Tay Partners

LegalTAPS (October 2017)

Section 4(2) of the Competition Act 2010: Magic Wand or Key to Floodgates?

Introduction

  1. With the coming into effect of the Malaysian Competition Act 2010 (“CA”) in January 2012, Malaysia’s competition regulator, the Malaysia Competition Commission (“MyCC”)’s determination to pursue potential infringers is apparent from the volume of investigations and infringement decisions issued.

  2. With the coming into effect of the Malaysian Competition Act 2010 (“CA”) in January 2012, Malaysia’s competition regulator, the Malaysia Competition Commission (“MyCC”)’s determination to pursue potential infringers is apparent from the volume of investigations and infringement decisions issued.

Legal Provisions

  1. Section 4(1) of the CA provides that a horizontal or vertical agreement between enterprises is prohibited if it has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services.

  2. Curiously, Section 4(2) of the CA further states that:

    (2) Without prejudice to the generality of subsection (1), a horizontal agreement between enterprises which has the object to-

    1. fix, directly or indirectly, a purchase or selling price or any other trading conditions;

    2. share market or sources of supply;

    3. limit or control-

      1. production;

      2. market outlets or market access;

      3. technical or technological development; or

      4. investment; or

  3. perform an act of bid rigging

is deemed to have the object of significantly preventing, restricting, or distorting competition in any market for goods or services.

Observations

  1. Reading in tandem the Act and the Guidelines of the MyCC, several observations are noted:

(A) Disjunctive reading of “object” and “effect” under Section 4(1)

  1. The provision of CA is clear – where a horizontal or vertical agreement between enterprises has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services, it will be prohibited.

  2. On the presumption that Parliament does nothing in vain, one must give significance to every word of an enactment, since the word “or” appears in the Act, the intention of Parliament in using the word ‘or’ must be that Section 4(1) should be read disjunctively2.

  3. In this regard, only either an anti-competitive “object” or “effect” of an agreement needs to be established for a finding of infringement under Section 4(1). This position is echoed by MyCC in its own guidelines3.

(B) Conjunctive reading of “object” for deeming provision at Section 4(2)

  1. Having established only either anti-competitive “object” or “effect” of an agreement needs to be shown for an infringement under Section 4(1), one further examines the deeming provision under Section 4(2).

  2. The wording of Section 4(2) is patently clear that where a horizontal agreement has the object to fix prices, share market or sources of supply, limit or control production, market outlet or access, technological or technical development or investment or rig bids, such agreement is deemed to have the object of significantly preventing, restricting, or distorting competition in any market for goods or services.

  3. In this respect, to invoke the deeming provision, one needs to firstly examine whether the agreement in question has the object to carry out the exhaustive list of actions under subsections 4(2)(a) to (d).

  4. As the CA does not define the term “object”, MyCC, in its own Guidelines on Chapter 1 Prohibition, stated that to be consistent with the Act’s economic goal “to promote economic development by promoting and protecting the process of competition”, in examining the kinds of agreement listed under Section 4(2) for anti-competitive “object”, the MyCC “will not just examine the actual common intentions of the parties to an agreement but also assess the aims pursued by the agreement in light of the agreement’s economic context. ”4

  5. If the “object” of an agreement is highly likely to have a significant anti-competitive effect, then MyCC may find the agreement to have an anti-competitive “object5 .

  6. In short, notwithstanding an “object/effect” dichotomy under Section 4(1), to examine “object” for purpose of application of Section 4(2), MyCC stated that it will examine the likelihood of an agreement having a significant anti-competitive effect by adopting a contextual approach examining the surrounding economic circumstances which form the setting for the agreement to assess the common intentions and aims pursued in light of the agreement’s economic context.

Why the need for “by object” restriction?

  1. Certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition6 . Thus, it can be redundant to prove negative effects in every case since experience shows that by object restrictions result in anti-competitive effects7.

  2. However, the distinction between “object” and “effect” is only meaningful if “recourse to the concept of restriction by object is clearly defined, failing which this could encompass conduct whose harmful effects on competition are not clearly established8 . If not properly defined, there is a real danger that a “by-object” provision, especially a deeming one like Section 4(2) may open up floodgates and render businesses easy targets without the need for proper analysis nor assessment of harm.

  3. The fine line between definition of restriction by object and effect has triggered much discussion, particularly in the EU sphere (see paragraphs 18 to 25 below).

Is our Section 4(2) a departure from other jurisdictions?

    1. Firstly, unlike our CA, foreign competition laws lack a deeming provision which imputes liability if there is an object to, for example, share market.

    2. Lack of deeming provision aside, the object/effect distinction comes with its own set of problems. For example, EU competition laws have oft faced criticism for lax interpretation of by object restrictions by vacillating between a strict approach without looking at effects of the agreement in question9 and at times, weighing in effects of the conduct in question10 . This has resulted in inconsistent application of law and blurring of the line between “object” and “effect”.

