The Cost of Antitrust Law to Malaysia's Financial Services Sector

71 Pages Posted: 29 Aug 2014 Last revised: 9 Aug 2015

Bryane Michael

University of Hong Kong Faculty of Law; University of Oxford

Mark Williams

Hong Kong Polytechnic University

Susila Munisamy

University of Malaya

Date Written: August 29, 2014

Abstract

Judging by only economic incentives, Malaysian financial institutions (particularly banks) should completely ignore the Competition Act. The data show that Malaysian banks probably benefit from anti-competitive behaviour. Political and family connections likely facilitate such behaviour. Given that the Malaysian Competition Commission will likely lack the resources to investigate and sanction anti-competitive behaviour in Malaysia’s banking industry – the banks’ best response to the Act probably consists of ignoring it. Maximum fines of 10 million ringgit and revenue-tied penalties of only 10% of worldwide revenue mean that banks still have strong incentives to engage in anti-competitive behaviour and to pay any low fine that might be levied. The best compliance programme for banks in Malaysia likely consists of actions that avoid detection rather than detecting and preventing anti-competitive behaviour. Private rights of action are unlikely to provide any stronger economic incentives for Malaysian banks to adopt strong antitrust compliance programmes and internal audit programmes. By staying the course, Malaysian banks can continue to earn about 15 billion ringgits (approximately US $4.6 billion in anti-competitive rents).

Keywords: antitrust compliance, internal audit, Malaysia

JEL Classification: D41, L41, L44

Suggested Citation

Michael, Bryane and Williams, Mark and Munisamy, Susila, The Cost of Antitrust Law to Malaysia's Financial Services Sector (August 29, 2014). World Competition 38, no. 1: 133–170.; University of Hong Kong, University of Hong Kong Faculty of Law Legal Studies Research Paper Series. Available at SSRN: https://ssrn.com/abstract=2488904 or http://dx.doi.org/10.2139/ssrn.2488904

Bryane Michael (Contact Author)

University of Hong Kong Faculty of Law ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

HOME PAGE: http://web.hku.hk/~bmichael/

University of Oxford ( email )

South Parks Road
Oxford, Oxfordshire OX1 3QY
United Kingdom

HOME PAGE: http://users.ox.ac.uk/~scat1663/

Mark Williams

Hong Kong Polytechnic University ( email )

Hung Hom, Kowloon
Hong Kong

Susila Munisamy

University of Malaya ( email )

Jalan Lembah Pantai
Kuala Lumpur, Wilayah Persekutuan 50603
Malaysia

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