Cheah Swee Gim and Maria Gabriela Dorotan of Kelvin Chia Yangon in Myanmar discuss the country's competition law

On 24 February 2015, Myanmar passed the Competition Law (the “Law”), which prohibits competitive agreements and abuse of market. Like other antitrust laws, the Law also introduces a merger control regime in the country.

1. The Law came into effect on February 24 2017

Notification 69/2015 was issued on December 12 2015, declaring that the Law shall come into effect on February 24 2017. This means that businesses will have to comply with, and be subject to the consequences for violation of, the Law after February 24 2017.

2. The implementing rules and regulations have not been finalised and issued

Despite the issuance of the Notification, however, the implementing rules and regulations have not been passed. While the Ministry of Commerce has completed the draft of the rules, the same will have to go through the Union Attorney General’s Office and the parliament for approval. There is no indicative date for the final issuance and effectivity of the rules.

3. The Law establishes the Myanmar Competition Commission (“Commission”) for the enforcement of the Law

The Commission is the regulatory authority charged with the implementation of the Law. Its duties include, among others, cooperating and coordinating with international and local organisations with regard to competition affairs, defining forms, procedures and regulations required in applying for a permit for business arrangements which affect competition, determining market share limitations which affect fair competition, enforcing market share limitations by issuing orders to reduce market share of relevant businesses, and conducting investigations in relation to violations of the Law.

In conducting its investigations, the Commission is empowered to form an Investigation Committee comprised of 5 to 9 members who have experience and knowledge in economics, law, commerce and other relevant fields. The Investigation Committee, by itself or through Working Groups, may investigate violations of the Law. The findings of the Investigation Committee are to be submitted to the Commission for appropriate action. The Commission is also authorised to designate a person to collect the fines prescribed under the Law. The Commission shall be formed after the issuance of the implementing rules and regulations of the Law.

The Commission is set to be formed following the issuance of the implementing rules of the Law.

4. There are four types of violations under the Law

The Law generally classifies four types of violations: (a) acts in restraint of competition; (b) market monopolies; (c) anti-competitive acts (or what are basically unfair trade practices), and (d) anti-competitive business combinations.

5. Acts in restraint of competition

Acts in restraint of competition are defined as acts which reduce or hinder the competition in the market. The Law provides a list of acts deemed to be in restraint of competition, including price fixing, abuse of market dominance, restraining or controlling production, market acquisition, technology and development of technology and investment, and collusion in tenders and bids.

The Commission may exempt certain agreements which would otherwise be an act in restraint of competition if it is aimed at providing benefit for the consumers and which, among others, improve the capability of business, upgrade technology, and promote competitiveness of businesses of Myanmar in the international market.

6. Acts which cause monopolisation of the market

The Law does not define “monopoly.” Instead, it provides for acts which have the effect of causing a monopoly, namely:

  • Controlling purchase price, sales price of goods and fees for services. 
  • Restricting services or production of goods or restricting opportunities in purchasing and selling of goods or specifying compulsory terms and conditions directly or indirectly for other businessmen, for the purpose of controlling price. 
  • Suspending or reducing or restricting services, production, purchasing, distribution, transfer or import of goods without any appropriate reasons or destroying or causing damage to the goods to reduce the quality in order to lessen demand.
  • Controlling and restraining the area where goods or services are traded in order to prevent other businesses from entering and controlling the market. 
  • Interfering in the operation of other businesses unfairly.

7. Acts considered as unfair trade practices

The following acts are considered unfair trade practices and are prohibited:

  • Misleading the consumers. 
  • Disclosing trade secrets. 
  • Coercing businessmen against each other.
  • Defaming the reputation of another business. 
  • Disturbing the operation of the business. 
  • Conducting advertising and sales promotions for the purpose of unfair competition. 
  • Discriminating among businessmen. 
  • Selling goods at a price less than the production cost or cost, insurance and freight in the market. 
  • Abusing influence of business, inducing or instigating of a party under contract with other businesses to breach the contract.
  • Exercising unfair competitive act in violation of any stipulation by the commission for the interests of consumers when necessary.

8. Merger control

The Law prohibits (subject to certain exceptions) business arrangements (either through the merging of businesses, cooperation among them, acquiring another’s business, carrying out a joint venture, and other forms of business combinations as determined by the Commission) (1) that are undertaken to create excessive market domination for a period of time, (2) that have the effect of reducing competition with the intention of creating a market of goods and/or services where only one or a few businesses are active, and (3) that result in the exceeding of the market-share threshold determined by the Commission.

There are three tests applied in determining whether a business arrangement is prohibited:

  • Whether or not the prospective merger is intended to create excessive market domination for a period of time; 
  • Whether or not the prospective merger has the effect of reducing competition, with the intention of creating a market of goods and/or services where only one or a few businesses are active; and
  • Whether the prospective merger will result to exceeding the market-share threshold determined by the Commission.

9. Violation of the Law is penalized with a fine and/or imprisonment

Violation of the Law brings about organisational/corporate and/or individual liability, which result in fines that run up to MMK15 million (roughly $15,000), and/or imprisonment (individuals) for up to three years.

10. There are other sector-specific laws and rules on competition

Other than the Law, sector-specific laws and regulations, namely the Financial Institutions Law 2016 and the Competition Rules for the Telecommunications Sector of the Republic of the Union of Myanmar 2013 regulate mergers and acquisitions with respect to financial institutions and telecommunications companies, respectively.

 

Cheah Swee Gim
Director and Foreign Consulting Attorney
Kelvin Chia Yangon
csg@kcyangon.com

Maria Gabriela Dorotan
Foreign Consulting Attorney
Kelvin Chia Yangon
mgd@kcyangon.com