    3. If one considers the complications surrounding the object/analysis distinction and add a deeming provision like our Section 4(2) into the equation, it immediately becomes clear that such a deeming provision will be extremely onerous to businesses as commercial decisions will be rife with uncertainty and pose as easy targets to competition regulators.

European Union (EU)

    1. Recent EU cases suggest an adherence to a contextual approach not unlike that propounded by the MyCC in its guidelines (see paragraph 12 above). To assess whether an agreement has an anti-competitive object, these cases held that regard must be had to the content of the agreement, the objectives it seeks to attain, and the economic and legal context of which it forms part of11 . “ [T]he concept of restriction of competition ‘by object’ can be applied to certain types of coordination between undertaking which reveals a sufficient degree of harm to competition that it may be found that there is no need to examine their effects12 .

United States (US)

    1. Antitrust law in the US also provide that there are certain agreements or practices which, “because of their pernicious effect on competition and lack of any redeeming virtue, are conclusively presumed to be unreasonable, and therefore illegal, without elaborate inquiry as to the precise harm they have caused or the business excuse for their use13 . Such agreements are manifestly anticompetitive and illegal per se14.

    2. Nonetheless, even a finding of per se illegality or per se categories cannot conjured from thin air and requires antitrust regulators to have “considerable experience with the type of restraint at issue” and “demonstrable economic effect rather than … formalistic line drawing15.

Singapore

  1. Singapore’s Competition Act16 provides an illustrative list of the types of restrictions that may be regarded as anti-competitive. It does not prescribe a deeming provision.

  2. Again, Singapore competition authorities have held that in assessing object, it will be guided by a contextual approach (not unlike the EU) and assess whether the conduct in question reveals a sufficient degree of harm to competition17 .

Conclusion

  1. A deeming provision like Section 4(2) may render it exceedingly convenient for regulators to circumvent the need to properly access the degree and extent of harm in an arrangement. As seen from MyCC’s own guidelines18 and other jurisdictions – notwithstanding an object/effect distinction, a finding of “by-object” restriction does not and cannot stand in vacuum – whatever the approach adopted, there is a need to adopt a contextual analysis and look at perceived effects and whether the alleged infringement reveals a sufficient degree of harm.

  2. Hence, since the Section 4(2) deeming provision is one that is distinct to the Malaysian jurisdiction and one that is particularly onerous, more clarity and guidance is required from our competition authorities on the applicability and approach for this provision to adequately promote and protect the process of competition.

The views and opinions expressed in this article are those of the authors alone and do not constitute any legal advice.

1High Court has allowed the judicial review application by MyCC in respect of the decision of Competition Appeals Tribunal for this matter. MAS and AirAsia appealed to the Court of Appeal and this matter is presently pending appeal.
2See for example Union Insurance Malaysia Sdn Bhd v. Chan You Young [1999] 3 CLJ
3Paragraph 2.14 of MyCC’s Guidelines on Chapter 1 Prohibition
4Paragraph 2.12 of MyCC’s Guidelines on Chapter 1 Prohibition
5Paragraph 2.13 of MyCC’s Guidelines on Chapter 1 Prohibition
6Case C-67/13 P Groupement des cartes bancaires v European Commission, EU:C:2014:2204, para. 50
7Joined cases T-374/94, T-375/94, T-384/94 and T-388/94 European Night Services Ltd and Ors v Commission of the European Communities, ECR 1998 II-03141, para. 136
8Opinion of Advocate General Wahl for Case C-67/13 P Groupement des cartes bancaires v European Commission, ECLI:EU:C:2014:1958, para. 36
9Joined cases C-56/64 & C-58/64 Consten and Grundig v. Commission, ECLI:EU:C:1966:41
10See for example, Case C 8/08 T-Mobile Netherlands and Others v Commission, ECR 2009 I-04529; C-32/11 Allianz Hungaria v Gazdasagi Versenyhivatal, ECLI:EU:C:2013:160
11EC Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, para. 25. For example, see also Case C-8/08 T-Mobile Netherlands and Others v Commission, ECR 2009 I-04529, para. 31; Joined Cases 29/83 and 30/83 Compagnie Rotale Asturienne des Mines SA and Rheinzink GmbH v Commission, ECLI:EU:C:1984:130, para. 26
12Case C-67/13 P Groupement des cartes bancaires v European Commission, ECLI:EU:C:2014:1958, para. 58
13Northern Pac. R. Co. v. United States, 356 U. S. 1, 356 U. S. 5 (1958)
14Continental T.V., Inc. v. GTE Sylvania, Inc. , 433 U.S. 36 (1977)
15>Leegin Creative Leather Products, Inc. v. PSKS, Inc. , 551 U.S. 877, 887 (2007)
16Section 34(2) of Competition Act (Chapter 50B) Act 46 of 2004
17Infringement decision by Competition and Consumer Commission Singapore, CCS 500/003/13 Infringement of the section 34 prohibition in relation to the distribution of individual life insurance products in Singapore
18Paragraph 2.12 of MyCC’s Guidelines on Chapter 1 Prohibition


