Tort of Harassment

Harassment
Harassment in its Many Forms and Types

Harassment is a common term. Its definition as per the Oxford Dictionary means “Aggressive pressure or intimidation.” Law students that studied English Law or general public often than not thinks that there is actually a law protecting us from Harassment(at least that is what I thought). However, that is not the case in Malaysia.

 

ct-cta-anti-harassment-campaign-20151009

 

In United Kingdom, the Parliament has enacted the Protection from Harassment Act 1997 following the concern over the problem of ‘stalkers’, after several much-publicized cases in which individuals became obsessed with an ex-girlfriend or -boyfriend, a celebrity or even a mere acquaintance, and subjected them to constant and often long-term harassment. However, para material legislation does not exist in Malaysia. Thus, there is no ‘tort of harassment’ per se in Malaysia.

 

In Desiree Couture Sdn Bhd & Anor v Anne F Co. Ltd & Ors [2016] 10 MLJ 315, the High Court was invited to consider if Malaysia has a cause of action under the Tort of Harassment. Azizul Azmi Adnan JC, in his judgment at para [58] noted that:

I should however note that I found the arguments in support of the existence of the tort of harassment persuasive, and the time may well be upon us to follow the examples of Hong Kong and Singapore in recognising such a cause of action under the common law.

 

His lordship affirmed that there is no such cause of action known as ‘tort of harassment’ in Malaysia. However, he agreed that given the social changes, tort of harassment should be a valid cause of action in Malaysia. Nevertheless, his lordship did not rule on the matter and establish a new tort as it was not necessary to do so.

 

Harassment-Is-A-Crime_600

 

Following on in the Federal Court case of Mohd Ridzwan bin Abdul Razak v Azmah bt Hj Mohd Nor [2016] 4 MLJ 282, the Suriyadi Halim Omar FCJ made the following comment in his judgment under para [39]:

After mulling over the matter, we arrived at a decision to undertake some judicial activism exercise and decide that it is timely to import the tort of harassment into our legal and judicial system with sexual harassment being part of it.

 

Under para [57], his lordship continues to explain principle for the ‘tort of harassment’:

For our purpose, before defining the tortious phrase of sexual harassment, we need to know what harassment is in the first place. For brevity, when identifying the harasser or the victim, the pronouns he, she and her, apply to both gender whenever appropriate. Putting aside the statutory definition provided in the Employment (Amendment) Act 2012 and in the Employment Act 1955 as discussed earlier, Lord Sumpton in Hayes v Willoughby [2013] 1 WLR 935 acknowledged that harassment is an ‘ordinary English word with a well understood meaning.’ Citing Thomas v News Group Newspaper Ltd [2002] EMLR 78, 30, Lord Sumpton stated that harassment is, ‘persistent and deliberate course of unreasonable and oppressive conduct, targeted at another person, which calculated and does cause that person alarm, fear or distress.’ We certainly have no disagreement with such a definition.

 

Based on the underlined statement, it would seem that the elements of ‘tort of harassment’ is imported into Malaysia from the English case of Thomas v News Group Newspaper Ltd [2002] EMLR 78. However, as explain by his lordship, there is a distinction between ‘tort of harassment’ and ‘tort of sexual harassment’. In a general sense, the tort of harassment is a general heading, encompasses many type of harassment including sexual harassment. This case concerns sexual harassment. Thus, it may be argued that when Suriyadi Halim Omar FCJ says that ‘it is timely to import tort of harassment into our legal and judicial system’, it is essentially an obiter dicta. This is further supported by the fact other than the afore-quoted para, there are no other discussion on ‘tort of harassment’. Nevertheless, even though it is an obiter dicta, it is an obiter dicta from the Apex court of the land. Considering it together with Azizul Azmi Adnan JC’s judgment mentioned above, the statement that ‘tort of harassment exist in Malaysia’ may be highly persuasive.

 

In Conclusion, tort of harassment is currently, not an existing Malaysian Common Law right offered to an individual. However, pursuant to the aforementioned cases, the ‘tort of harassment’ will most likely be introduced if there is a relevant case on this issue that is in dispute in the court.

 

Edit: There is currently a global anti-harassment movement. Google ‘#MeToo’ to find out more.

