213.45mil penalty on the industry.

The commission will also consider Bank Negara’s statement on the matter in its review process.

“If the parties can come forward and make their representations, we will listen to them,” its chairman Tan Sri Siti Norma Yaakob said.

“We hope they would be able to give us new evidence,” she told reporters at the Malaysia Competition Conference 2017 yesterday.

She reiterated that the RM 213.45mil penalty on local general insurers for the alleged infringement of the Competition Act 2010 (CA) announced on Feb 24 was a “proposed decision” and not finalised.

Siti Norma said the industry had 30 days to make its representation.

Bank Negara, in a statement last week, said the proposed decision was “most unfortunate” and would severely impact consumer interest.

Persatuan Insuran Am Malaysia (PIAM), in another statement last week, hoped MYCC would reconsider its proposed decision and the imposition of the financial penalty on its members.

It is also obtaining legal advice to defend its position that this was not an anti-competitive agreement.

MYCC on Feb 24 had said the proposed RM 213.45mil penalty was a result of its investigation into the alleged infringement in the agreement between PIAM and the Federation of Automobile Workshop Owners’ Association of Malaysia on trade discount rates for the parts of certain vehicle makes and labour hourly rates for PIAM-approved repairers scheme workshops.

MYCC commissioner Prof Datuk Dr Sothi Rachagan explained that the financial penalty imposable under the CA is up to 10% of an enterprise’s worldwide turnover over the period which the infringement occurred.

While the suggested penalty of RM 213.45mil seems like a large sum, the penalty value is only 1% of the total turnover of the 22 general insurers involved.

Furthermore, MYCC will also consider if the general insurers are seeking relief from liability for the infringement.

The conditions under Section 5 of the CA deem that there should be significant identifiable technological, efficiency or social benefits that arise directly from the agreement, or the benefits could not reasonably have been provided by the parties to the agreement without preventing, restricting or distorting competition.

Apart from that, the detrimental effect of the agreement on competition is found to be proportionate to the benefits provided, or the agreement does not allow the enterprise concerned to eliminate competition completely in respect of a substantial part of the goods or services.