Tay Beng Chai
Partner
T: +603 2050 1888
bengchai.tay@taypartners.com.my


Heng Jia
Associate
T: +603 2050 1888
jia.heng@taypartners.com.my

Section 68(1)(a) of the Courts of Judicature Act 1964 vs. Court of Appeal Practice Directions

Introduction

In Malaysia, applications for leave to appeal to the Court of Appeal are generally governed by section 68(1)(a) of the Courts of Judicature Act 1964 (“CJA”) which provides that no appeal shall be brought to the Court of Appeal when the amount or the value of the subject matter of the claim (exclusive of interest) is less than RM250,000, except with the leave of the Court of Appeal.

Despite the express CJA provision, both Court of Appeal Practice Direction No. 2 of 1996 (“PD 1996”) and Practice Direction No. 1 of 2008 (“PD 2008”) state that no prior leave of the Court of Appeal under section 68(1)(a) of the CJA is required for an appeal concerning a certiorari against the decision from a quasi-judicial body involving natural justice.

Before we proceed further and as the title suggests, this article is going to discuss about the prevailing conflicting positions between the case law in respect of the interpretation of section 68(1)(a) of the CJA and a few of the Practice Directions issued by the Court of Appeal. Such conflict had been put to rest by the Court of Appeal in its decision in the case of Country Garden Danga Bay Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor (Case No. J-08-26-01/2019) which was handled by our firm.

In the case of Country Garden Danga Bay, the requirement for leave was brought up as the amount of the subject matter pertains to a RM50,000 tribunal award granted by the Tribunal for Homebuyer Claims. The solicitors for the Applicant, Country Garden Danga Bay Sdn Bhd filed this notice of motion for leave to appeal in an abundance of caution in view of the aforesaid conflicting legal positions.

Past Decisions of the Court of Appeal and the Federal Court

In the Court of Appeal dissenting judgment of Mohd Hishamudin JCA (as he then was) in Galaxy Energy Technologies Sdn Bhd v Deputy Collector of Stamp Duty, Malaysia & Anor [2011] 5 MLJ 145, it was held that PD 1996 and PD 2008 were mere guidelines and should be interpreted as being subject to the CJA. His Lordship was of the view that the items pertaining to cases of certiorari in both the Practice Directions were meant to apply only to certiorari cases in respect of subject-matters that had no value attached to them or those with values that could not be quantified. Mohd Hishamudin JCA subscribed to the view of the Federal Court in Lam Kong Co Ltd v Thong Guan Co Pte Ltd [2000] 1 MLJ 129 which was subsequently adopted by the Court of Appeal in the case of Harcharan Singh s/o Sohan Singh v Ranjit Kaur d/o S Gean Singh [2010] 2 MLJ 479 that the declarations as described in item (ii) of PD 1996 are those that relate to subject matters which either do not have any value attached to them or its value cannot be quantified.

Nevertheless, the majority of the panel in Galaxy Energy Technologies (Zaleha Zahari and Abu Samah Nordin JJCA) ruled that no prior leave under s 68(1)(a) of the CJA leave was required for the purpose of the appellant’s appeal after hearing submissions on the preliminary issue. There was no further elaboration from the majority of the panel on this legal point.

Practice Direction No. 1 of 2017 (“PD 2017”)

Since the case Galaxy Energy Technologies, it is pertinent to note that PD 1996 was revoked by PD 2008 whereas PD 2008 was revoked by the Court of Appeal’s Practice Direction No. 1 of 2017 (“PD 2017”). The difference now is that the brief descriptions found earlier in PD 1996 and PD 2008 with respect to the matters for appeal do not appear in PD 2017. Even so, PD 2017 still explicitly states that matters that do not require leave to appeal are, among others, certiorari.

The Significance and Effect of the Court of Appeal’s Latest Decision

The Court of Appeal in its judgment of Country Garden Danga Bay referred to O’Reilly v Mackman [1983] 2 AC 237 and Lam Kong and held that the requirement for leave serves as a filter against frivolous or unmeritorious proceedings. It must follow that no appeal can be filed against the decision of the Court of Appeal regarding leave as otherwise the filter principle would be defeated.

The Court of Appeal took judicial notice of PD 1996, PD 2008, PD 2017, the dissenting judgment in Galaxy Energy Technologies as well as the Applicant’s written submission filed by us and further held that practice directions are issued by the courts to supplement the existing rules and to regulate the procedural practice of solicitors in their dealings with the courts, and in the filing of cause papers or documents. Practice directions are created and issued to streamline the court process and enhance efficiency of the same.