Further Readings:

  1. Between Lex Lata And Lex Ferenda: An Evaluation Of The Extent Of The Right To Privacy In Malaysia [2017] 4 MLJ xxix

  2. https://canlawreport.com/metoo-movement-malaysian/

 

Equality under the law: A woman’s friend or foe?

balance-154516_640

International Women’s Day (8 March) has dawned on us once again. Regardless of ethnicity, most of us Malaysian women will not think much of the occasion as we collectively ease into the busy period that is post-CNY. At best, International Women’s Day punctuates our busy lives in the form of commercial advertisements, seizing upon the message of the day which is ‘You Deserve Better Rights‘ and turning it into ‘You Deserve Better Things‘. This is a simple but effective marketing strategy.

Jokes aside, anyone with a passing knowledge of the women’s rights movement will appreciate the importance of International Women’s Day. It is a reminder of how far we have come. Despite this, we have not yet achieved gender parity. Sexism/gender discrimination is a universal phenomenon.

In lieu of the occasion, I wanted to pose the following question to readers of this blog: Does ‘equality under the law’ help or harm women? Some of you must be thinking, ‘of course equality under the law helps women, don’t they want equality?’ Not so fast. If everybody had the same interpretation of the term ‘equality’, there would only be disagreements over whether women deserve equality or not. However, even among proponents of equality there may be disagreement over what equality should be. There is a narrower definition called formal equality and a broader definition called substantive equality.

main-qimg-4f5adf70f6d4a549a858f611ad70ead8
Interaction Institute for Social Change | Artist: Angus Maguire

Formal equality (“Equality”)

For ease of understanding, formal equality is depicted in as ‘Equality’ in the above illustration. This model provides that all individuals, regardless of gender, sex, race, class, etc. will be treated alike under the law. For example, individuals are governed by the same laws of contract regardless of their background. As an illustration, imagine being a pisang goreng vendor in Klang. You are a rich man. You enter into an oral agreement with a customer but they refuse to pay up and also dispute the terms of the agreement. The chances of winning a civil suit against this person depends on how the courts construe your agreement in light of the existing legal principles. The same legal principles would apply even if you were a poor woman. Seems fair, right?

Yet, because you are a rich person, you are able to sustain the legal suit for a longer period than you would have if you were poor. Since the agreement was not written, the court must decide on the balance of probabilities whose evidence is more compelling, so if the judge is sexist, you stand a better chance convincing the court as a man than a woman. Although the laws apply equally to all, the outcome differs when certain variables are tweaked, despite the merits of your case.

Substantive equality (“Equity”)

Substantive equality accounts for the wider social context and mainly concerns itself with equality of access/opportunity. The law is then modelled with the disadvantaged in mind. For example, substantive equality may be done where legal aid is automatically given to those earning below a certain level of income or 90-days maternity leave is made mandatory within the judicial service to encourage gender diversity. With those policies/laws in place, an environment is created so as to give even the ‘poor woman’ version of your pisang goreng story a shot at winning your case fair and square.

Some critics of substantive equality say that it generates inequality. They would say that men are disadvantaged because women benefit from statutorily mandated 60 days maternity leave, while men have no similar mandated law. However, it must be remembered that women are the ones recovering from pregnancy and are expected to bear the brunt of motherhood. Women are looked down upon if they shift the burden to their male partners and decide to take some time off for themselves. Another common criticism is that it fosters dependency and a victimhood mentality. This is a fair concern, as the purpose of substantive equality is to enable the disadvantaged to feel in control and in power, even when the reality appears otherwise. (P.S. The author is totally in favour of more paternity leave!)

Conclusion

In my humble opinion, substantive equality is formal equality with fries and coke on the side. In other words, it allows the creation of laws and rules with richer content and safeguards the interests of the community at large. After all, no one is an island and the more opportunities are given to people who need it the most, the healthier and happier society becomes. None of us had a choice in what families to be born in, what gender we would be assigned, nor what ethnicity we would inherit. Half of the world’s population didn’t get a choice to be born and assigned the so-called ‘weaker’ sex. Give us the equal opportunities, education and equip us with confidence. There is a lot of potential to be unleashed in each and every one of us, regardless of gender and sex.

