COMPETITION ACT 2010 AND ITS IMPACT TO PROTON

The Competition Act 2010 was passed by Parliament in April 2010 and was enforced since January 2012 by the Malaysia Competition Commission (MyCC) which is an independent body established under the Competition Commission Act 2010. It's main role is to protect the competitive process for the benefit of businesses, consumers and the economy as well as to give foreign investors more confidence in the country's business practices. The Act governs all firms, including government-linked companies (GLCs) in all industry. We lauded the implementation but there are various issues that requires clarification.

What are the impact of the Competition Act to the automotive industry's current operation? Please note that this is my own interpretation of the act and the Guidelines issed pursuant to the implementation of the Act. We are seeking clarification from the Competition Commission on many grey areas. 

Among the key breaches of common practice in the automotive industry.

1. Car dealers are being forced to use Motor Insurance for its customer from Banks' subsidiary General Insurance company as a condition for the dealers to utilize the bank's facility granted to them. Although Bank has denied but in practice, car dealers are still being forced to use bank's own general insurance arm.

2. Interest Rate for Proton cars are fix akin of a concerted effort by all Banks which is higher than other automotive range (Para 2.5, Guidelines on Chapter 1 of the Competition Act 2010).

3. Although the Central Bank of Malaysia (Bank Negara Malaysia) had lifted the ceiling imposed for the dealer's Handling fees for already more than a year but all Banks akin of a concerted practice are still limiting Dealer's handling fee to a maximum RM600 (Para 2.5, Guidelines on Chapter 1 of the Competition Act 2010).