Competition Law in Malaysia 2026: The Rules That Already Bind Your Distribution Contract — Section 4 and Section 10 of Act 712, the 10%-of-Worldwide-Turnover Penalty With No Ringgit Ceiling, the RM415.5 Million Cartel Fine the Appeal Tribunal Affirmed on 11 February 2026, and What the Competition (Amendment) Bill 2026 Changes

Most foreign groups arriving in Malaysia budget for SSM, LHDN, immigration and their sector licence. Almost none budget for competition law — and yet the Competition Act 2010 (Act 712) binds the very first commercial document a new Malaysian subsidiary signs: the distribution agreement, the price list circulated to dealers, the territory carve-up between two group companies, the trade-association meeting where "everyone agreed the market cannot sustain these prices". The Malaysia Competition Commission (MyCC) has no registration to apply for and issues no licence, which is exactly why it is invisible until it is expensive. On 11 February 2026 the Competition Appeal Tribunal unanimously affirmed MyCC's RM415.5 million penalty against a chicken-feed cartel — the largest competition fine in Malaysian history — and in July 2026 Parliament passed the Competition (Amendment) Bill 2026, widening the prohibition and giving MyCC a settlement regime. This guide sets out what already binds you, what the amendments change, what the penalties actually are, and the short list of documents a foreign-owned Sdn. Bhd. should review before its next pricing decision.

Why this reaches you earlier than you think

Competition law is not a large-company problem. Act 712 applies to any enterprise carrying on commercial activity in Malaysia, and — critically — to conduct outside Malaysia that has an effect on competition in any Malaysian market. There is no turnover threshold below which the prohibitions switch off. A three-person trading Sdn. Bhd. with RM800,000 of revenue is as capable of committing a section 4 infringement as a listed group.

For a Chinese or other foreign group, four ordinary business habits create nearly all of the exposure:

• Managing the dealer's resale price. Telling a Malaysian distributor what it may sell for — or capping the discount it may give — is resale price maintenance, and it is an agreement between two enterprises, not an internal decision.
• Splitting the market with a "partner". You take East Malaysia, I take the peninsula; you take the OEM accounts, I take retail. Market sharing is on the deemed-infringement list.
• Industry associations and WeChat groups. Malaysian trade associations are active and social. A group chat in which competitors compare quotations, coordinate a "reasonable" price increase or agree who will bid low on which tender is documentary evidence, and MyCC has expressly warned associations about coordinating members' pricing.
• Bidding on the same tender as an affiliate or a friendly competitor. Cover bids, agreed withdrawals and rotation are bid rigging, which MyCC has enforced repeatedly against construction and services firms since 2025.

None of these require a written contract. An "agreement" under Act 712 includes any arrangement or concerted practice, written or not, and MyCC's recent decisions have been built on emails, meeting notes and tender documents prepared at a competitor's premises.

The statute and the regulator

The Competition Act 2010 (Act 712) came into force on 1 January 2012 and is enforced by the Malaysia Competition Commission (MyCC / Suruhanjaya Persaingan Malaysia), a statutory body established under the Competition Commission Act 2010 and sitting under the Ministry of Domestic Trade and Cost of Living (KPDN). Appeals from MyCC decisions go to the Competition Appeal Tribunal (CAT).

The Act has exactly two prohibitions — and, until now, no third:

• Section 4 — anti-competitive agreements.
• Section 10 — abuse of a dominant position.
• No general merger control. Malaysia remains one of the few sizeable economies with no cross-sector merger notification regime. Share and asset acquisitions are not notifiable to MyCC.

Two sets of carve-outs matter. The First Schedule removes certain sector-regulated activities from Act 712 — most importantly communications and multimedia, which has its own competition chapter administered by MCMC under the Communications and Multimedia Act 1998, and aviation services regulated by MAVCOM; certain energy and upstream petroleum activities are also outside. The Second Schedule excludes conduct engaged in to comply with a legislative requirement, collective bargaining and collective agreements on employment terms, and enterprises entrusted with services of general economic interest. Everything else — trading, manufacturing, logistics, construction, F&B, professional services, e-commerce — is inside.

Section 4: the agreements that are treated as illegal without further argument

Section 4(1) prohibits any horizontal or vertical agreement between enterprises which has the object or effect of significantly preventing, restricting or distorting competition in a Malaysian market. Section 4(2) then takes four categories of horizontal agreement — between competitors — and deems them to have that object. In practice that reverses the burden: MyCC does not have to prove market effects, and the enterprise must rebut the presumption under section 4(3).

Relief is possible but narrow. Section 5 allows an enterprise to escape liability where the agreement produces significant identifiable technological, efficiency or social benefits that could not be obtained less restrictively, the benefits outweigh the anti-competitive effect, and competition is not eliminated. MyCC can also grant an individual exemption on application, or a block exemption for a category of agreements — as it did for vessel-sharing agreements in liner shipping. These are exceptions argued on evidence, not boxes to tick.

Vertical agreements: your distribution contract is in scope

Malaysia does not confine section 4 to competitors. Vertical agreements — supplier to distributor, principal to dealer, franchisor to franchisee — are caught whenever they have the object or effect of significantly restricting competition. They are not deemed illegal, so an effects analysis applies; but that is cold comfort once an investigation opens.