 

The “right” in copyright

null

(I hope you’ve understood the pun)

Foreword: During the summer after my first year of law school, I did 2 internships in 2 different law firms. One of the law firms gave us a training session every week which was very interesting and something my first internship did not have. The IP partner then told us about this story and this is THE CASE that got me interested in IP law. It’s an old case but nevertheless an interesting one. Enjoy 🙂

Maxis Sdn Bhd v Suruhanjaya Syarikat Malaysia [2004] 2 MLJ 84

Maxis is one of the strongest names in Malaysia and I’m sure that whenever someone says the word “Maxis”, a distinct green squiggly line will appear in your head. What if, Maxis was not the Maxis you knew?

The two parties in the case are Maxis Sdn Bhd on one side and the Registrar of Companies along with Maxis Group of Companies on the other (the latter is the one that we are well versed with). Maxis Sdn Bhd was incorporated in 1992 and was engaged in the business of information and system services provider in 1993. Then after, it ceased operations and became dormant. On the other hand, the principal companies in the Maxis Group of Companies do not previously carry the forename ‘Maxis’. They were formerly known by their principal name: ‘Binariang’. With subsequent changes made to their names, all the companies in the Maxis Group of Companies have the word ‘Maxis’ as its leading character. The latter was established in 1995 and was one of the first mobile communications providers in Malaysia.

Maxis Sdn Bhd sought a declaration that the Registrar was wrong in approving the use of the name “Maxis” by Maxis Group Companies and therefore, should be canceled. Maxis Group Companies counterclaimed for an interim injunction and several others for passing off. This case concerns the counterclaim.

Maxis Group of Companies now allege the defendants of passing off or assist in passing off the defendants’ business as and for that of the Maxis Group of Companies. Some of the instances are as follows:

  1. Saw and Yeoh had acquired Maxis Sdn Bhd in 2001, a then inactive company with the intention to revive it.
  2. They have incorporated Maxis Capital Sdn Bhd in 2001 by using the name Maxis as the lead name.
  3. They have caused a name change in Maxis Biotech Sdn Bhd which previously does not carry the word Maxis.
  4. Maxis Sdn Bhd, Maxis Capital Sdn Bhd and Maxis Biotech Sdn Bhd took premises in Menara Maxis that housed most of the offices of the Maxis Group of Companies.
  5. Printing letterheads and distributing name cards which carry the name Maxis in similar fashion and style as the brand name used by Maxis Group of Companies.

Defendant’s defence:

The Defendants deny that they had in any way “passing off” business as being part of Maxis Group of Companies because Maxis Sdn Bhd existed before Maxis Group of Companies did. They also stressed the fact that although they had at one point rented an office in Menara Maxis, they said it was due to the advantage of the location. Also, Maxis’s business activities are only confined to telecommunication; they have not acquired goodwill for goods or services outside this area.

*pause and drink a sip of coffee*

First things first, what is “passing off”?

Passing off occurs when someone uses very similar traits of a product/ service/ brand to create some false representation likely to induce a person to believe that the goods or services are those of another. Example:

 

It occurs when the following are satisfied in the landmark case of Reckitt & Colman Products Ltd v Borden Inc

  • The trader must establish goodwill or reputation attached to the goods/ services
  • The trader must demonstrate that the defendant made a misrepresentation
  • The trader must demonstrate that he will suffer damage by reason of erroneous belief

Each will be discussed below.

 

  1. Goodwill/ reputation

Unlike above, goodwill is easy to describe, difficult to define. It is the one thing which distinguishes an old established business from a new business at its first start. In other words, it is the business interest that the claimant is trying to protect.

Whether the claimant has the reputation (or goodwill) is a question of fact and entirely dependent on evidence showing that consumers recognize the sign as indicating origin. In simpler terms, it is the attractive force which brings in custom and that which distinguishes old business from a new. (Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd)

Adding up the above, a passing off action is a remedy for the invasion of the right of property, not in the mark, name or get-up improperly used, but in the business or goodwill in which it has been used.