In support, the Court of Appeal referred to the decision in the case of Chua Choong Yin v Tan Boon Bak Trading Sdn Bhd & Anor [2002] 4 MLJ 145 cited by the Applicant’s Counsel where Siti Norma Yaakob JCA (as she then was) observed as follows:

“Whilst the court appreciates that practice directions do not have the force of law, they are created for a specific purpose, namely to regulate a systematic and consistent procedure governing the filing of appeal records. For that reason, they have to be adhered to otherwise chaos and uncertainty in the filing of appeal records shall prevail.”

In similar vein, the Court of Appeal also referred to its decision in OCBC Bank (Malaysia) Bhd v Lim Hock Kok & Anor [2017] 9 CLJ 454 cited by the Applicant’s counsel where Idris Harun JCA noted as follows:

“One thing seems to be clear, that is that, judicial authorities show that practice directions are effected for administrative purposes, but it is trite that once practice directions have been properly and legally issued, they must be complied with.”

According to the Court of Appeal in Country Garden Danga Bay“it can be surmised that as long as the practice directions are not contrary to any written law, they must be complied with. If the practice directions are disregarded willy-nilly, there may arise confusion and even disorder in the management of caseloads in the courts. So to say they are there for mere guidance is quite inaccurate.”

The Court of Appeal further pointed out that the cases of Lam Kong and Harcharan Singh were not concerned with a leave application for matters concerning judicial review such as certiorari. They were concerned with declarations. The case of Galaxy Energy Technologies, however, concerned an application for certiorari. In the view of the Court of Appeal, cases concerning judicial review and certiorari should be considered on a different footing as it is an important process to review executive and legislative actions. It provides checks and balances which are imperative in the separation of powers. In this way, the courts can review an administrative and quasi-judicial decision by a public authority, As such, the value of the subject matter as stated in section 68 of the CJA was really intended for cause of actions founded on tort or contract or other claims based on equity and not for matters concerning judicial review. (emphasis added)

Therefore, the Court of Appeal held that it is really irrelevant as to whether the amount involved in the administrative action is RM50,000 or RM50 million. The Court of Appeal further added that: “To think otherwise would place a man with less means in a worse position that one with more or much more. If at all a filter is necessary to prevent frivolous or unmeritorious appeals, it may be more appropriate to consider whether such appeals meet the test of real prospect of success rather than the rather arbitrary threshold of the value of the claim.”

In conclusion, the Court of Appeal agreed with the majority view in Galaxy Energy Technologies and held that no prior leave was required under section 68(1)(a) of the CJA for the purpose of the appeal in Country Garden Danga Bay.


Leonard Yeoh
Partner
T: +603 2050 1973
M: 012-321 6893
leonard.yeoh@taypartners.com.my


Chuah Chong Ping
Senior Associate
chongping.chuah@taypartners.com.my

What do you need to know about the amendments to the Industrial Relations Act 1967?

The Industrial Relations (Amendment) Bill 2019 has been passed by Dewan Rakyat and Dewan Negara on 9 October 2019 and 19 December 2019 respectively. The amendments are part of the government’s effort for a more robust industrial relations system in bringing transformation to the industrial relations landscape in Malaysia. The Amendment Bill contains salient improvements to enhance and improve workers’ protection and to ensure workers’ rights are at par with international standards. The Amendment bill has also decisively devolved the power of the Minister of Human Resources (“Minister”) to the Director General for Industrial Relations (“DG”) in many aspects.

Pursuant to the notification in the Gazette (PU(B) 695) on 21.12.2020, majority of the provisions under the Industrial Relations (Amendment) Act 2020 (“Amendment Act”) will come into force on 1 January 2021, except for certain amendments pertaining to essential services and bargaining rights.

In this article, we aim to explore from the perspective of how the Amendment Act is likely to impact a Company or the employers. For that, we have summarized the key amendments introduced under the Amendment Act –

Representation on dismissal cases

The Amendment Act had reduced the power of the Minister significantly as far as representations on wrongful dismissal cases are concerned. Prior to amendments to the Industrial Relations Act 1967 (“the Act”), the Minister has discretion to filter wrongful dismissal claims which are frivolous or vexatious. However, pursuant to the Amendment Act, the Minister no longer possesses such discretionary power and the DG shall refer a representation on wrongful dismissal to the Industrial Court for an award once the DG is satisfied that there is no likelihood of the representations being settled.

It would appear here that once parties are not able to reach a settlement during conciliation meeting the representation will be ‘automatically’ referred to the Industrial Court. This will certainly cause an influx of cases being referred to the Industrial Court.

