Competition agencies and MSMEs

Competition law agencies are responsible for the implementation and enforcement of the competition law in their jurisdiction. The priorities for each competition agency will be different, based on the particular economic circumstances in the country. Although as a percentage of the total number of businesses, the number of MSMEs in a country is always high, the focus of a competition agency, mainly newly established ones, may not be on this group. Government and public pressure may result in competition agencies focusing on larger businesses, assuming that the law is not relevant to MSMEs.

Assisting competition law agencies to recognise the importance of the MSME sector in competition law enforcement and implementation will be vital to the overall success of competition policy and the growth of MSMEs in a country. Some of the AMS competition agencies have taken an active role in advocating MSME groups, enforcing the competition laws against MSMEs and working with trade associations to encourage compliance and raise awareness within this large and often disparate group.

Advocacy
One of the critical roles of a competition agency is to advocate the benefits of competition law and policy and highlight where further change is needed. Advocacy efforts in the early years of operation of a competition agency are vital. The AEGC has published a Toolkit for Competition Advocacy (CA) in ASEAN to recognise the importance of advocacy for competition agencies in the region. This toolkit aims to provide AMS with practical guidance, tools, and templates to develop and deliver advocacy activities for CPL. It is primarily intended for by CA in ASEAN, including Commission members, heads of departments, communications staff and case-handlers.

Additionally, the contents of this toolkit may be shared with partners outside of the CA in joint efforts to foster a broad-based competition culture in ASEAN. Determining which advocacy activity is most appropriate depends on the specific stakeholder groups that CA intend to engage. These comprise government agencies and other public authorities, businesses (including trade and business associations), media, consumers, academia, the legal community, and the judiciary. This toolkit provides advice on how to best different target groups and which messages need to be chosen. Articulating the right message for the right stakeholder group is key to carrying out successful advocacy activities.

In the ASEAN region, many MSMEs are still unaware of the competition law (as many have been introduced in the last five years) or unsure how the law applies to them, if at all. Some competition agencies in the region have conducted surveys to assess the awareness and understanding of competition laws within their jurisdictions. The results indicate that a lot more advocacy work is required. For example, a study in Malaysia in 2014 revealed that only 27 per cent of MSMEs were aware of the competition law.¹⁰⁹ In Singapore, the CCCS conducts regular stakeholder perception surveys. Its most recent survey (2019) indicated that less than 30 per cent of businesses surveyed were aware of the Competition Act. Perhaps not surprisingly, there was a sharp big firm-small firm dichotomy: whilst 50 per cent of multinational companies were mindful of the existence of the CCCS, only 13 per cent of local enterprises were.¹¹⁰

Consequently, several national competition bodies have developed an extensive advocacy history, especially in their early days of operation. For example, the Malaysia Competition Commission (MyCC) conducted 120 advocacy sessions between April 2011 (when it was established) and November 2014¹¹¹. Likewise, the Philippine Competition Commission conducted 102 advocacy events during 2016-2019 for the judiciary, legal community, government agencies and business groups (PCC 2019, PCC 2018, PCC 2017b, PCC 2016)¹¹². As of April 2020, the Competition Commission of Brunei Darussalam (established in August 2017) had conducted 46 advocacy sessions for key stakeholders¹¹³. Mature agencies such as the Indonesia Competition Commission (ICC) and the Competition and Consumer Commission of Singapore (CCCS) also continue to conduct advocacy activities. In 2019, the ICC advocated more than 2000 stakeholders, focusing on the central and regional governments and higher education¹¹⁴. In 2018, the CCCS set up an advocacy and outreach unit to focus its advocacy efforts. Its advocacy focuses on various groups, including government, business, legal practitioners, students and consumers.¹¹⁵

Enforcement
The approach taken to enforcement across the ASEAN region has differed. Some jurisdictions have phased in the operation of their laws (Singapore and Brunei Darussalam) which has allowed capacity building within the agencies to be focused and gradual. Although the Philippine competition law itself was not phased in, the Philippine Competition Commission has focused its early enforcement activities on the review of mergers - it has reviewed 204 merger transactions from 2016 to 2019.¹¹⁶ Malaysia, which does not have a merger regime, brought early cartel cases (many against MSMEs). In contrast, Myanmar has focused its enforcement efforts to date on utilising its administrative powers in less severe competition cases.

Competition agencies in the ASEAN region have not shied away from enforcing their laws against MSMEs. The competition agencies in both Singapore and Malaysia brought early cases against MSMEs, many of whom had acted through their trade associations¹¹⁷. However, the approach taken to strict enforcement against MSMEs differs. The first case brought by the MyCC was against the Cameron Highlands Floriculturist Association. The association members (all MSMEs) agreed to increase the price of cut flowers by 10 per cent and announced the price rise in the newspaper. MyCC had declared a ‘soft touch’ approach in its initial enforcement period, so no fine was imposed on the association or its members. However, the MyCC required the association and its members to change the behaviour and publish an apology statement in a local newspaper to ensure increased awareness.¹¹⁸ The MyCC has since enforced the competition law against other trade associations and their members.¹¹⁹  Although many cases against MSMEs involve anti-competitive agreements, it is worth noting that MSMEs can be dominant in their respective markets. In the first dominance case brought by the CCCS, Sistic (an MSME) was found to have abused its dominant position by entering into exclusive dealing arrangements. The CCCS imposed a penalty of SGD $989,000 (around $ 742,000) (reduced to SGD $769,000 [ $ 577,000] on appeal).¹²⁰

Overseeing Partnerships with MSMEs
The ICC has an express mandate to supervise and enforce partnerships between large enterprises and MSMEs under Law No. 20 of 2008 on Micro, Small and Medium Enterprises. The 2019 Annual Report of the Indonesia Competition Commission refers to this regulation being in line with the priorities of the Government in developing MSMEs, “especially to oversee and ensure that MSMEs have the same opportunity or bargaining position with the large business actors that become their partners”.¹²¹

Trade Associations
In addition to the risk of a breach being facilitated (knowingly or innocently) by a trade association, competition agencies can utilise trade associations as an effective means of advocating the benefits of competition law to the MSME community. The MyCC and the Federation of Malaysian Manufacturers (FMM) worked closely together to advocate the benefits of competition law to members of FMM. Activities included regular compliance training events (conducted by the MyCC for FMM members) and the publication of a joint MyCC/FMM competition law compliance checklist (Borneo Post, 2014). Other ASEAN competition agencies (Singapore, Philippines, Myanmar) also regularly engage with trade associations to understand issues faced by MSMEs and advocate the benefit of competition.