An argument tender by the defendant is that passing over should only exist in the line of business or services that the applicant was in. They are of the view that the applicants’ business activities are only confined to telecommunication; they have not acquired goodwill for goods or services outside this area, namely for their company Maxis Capital Sdn Bhd and Maxis Biotech Sdn Bhd.

However, case law has suggested that this is insufficient to protect the goodwill of businessman from appropriation and misuse by another businessman. It may very well extend to any business that may mislead anyone into thinking that the products or services were the goods and services of the plaintiff. This is especially where a business is a conglomerate.

Example: AirAsia also owns Tunehotel and Tunetalk. If TuneTaxi pops up, I would think 70% Malaysians (modest estimation) would think it relates to Tune Group.

This is the case EVEN IF the defendant promises that he would never enter into the same business line as the applicant. Where there is an invasion or likelihood of invasion into the rights of the property of the applicants, the cause of action is a well-founded one. Maxis has expended huge sums of money to promote and market the name ‘Maxis’ aggressively throughout this country in the field of telecommunication, which they are primarily engaged in but also to other fields of business the Group owns. It doesn’t take a lot for one to think it’s unfair that someone else should usurp the benefit when another has spent millions to develop the name.

For now, Maxis Group 1 – 0 Maxis Sdn Bhd

*Pause and eats a chocolate*

2. Misrepresentation

What is funnier than having a Maxis-named non-Maxis company breathing existence in Maxis Tower. *facepalm*

The D’s argument was that they mistook that this building is within the Multimedia Super Corridor and since such setup taking up premises there would be advantageous when it wasn’t. They even declared that they would not move into this building and reiterated that they will never set up an office there, even if they are successful in this suit.

(still, the thought of it is already baffling)

I don’t think anyone would be convinced and the judge was certainly not amused. The judge considered them to have an intention to deceive and where Kuala Lumpur being so vast and wide, and filled with available office space could have easily accommodated the defendants’ companies, they had to choose Menara Maxis. The judge notes the similarity of the name made the slip-up of by the building management into allowing them to penetrate this fortress of the Maxis Group of Companies.

On the point of Maxis using the word “Maxis”. Maxis Sdn Bhd was incorporated before Maxis Group of Companies used the name “Maxis” and as such, they had every right to use the name. They stressed that at no time they had represented themselves to be part of Maxis Group of Companies.

(Perhaps Maxis Group of Companies knew this because all the companies under the parent are named Maxis XXX Sdn Bhd)

They claimed that and yet the judge found the use of the shape, style, and character of the word ‘Maxis’ printed on these documents are almost identical to that trade name which the applicants are promoting. (I couldn’t find the exact logo of Maxis Sdn Bhd which is regrettable) Similar to the above, there are about 69 fonts in Microsoft word so why choose the one that Maxis uses and in such a form and fashion so similar to that of the applicants’ unless they did it with some sinister intentions. The crucial issue is what effect the false statement has on the minds of the claimant’s customer and make them think that this was ‘something for which the (claimant) was responsible’

On the contrary, if the consumer is not confused and does not mistaken, then there can be no misrepresentation and no liability for passing off. Looking at the above, it is difficult for this court to accept the defendants’ explanation that their actions as being reasonable and are devoid of any intention to deceive and mislead.

Maxis Group of Companies 2 – 0 Maxis Sdn Bhd

3. Likelihood of damages suffered by reason of erroneous belief

The applicant must now show that they have suffered or likely to suffer losses and must affect the goodwill of the company. The test is that the applicants need not prove “actual damage in order to succeed. Likelihood of damage is sufficient. One of the ways in which a business reputation may be injured is by the appropriation of that reputation or part of it by a third party. Such appropriation may be brought about by the adoption of a name which suggests that the person or company adopting it is in some way connected or associated with the person or company enjoying the reputation.

It is quite obvious that Maxis Group of Companies would be adversely affected by the use of the word “Maxis” by another. If any undertakings that go by the name “Maxis” were to conduct illegal dealings or be bankrupt, the general public would understand it to be somehow related to the applicant instead of being distinct.

Owing to the above reasons, Maxis Group of Companies obtained interim injunction and Maxis Sdn Bhd was precluded from conducting business using the word ‘Maxis’. An intriguing point to add is according to Bloomberg, as of January 18, 2006, Maxis Sdn Bhd operates as a subsidiary of Maxis Communications Bhd.