Representation in Conciliation Meetings at the Industrial Relations Department

The Amendment Act appears to have widened the choice of representation in conciliation meetings for wrongful dismissal claims at the Industrial Relations Department for both employer and workman. Under the Act, an employer and workman may be represented by way of self-representation or be represented by a member of trade union of employers or workmen or any official of an organization of employers/workmen (not being a trade union of employers/workmen) registered in Malaysia.

Pursuant to the Amendment Act, both employer and workman now have the option to appoint any person (“Individual”) other than the aforementioned persons to represent them, provided that the Individual is not an advocate and solicitor, the appointment of the Individual is authorised by the employer or workman as the case may be and the appointment of the Individual must be with the permission of the DG.

It should be noted that although the Amendment Act appears to have widened the parties’ options in choosing their representative, the parties are still required to obtain the DG’s permission in so far as their choice of representatives in the conciliation meetings are concerned.

Additional Powers Granted to the Industrial Court

Additional powers are given to the Industrial Court under the Amendment Act as follows:-

  1. Continue to conduct the proceedings notwithstanding the death of the workman who made the representation.

  2. To award back wages or compensation in lieu of reinstatement or both to the next-of-kin of the deceased workman.

  3. To direct that an award made by the Industrial Court shall carry interest up to the rate of 8% per annum to be calculated from the 31st day from the day of the award until the award is fully satisfied.

Although the Amendment Act appears to be favourable to the next of kin of a deceased workman who had made representation before the Industrial Court, the application of the Amendment Act would be challenging. This is because in a trial before the Industrial Court, the claimant is required to prove his/her case by way of viva voce examination (giving oral testimony) and adduce evidence in the course of the trial. In the event where the claimant passed on before giving testimony before the Industrial Court and the proceedings proceed notwithstanding the death of the claimant, the Court will not be provided with sufficient evidence in deciding on the claim.

Appeal against an Industrial Court award to the High Court

Pursuant to the Amendment Act, any person dissatisfied with an award of the Industrial Court may appeal to the High Court within (14) fourteen days from the date of receipt of the award. This is a paradigm shift of the existing legislation where an aggrieved party is to file an application for judicial review before the High Court in the event that he/she/the company is dissatisfied with an award. Under the Amendment Act, the procedure of the appeal would be subjected to the Rules of Court 2012 and the High Court shall have power as if the appeal is from a Sessions Court.

It is pertinent to note that the Amendment Act not only changed the mechanism for appeal against an Industrial Court award, it had also reduced the duration for the same substantially from ninety (90) days (time given for an application for a judicial review under the existing legislation) to fourteen (14) days.

Separately and theoretically, there should be a better prospect in succeeding in an appeal against an Industrial Court award under the Amendment Act as compared to the existing appeal mechanism – an application for a judicial review to quash an Industrial Court award. This is because the threshold for an application for a judicial review is relatively higher and more challenging as opposed to an appeal.

Increased of penalties

The Amendment Act has increased the penalties for contravention of the Act as below:-

  1. The penalty for a person who gives financial aid to illegal strikes and lock-outs has been increased from RM 500 to RM 5,000.

  2. The penalty for non-compliance with an Industrial Court award or collective agreement has been increased from RM 2,000 to RM 50,000.

  3. The general penalty for any contravention of the Act and/or any summons, order or direction given or made under the Act has been increased from RM 5,000 to RM 50,000.

This is a timely amendment as it would ensure that the parties affected, i.e.: the employers, take the Act more seriously.

Sole Bargaining Rights

With the inclusion of new provisions, the Amendment Act attempts to introduce sole bargaining rights in the premise of multiplicity of trade unions in an organization. The new provisions provide that if there are more than one trade union that can represent employees, the trade unions concerned may decide among themselves which trade union shall have the sole bargaining rights.

If there is no agreement as to which trade union shall have the sole bargaining rights, the employees shall be accorded the right to vote by secret ballot to indicate their preference for the trade union that shall have the sole bargaining rights to represent them. This will ensure that only one trade union, which obtains the highest number of votes, to have sole bargaining rights to represent workmen in collective bargaining.

Where a trade union has obtained the sole bargaining rights, no other trade unions shall have the same rights for a period of three years, unless the trade union which obtained the sole bargaining rights has ceased to exist.

As it is silent under the Amendment Act, it is unclear if voting should be done all over again after “a period of three years” to determine which trade union should gain the sole bargaining right.

Trade Union – Recognition and Scope of Trade Union Representation

The Amendment Act seeks to add two procedures in determining recognition to be accorded to a trade union of workmen which are by the trade unions of workmen or the Director General under the new Section 12A.

Under the Amendment Act, the employers, trade union of employers and trade union of workmen are prohibited from commencing collective bargaining prior to the period of 90 days before the expiry of the existing collective agreements.