The clauses that draw attention in a foreign group's standard distribution template are predictable:

• Resale price maintenance. Fixing or setting a floor under the distributor's resale price. A genuine maximum price or a non-binding recommended retail price sits on safer ground; a "minimum advertised price" enforced by withholding supply does not.
• Exclusive territories with absolute protection. Appointing an exclusive distributor is normally fine. Prohibiting it from responding to unsolicited orders from outside the territory, or requiring it to refuse other Malaysian resellers, is where restriction begins.
• Long exclusive purchasing and non-compete terms. Duration and market coverage matter — a five-year tie across most of the available distribution in a concentrated market is a different proposition from a one-year tie in a fragmented one.
• Tying and bundling. Conditioning supply of the product everyone wants on taking a second product they do not.

Practical rule for a new Malaysian subsidiary: your China-drafted distribution agreement should not be translated and signed unchanged. Have the pricing, territory and exclusivity clauses reviewed against Act 712 before the first dealer signs — it is a one-off cost against a penalty measured in percentages of group turnover. Our team handles this as part of contract drafting and review.

Section 10: dominance is legal, abusing it is not

Section 10 prohibits an enterprise from abusing, independently or collectively, a dominant position in any Malaysian market. Being dominant is not an offence — Malaysia has no market-share threshold that makes you unlawful, and dominance turns on whether you can adjust prices, output or trading terms without effective competitive constraint. What is prohibited is conduct such as:

• imposing unfair purchase or selling prices, including excessive or predatory pricing;
• limiting production, market outlets or technical development to consumers' prejudice;
• refusing to supply a particular enterprise or group;
• applying dissimilar conditions to equivalent transactions, putting some trading parties at a disadvantage;
• tying supply to acceptance of unrelated supplementary obligations;
• predatory conduct or buying up scarce supplies to keep them from competitors.

The list is not exhaustive. Section 10 also recognises that conduct which is a reasonable commercial response to a competitor's market entry is not abuse — the defence exists, but it is argued after the investigation has already begun. Niche dominance counts: a company can be dominant in a narrowly defined market (a specific component, a single port, one certification-bound service) while looking small nationally.

What it costs: penalties, private suits and the enforcement record

Under section 40, once MyCC finds an infringement it may direct the conduct to cease, impose any other appropriate direction, and impose a financial penalty of up to 10% of the enterprise's worldwide turnover over the period of the infringement. Note the three features that make this different from most Malaysian regulatory fines: it is a percentage rather than a fixed sum, it is measured on worldwide turnover rather than Malaysian revenue, and there is no ringgit ceiling.

Separately, section 43 gives any person who has suffered loss or damage from an infringement a direct right of action against the infringing enterprise. A MyCC decision therefore also functions as a roadmap for customer follow-on claims.

What changes: the Competition (Amendment) Bill 2026

Parliament passed the Competition (Amendment) Bill 2026 and the Competition Commission (Amendment) Bill 2026 in the Dewan Rakyat on 6 July 2026 and in the Dewan Negara on 27 July 2026. As at the date of writing the amendments await Royal Assent and gazettement, and will come into force on a date to be appointed — so the position described above remains the operative law today. The direction of travel, however, is settled.

A workable compliance programme for a Malaysian subsidiary

Competition compliance in a company of twenty people does not need a policy manual. It needs four things done once and refreshed annually:

1. Review the contracts that set prices. Distribution, dealer, agency, franchise and supply agreements — specifically the resale price, territory, exclusivity, minimum purchase and tying clauses. Fix them at renewal rather than after an investigation.
2. Brief the people who meet competitors. Sales heads, tender managers and anyone on an industry committee. The rule to teach is simple: never discuss price, margin, capacity, customer allocation or bidding intentions with a competitor, and leave any meeting where it starts — visibly, and record that you left.
3. Impose tender hygiene. One team, one bid, no sharing of pricing with any other bidder including affiliates bidding separately. If two group companies may bid on the same tender, take advice before both submit.
4. Have an escalation route. Anyone who sees a problem should know who to tell, and management should know that the leniency window is measured in days.

For a foreign-owned group, these sit alongside the compliance stack you are already carrying — director duties, tax audits and the corporate-liability regime for corruption. Section 17A of the MACC Act and Act 712 share a structure worth noticing: both impose liability on the company for what its people did, and both accept a properly run internal programme as the answer. Our guide to Section 17A corporate liability covers the other half of that picture.

Where to start

If your Malaysian entity sells through distributors, bids for public or private tenders, or belongs to an industry association, competition law is already live for you — with or without the 2026 amendments. The cheapest intervention is a contract review before the next dealer appointment and a one-hour briefing for the commercial team; the most expensive is a section 40 penalty calculated on your group's worldwide turnover.

ONEKEY BIZ reviews and drafts Malaysian commercial contracts for foreign-owned companies, and coordinates competition-law advice where a structure needs it. Talk to us through our contact page, or start with contract drafting and review.

This article is general information only, not legal, tax or immigration advice. Policies, thresholds and official fees are set by the relevant Malaysian authorities and may change. Talk to our consultants about your specific situation.