Comment:

Whilst reading the facts of the case and the judgment therein, I can’t help but think about the prominent staircase shot widely shared on Instagram in APW Bangsar. Before going to APW Bangsar myself, I’ve always thought that the staircase was within the property/ vicinity of BT. Little did I know when I went there, it was directly below a sushi burrito shop and NOT on the same structure as where BT was located and most commonly tagged on Instagram. The sushi burrito shop owns the stairs (or at least the landlord I presume) and not BT but since the latter popularise it so hypothetically, does it justify that BT should be allowed to call it their stairs?

I do acknowledge that Maxis Sdn Bhd had overstepped the line and became from dormant to active very shortly after Maxis was listed to be very suspicious indeed. However, where does one draw the line where a product came first but some other undertaking popularised it? The staircase (I would consider) was part of the structure of the sushi burrito shop but Breakfast Thieves was the one who popularised it so does that mean the staircase belonged to Breakfast Thieves instead?

Maxis Sdn Bhd was registered prior to Maxis Group of Companies changing their name so was it right that Maxis Sdn Bhd should be allowed to continue trading in its name? Even the judge acknowledged that this legal issue is debatable. The basic rule is that reputation and goodwill should be exclusive to the claimant but sometimes there may be a sharing of reputation such as where two companies, by coincidence, acquire a separate reputation and neither can stop the other from using the name. An example is Anheuser-Busch Inc v Budejovicky Budvar NP where BUDWEISER was the trademark of both and the net outcome was that they were forced to co-exist, neither having a right of priority over the other.

Personally, I do think it’s unfair if, by market power, one were to be allowed to dominate (and steal) another’s business because they have better resources for marketing and investing. Perhaps the truth is, the bigger company knew about the smaller company but figured it could overpower it (not suggesting this was the case in Maxis). However, market power also isn’t everything. In 2009, McCurry (short for Malaysia Chicken Curry) won it’s lawsuit against McDonald when the latter sought an injunction to prevent the former from using the prefix “Mc” in its business. The Court of Appeal stated that there were several distinguishable grounds such as the business logo was noticeably different, none of McCurry’s menu had used the prefix “Mc” and the menu was very different in that it only sold Indian food. What amounts to a “passing off” seems to me to vary quite acutely depending on the parties in the case and many other factors.

In the end, it’s up to the courts to weigh on where the balance of convenience lies and the degree of damage that would cause one an undertaking should the application be refused based on reasonable judicial principles.

Resources:

  1. Compagnie Generale Des Eaux v Compagnie Generale Des Eaux Sdn Bhd
  2. Bulmer v Bollinger
  3. Commissioners of Inland Revenue v Muller and Co Margarine
  4. https://asia.nikkei.com/Company/00C8GY-E
  5. Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd
  6. Anheuser-Busch Inc v Budejovicky Budvar NP
  7. Reckitt & Colman Products Ltd v Borden Inc
  8. Helen E Norman, Intellectual Property Law

Certificate in Legal Practice (CLP) – Making the Most Out of the Postgrad Course in Malaysia

Compared to the UK Bar Professional Training Course (BPTC) whose syllabus is all-rounded to sharpen advocacy and drafting skills and refining techniques on legal application, the CLP as “one of the toughest examinations a law graduate will ever face” (source) involves rote learning the breadth of study materials coupled with the constant reminder at the back of your mind of it’s infamous passing rate.

Paperwork

However, there are many benefits to being in Malaysia that you can take advantage of. Here’s 4 things you can do to enrich your CLP journey and turn it into an all-encompassing learning experience that may be beneficial in kick starting your career as a young lawyer.

1. Internships

With the flexibility of doing part-time or full-time studies for CLP, this is a good chance to do internships that you didn’t secure during your degree days. There are so many areas of law to explore – criminal, family, banking & commercial, employment, tax, human rights, entertainment, and intellectual property to name a few. This could be one of your last few opportunities to get a taste of different areas before you delve deeper into it as a chambering student. During the internship you would also be exposed to the realities of the working world that would better prepare you for when you join the workforce (perhaps you’ll realise that student life is actually the best and appreciate it more).