Prior to the amendments to the Act, trade unions can only raise matter pertaining to procedures of promotion of employees during collective bargaining. However, pursuant to the Amendment Act, trade unions are allowed to raise questions of a general character relating to the following matters –

  1. the promotion of any employee from a lower grade or category to a higher grade or category;

  2. the transfer by an employer of an employee within the organisation of an employer’s profession, business, trade or work, provided that such transfer does not entail a change to the detriment of a workman in regard to his terms of employment;

  3. the employment of any person that he may appoint in the event of a vacancy arising in his establishment;

  4. termination of an employee due to redundancy or re-organisation;

  5. the dismissal and reinstatement of an employee;

  6. the assignment or allocation of a workman that is consistent or compatible with the terms of his employment.

The amendment certainly broadens the scope of discussing and bargaining of the collective agreement between the employers and workmen.

Trade Disputes Arising from Refusal to Collectively Bargain or Deadlock

The Amendment Act also provides that any disputes arising from the refusal to collective bargain or a deadlock in collective bargaining can only be referred to Industrial Court with the written consent of the parties, unless:

  1. the trade dispute relates to the first collective agreement;

  2. the trade dispute refers to any essential services specified in the First Schedule;

  3. the trade dispute would result in acute crisis if not resolved expeditiously; or

  4. the parties to the trade dispute are not acting in good faith to resolve the trade dispute expeditiously

This amendment precludes the need for written consent to refer disputes arising from the refusal to collective bargain or a deadlock in collective bargaining to the Industrial Court under certain circumstances. These new provisions (iii) and (iv) as to the referral of dispute to the Industrial Court appear to be relatively wide. It may encourage the parties to refer more disputes to the Industrial Court which may lead to backlog of cases.

Restraint of strikes and lock-outs

By inserting a new provision under the Amendment Act, additional power is given to the Minister to order a strike or lock-out to stop in the event that the strike or lock-out lasts beyond a certain time or extends beyond a certain scope, thus endangering the life, personal safety or health of the whole or part of the population.

However, it is to be noted that the Amendment Act is silent on the “time” and “scope” which may trigger the Minister to order a strike or lock-out to stop. We opine that it may provide too much of power and discretion for the Minister to decide to stop a strike or lock-out initiated by the workmen.

Conclusion

It is certain that the Amendment Act brings a significant change to both the workmen’ rights and impact on the employers. While most of the changes in the Amendment Act are commendable, there has been ongoing debate on whether the removal of the Minister’s discretion in deciding whether to refer a representation to the Industrial Court is a plausible move. This is because all representations which cannot be settled at the stage of conciliation meeting will now be automatically referred to the Industrial Court, including those which are baseless and without merits. It remains to be seen as to how the Industrial Court will manage the influx of cases referred to it.

As for other amendments which we have discussed above, many of which can only be tested in the court of law or subsequently defined by further amendments, judicial decision or interpretation. Despite the uncertainties, we maintain a positive outlook on the constructive impact which the Amendment Act may bring to the industrial relations landscape in the country.


Leonard Yeoh
Partner
T: +603 2050 1973
M: 012-321 6893
leonard.yeoh@taypartners.com.my


Pua Jun Wen
Associate
junwen.pua@taypartners.com.my

How to Influence, Correctly A Guide to Using Influencer Marketing

“This article aims to guide brand owners in avoiding the pitfalls of influencer marketing, a double-edged sword that either launches businesses to unparalleled successes or lands them in epic boo-boos.”

Introduction

We can all agree that traditional celebrity endorsements are slowly becoming a thing of the past. In fact, the use of “traditional” reflects how much the advertising landscape has shifted over the last few decades.

Gradually fading into the abyss of irrelevance is the indiscriminate advertisement that seeks to reach out to the widest possible range of audience with a return on investment that is often difficult to measure. Usher in influencer marketing, a disruptive, innovative and ultra-targeted mode of advertising that relies on the emotional attachment between social media users and individuals whose routines and daily lives they religiously follow.

It is hard to understate the impact of influencer marketing. 70% of teens now trust influencers more than traditional celebrities. 49% of consumers depend on influencer recommendations for their purchases1. You probably have a social media account following someone who you have never met but feels like a friend to you.

In the face of the alluring benefits that influencer marketing presents, it is only natural for brand owners to gloss over the negative and sometimes catastrophic impacts of a miscalculated influencer marketing effort.

Early this year, the luxury fashion house Prada was embroiled, albeit momentarily, in a scandal involving a Chinese celebrity, Zheng Shuang, who they had just appointed as brand ambassador a week before. Shortly after the news broke, Prada shares on the Hong Kong Stock Exchange fell 1.7% and further tumbled by almost 5% at the next day’s opening2.

On the other side of the globe, YouTube star Olivia Jade Giannulli was stripped of her collaborations with Sephora and Hewlett Packard in 2019 following accusations that her parents had been paying bribes to place their children in elite universities3.