Aside from the areas of law, internships are also an opportunity for you to try different practices such as court litigation, corporate advisory, or arbitration among others. Each practice has emphasis on a certain skills over the other, for example, advocacy in litigation and being meticulous with a sharp eye for detail in corporate. These are not one size fits all approaches and discovering which is a better fit to your character and personality is helpful for targeted pupillage applications. During university, I did an internship in dispute resolution but had no idea of the workings of the corporate world so I was really glad to get experience from a corporate internship done during the first month of CLP.

Internships are of course not only restricted to the legal industry and you can aim to diversify your CV by doing non-law related internships in fields such as accounting, business, consulting, or even the creative industry of arts and design! Learning the basics of other trades will expose you to different perspectives and angles of problem solving. If the CLP is your last level of study, it is the last time you are a student and able to try different things hence why it is important to try and make full use of the time on your hands to gain these experiences.

2. Attend law events 

What I found as the main advantage of being back in Malaysia compared to UK is the ease of connecting with your potential future employers through the events held from time to time. Many law firms conduct talks on legal knowledge and workshops for development of skills that are open to law students. These events are also a networking platform to get to know lawyers and partners to find out about their work. These conversations would enable you to understand the firm’s culture, the pupillage structure, and help you to be better prepared for interviews.

I had the opportunity to attend a coffee session with a partner of a boutique law firm with a small group of law students and it shed light on the differences of the prospective pathway of being made partner compared to setting up your own law firm after some years of practice. It definitely provided food for thought and gave me valuable tips of what I should keep in mind to develop and take my legal career one step further in future.

ladder-cloud-56a437203df78cf7728151c5

Other than events held by law firms, the Malaysian Bar and KL Bar also regularly holds events open to law students. Some of these workshops help to improve legal skills such as drafting written submissions (source) and learning a thing or two from here may help in transitioning from degree-level academic exam answers to a more practical approach for CLP.

Some events touch on personal development such as one I attended which talked about business development and building a career beyond legal skills. Among the key points were to consider specialisation and to place importance on personal branding to put yourself out there and stand out from the crowd. Law school has little to offer on these aspects and it is through taking the initiative to go beyond what is provided that you equip yourself with an overarching mindset to make informed decisions.

3. A part-time job

Always wanted to be a barista or service staff at a cafe? Do it. Good at baking delicious treats? Make them for sale. Have passion for photography and video editing? Take up those projects. As I was interested in writing, I almost took up a part time copywriting job but the pay and logistics didn’t turn out to be favourable with my circumstances at that time so I had to give it a miss.

Taking up a part time job is a good way to channel your energy into your non-legal interests and earn some side income from it. It broadens your social circle out of the legal industry and develops people skills which might come in handy when dealing with clients from all walks of life.

4. Participate in student activities 

Within law school itself are plenty of opportunities you can take to have valuable gains. Join competitions like mooting and student events like firm tours, lawatan sambil belajar to different institutions to maximise your exposure. All in all, these will help promote a wholesome experience that will leave you feeling satisfied and fulfilled at the end of the day.

Of course, each of the above should be done in moderation with the ultimate focus being to pass the CLP examinations. But at the final stage as a student before becoming a working professional, going all out to take opportunities as they come by would be a good way to end this chapter knowing you’ve tried to be the best version of a student as you could be.

“In the end … We only regret the chances we didn’t take, the relationships we were afraid to have, and the decisions we waited too long to make.” ― Lewis Carroll

About the proposed decision on 7 Tuition and Daycare Centres: Sharing is not caring

Screen Shot 2018-02-28 at 20.00.15

They say sharing brings joy and happiness… but when the Malaysian Competition Commission comes knocking on your door? Not so much joy.

(Below is based on the Proposed Decision under Section 36 of the Competition Act – Infringement of Section 4(2)(a) of the Competition Act by 7 Tuition and Daycare Centre. When the full judgement is released, this post will be updated accordingly. Certain facts may be circumstantial or speculative.)

The facts are as follows. 7 tuition and day care centres were penalised with a financial penalty of RM33K for collectively agreeing to fix and standardise the fees charged for the tuition and day care services in the SS19 Subang Jaya area. The price fixing agreement caught the Commission’s attention and were penalised accordingly. (The Commission is allowed to impose a financial penalty not exceeding 10% of the undertaking’s worldwide revenue given in the Competition Act 2010)

Competitors collude more frequently than consumers might think and it is extremely naive to think that only high profile companies collude. It exists from your neighbourhood bakery sellers ((No. MyCC.0045.2013)) to ice manufacturers ((No. MyCC.700.2.0001.2014)) [Suggestion: the MYCC should come up with a shorter name for each case]. Healthy competition means competitors are striving to better serve customers than their rivals. As a result, competitors are never sure what their competitors will do next in trying to gain a competitive advantage. However, especially in oversaturated and concentrated markets, instead of going head-to-head with their competitors, why not just make a phone call to the CEO and collude? Where competition is stiff and there’s a lack of consumer choices in a concentrated market,  that sure seems like a win-win situation for the undertakings but not for consumers… or themselves when they find themselves within MYCC’s list.

Article 4(1) of the Competition Act 2010 states that “A horizontal or vertical agreement between enterprises is prohibited insofar as the agreement has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services.” (An improvisation of Article 101 TFEU) agreement cannot be examined in isolation from the earlier context, that is, from the factual or legal circumstances causing it to prevent, restrict or distort competition. Firstly, it is necessary to assess the impact on the relevant market and then weigh them with any possible efficiency gains or positive effects. Price-fixing agreements would predominantly fall under the object category because it’s quite clear that price-fixing would only benefit themselves and have pecuniary effects on the consumers.

It’s no surprise for information exchange to be regarded as a waving red flag to competition authorities for the presence of a cartel. In fact, information exchange is often considered as the no.1 ingredient of a cartel. However, information exchange can be a double edged sword. On one hand, information exchange allows concerted practice amongst undertakings which means this allows collusion amongst the parties. On the other hand, they may also be a source of efficiency gains to remedy some market failures such as information asymmetries. In Asnef‐Equifax case, information sharing can help to reduce the disparity between the information available to credit institutions and that held by potential borrowers.

So where does one cross the line when sharing information is deemed anti-competitive or not? As a general thought, information exchange restricts competition by object if the exchange of information is individualised (as opposed to aggregated) and the exchange concerns firms’ future conduct (removes strategic uncertainty). Features of the relevant market such as concentration, nature of the product or nature of the market plays an important role.

In Bananas (EU Case), the Commission found the bananas importers had engaged in direct bilateral pre-pricing communication had taken part in a concerted practice to coordinate quotation prices for bananas. It was found that the parties communicate frequently and the conversations which took place were about future pricing policies. It would be easy to assume that the undertakings would take the information into account when determining the policy which they intended to pursue on the market. The court laid down an interesting point where in Competition law, the requirement of independence precludes direct or indirect conduct between operators designed to disclose to actual or potential competitors decisions or intentions concerning their own conduct on the market.

There are however several circumstances where information sharing is legal such as between franchisors and franchisees since communication is vital for the success of both parties to profit. Another example is where the following criteria are satisfied: (i) the arrangement must contribute to improving the distribution of the services in question or economic progress as a whole; (ii) consumers must be allowed a fair share of the resulting benefit, (iii) it must not impose any non-essential restrictions on undertakings and (iv) it must not afford the possibility of eliminating competition in respect of a substantial part of the services in question. (Asnef‐Equifax)

Comment:

Price fixing is a straightforward case because it has a ‘pernicious’ effect on competition and to be so unlikely to produce efficiencies. This is why it is a “by object” restriction instead of “by effect” because to prove the latter is harder, takes longer time and more resources.

There are, however, many much more complicated situations. I’ll touch on what was the European Competition Commission’s biggest fine ever of £2.1million on an undertaking we used everyday– Google.

Sources:

  1. Proposed decision on seven tuition and day care centres for price fixing conduct
  2. Competition Act 2010
  3. MYCC Guidelines on Anti-competitive Agreements
  4. https://www.twobirds.com/en/news/articles/2007/ecj-preliminary-ruling-information-exchanges-between-competitors
  5. Jones & Sufrin Competition law