Locally, the Mandopop singer Choo Hao Ren had to publicly apologise and remove access to his music video, promoting a skin-whitening product, after receiving considerable backlash for his choice of featuring a character who was “slathered with make-up to achieve a darker skin tone” 4. Many described this as being tone-deaf in a country that embraces multiculturalism and a repeat of the 2017 “blackface” episode involving beauty chain Watsons Malaysia. While a remake was posted after a week, the public perception of the company behind the product may have already crystallised.

The instances of influencer marketing gaffes, intentional or not, drive home a message: businesses must be overly careful and deliberate when it comes to working with influencers or key opinion leaders (KOLs) to promote their brands.

Here, we highlight the three main issues which we think brand owners should absolutely take note of before embarking on their first, or next, influencer marketing campaign:

Compliance

Malaysia does not have a specific statute on advertising as it allows the industry to be primarily self-regulated, as is other countries like Australia, Canada, Italy and the United Kingdom. This scenario has contributed to the introduction of the following guidelines which include provisions on online advertising and, by extension, influencer marketing:

    1. Communications and Multimedia Content Code issued by Communications and Multimedia Content Forum

      The Content Forum is an industry forum designated under Section 212 of the Communications and Multimedia Act 1998 (CMA 1998). It is tasked to govern content and address related issues disseminated via electronic medium and that includes the internet as we know.

      The Content Code in its chapter on advertisements touches on a host of matters including legality, decency, protection of privacy, claims, testimonials and endorsements, prices, free offers, guarantees, comparisons, imitation and unacceptable products.

      A worthy mention is that advertisements should be shown in such a way so readers can tell easily that they are advertisements. In other words, masquerading advertisements as genuine testimonials is a no go.

      While we observe that brand owners tend to frown upon such disclosure as it is seen as hurting the “vibe” of the advertisement, there have been studies indicating that consumers’ view of a brand after an influencer’s recommendation remains about the same whether the relationship has been made known. For more savvy purchasers, disclosure in fact becomes a positive signal as doing so adds to the perceived transparency and authenticity that give most influencers the edge over their traditional counterparts5. Although no specific examples are given in the Content Code, labels or hashtags such as “ad”, “sponsored”, “advertisement”, “in collaboration with”, “contains affiliate links” are almost universally acceptable and will suffice.



    1. General Consumer Code of Practice for the Communications and Multimedia Industry Malaysia issued by the Consumer Forum

      The Consumer Forum is another industry body designated under Section 189 of CMA 1998 to address consumer-related matters including the advertising or representation of services.

      One of the requirements is the inclusion of qualifiers where there are limitations on the availability of the service that the brand owners provide. For example, where the service is only provided to certain states in Malaysia, qualifiers such as “for further information, please visit …”, “subject to service availability” should be added to the advertisement.



Compliance with the Content Code is voluntary, but the Communications and Multimedia Commission, the statutory guardian of CMA 1998, is empowered by the Act to direct any person to comply with the same and failure to do so may result in contravention of the Act.

Online advertisements are further regulated to a certain extent by a number of statutory provisions such as the Sale of Goods Act 1957 (conditions and warranties with reference to goods), Consumer Protection Act 1999 (guarantees in respect of goods and services), Trade Descriptions Act 2011 (false trade descriptions) and Personal Data Protection Act 2010 (use of personal data).

Brand owners should also be cautious about the types of products or services to be advertised as many are further subject to specific statutory provisions, such as food and drinks, medicines and supplements, slimming products and services, medical devices, toys, pesticides, legal services, real estate, financial products and services.

Last but not least, brand owners should keep themselves apprised of the advertising policies of each social media platform to ensure that their advertisements would not be taken down for not conforming to the standards. What is acceptable on a platform (say, YouTube) may not necessarily be allowed on others (such as Facebook or Instagram) as platform operators may assess the same content with different approaches.

Evaluation

Brand owners should also implement a procedure for evaluating and selecting suitable influencers. Every influencer has their quirks and niches which in turn attract wildly different types of audience. The measures that should be taken include a background check on the shortlisted candidates including their personal and professional backgrounds, public opinions, preferences and beliefs, and whether they have engaged in activities or exhibited behaviour which the brand owners consider inconsistent with their values.

It also goes without saying that in light of the Personal Data Protection Act 2010, brand owners should only undertake such assessments with the candidates’ express consent.

Engagement

Once the list of shortlisted candidates is reduced to a certain influencer, brand owners should ensure that they agree with the influencer on the terms of engagement before proceeding to seal the deal. A contract in this regard ranges from brand exclusivity, number, timing, duration and platform of posts, brand guidelines, intellectual property ownership over the advertisements, access to data analytics, non-disparagement to causes for termination.

We also strongly encourage brand owners to insist on content review and approval rights to allow them to have the final say on the content to be published. After all, advertisements that are thought to be exceedingly ingenious or simply innocent may end up being seen as nothing but offensive or insensitive in the discerning eyes of the public, and brand owners by placing themselves as the last bastion of the quality control and approval process would certainly help minimise such risks.

Conclusion

Influencer marketing has already proved itself as one of the most – if not the most – effective way of marketing in this era of excessive sharing, ever-improving technology and endless crave for instant gratification. With brand owners poised to invest up to a whopping $15 billion on influencer marketing by 20226, it is high time that they not only appreciate the enormous benefits of influencer marketing, but also its underlying risks.

1Excel Academy (n.d.), 20 Influencer Marketing Statistics that Will Surprise You. Retrieved from the Excel Academy: https://digital.excelacademy.my/20-influencer-marketing-statistics-that-will-surprise-you/
2Global Times (19 January 2021), Prada terminates cooperation with Chinese actress Zheng Shuang over alleged surrogacy dispute. Retrieved from Global Times: https://www.globaltimes.cn/page/202101/1213301.shtml
3Nicole Chavez and Chloe Melas (12 April 2019), Olivia Jade is ‘devastated’ by college cheating scandal. Retrieved from CNN: https://edition.cnn.com/2019/04/11/entertainment/olivia-jade-college-admissions-scandal/index.html
4Cheryl Heng (25 January 2021), Malaysian musician Choo Hao Ren apologises for music video featuring Instagram influencer Qiu Wen in brownface. Retrieved from South China Morning Post: https://www.scmp.com/week-asia/people/article/3119181/malaysian-musician-choo-hao-ren-slammed-music-video-featuring
5Alice Audrezet and Karine Charry (29 August 2019), Do Influencers Need to Tell Audiences They’re Getting Paid? Retrieved from Harvard Business Review: https://hbr.org/2019/08/do-influencers-need-to-tell-audiences-theyre-getting-paid
6https://www.businessinsider.com/influencer-marketing-report

 


Lee Lin Li
Partner
T: +603 2050 1898
linli.lee@taypartners.com.my

 


Low Kok Jin
Senior Associate
kokjin.low@taypartners.com.my

Peregrine Aviation Charlie Ltd v Pakistan International Airlines

On 15 January 2021, Tay & Partners successfully executed an ex-parte injunction order which grounded and arrested a Boeing 777-200ER aircraft at the Kuala Lumpur International Airport (KLIA).

The application for the ex-parte injunction was made by Peregrine Aviation Charlie Limited as the Plaintiff, with the national airline carrier of Pakistan, Pakistan International Airlines (PIA) as one of the defendants. The dispute arose as a result of PIA’s failure to make certain payments amounting to more than USD 14 million pursuant to two lease agreements pertaining to two separate aircrafts, one of which is the aircraft successfully grounded at the KLIA. Peregrine has commenced legal proceedings against PIA in United Kingdom to claim for payment. As the aircrafts continue to be in use by PIA notwithstanding the legal proceedings being underway, Peregrine has decided to enforce its contractual rights against PIA to ground the aircrafts at KLIA based on past records which show that the two aircrafts have been operated by PIA to service its standard flight route between Islamabad and Kuala Lumpur.

In the application for ex-parte injunction, Peregrine had also named Malaysia Airports Holdings Berhad (MAHB) and its subsidiary, Malaysia Airports (Sepang) Sdn Bhd as second and third defendants on the basis that they are operators of KLIA who would be able to assist Peregrine in successfully executing the injunctions. On 14 January 2021 after hearing our Cheah Soo Chuan on behalf of Peregrine, the High Court decided to grant the ex-parte injunction for the two aircrafts to be grounded and parked at KLIA until the inter-partes hearing of the application whish was fixed for 27 January 2021. MAHB and its subsidiary were ordered to ensure that the grounded aircrafts do not leave KLIA without any further order of the High Court.

On 15 January 2021 at approximately 10 a.m., the order was served on MAHB and its subsidiary before the aircraft landed at KLIA at 11.40 a.m. Cooperation being the order of the day, the order was complied with and Peregrine successfully ensured that the aircraft was arrested and remained grounded at KLIA. The arrest of the aircraft has garnered significant media attention in both Pakistan and Malaysia, as well as internationally since it is the first Malaysian case involving a mandatory injunction to arrest and ground an aircraft.

The aircraft was detained for almost two weeks at KLIA in compliance with the injunction. However, pursuant to negotiations between the parties which led to the parties reaching an amicable settlement, Peregrine has agreed for the grounded aircraft to be released. The parties’ agreement was conveyed to the High Court during the inter-partes hearing on 27 January 2021, and thus the High Court ordered the injunction order to be set aside and for the grounded aircraft to be immediately released from KLIA.


Cheah Soo Chuan
Partner
T: +603 2050 1973
M: 012-321 6893
soochuan.cheah@taypartners.com.my


Nurul Qarirah Md Kahar
Associate
nurul.qarirah@taypartners.com.my