GUIDELINE ON DOMINANT POSITION IN A COMMUNICATIONS MARKET RG/DP/1/00(1)
List of Exhibits
Exhibit 1 Proposed analytical framework for determining dominant position
Exhibit 2 Market and services structures in the convergence sector
The Malaysian Communications and Multimedia Commission ("the Commission") has prepared this guideline under section 138 in order to clarify how it will apply the test of "dominant position in a communications market" to a licensee for the purposes of administering the Communications and Multimedia Act 1998 ("the Act"). This guideline should be read in conjunction with the guideline published by the Commission concerning substantial lessening of competition.
2.1 Section 138 of the Communications and Multimedia Act 1998 ("the Act") states that the Commission may publish guidelines which clarify how it will apply the test of "dominant position" to a licensee. It sets out the factors which the Commission considers will most generally be relevant to making a determination under section 137.
2.2 The object of this guideline is to provide an analytical tool to be used in the performance of the Commission's functions under section 137. Section 137 of the Act states:-
"137. The Commission may determine that a licensee is in a dominant position in a communications market."
The guideline is intended to provide insight to market participants on the Commission's approach to exercising its powers and responsibilities concerning the determination of whether a licensee is in a dominant position.
2.3 Section 138 of the Act states:-
(1) The Commission may publish guidelines which clarify how it will apply the test of "dominant position" to a licensee.
(2) The guidelines may specify the matters which the Commission may take into account, including: -
(a) the relevant economic market;
(b) global technology and commercial trends affecting market power;
(c) the market share of the licensee;
(d) the licensee's power to make independent rate setting decisions;
(e) the degree of product or service differentiation and sales promotion in the market; and
(f) any other matters which the Commission is satisfied are relevant".
2.4 Section 138 does not require the Commission to present an exhaustive list of the factors which it will consider relevant, or of the approaches it will adopt in determining whether a licensee is in a dominant position in a communications market. In making such a determination, the Commission will form a view in good faith and on reasonable grounds. The Commission will have regard to this guideline, but will not be limited by it if the Commission forms the view that other factors may also be relevant to its determination.
3. Legislative Context
3.1 The test of "dominant position" is important because it is a precondition of the Commission's power to take action under section 139. This section enables the Commission to direct a licensee to cease any conduct in a communications market which has the effect of substantially lessening competition.
3.2 This guideline deals with the analytical procedure for determining whether a licensee is in a dominant position in a communications market.
3.3 There is no basis in the Act for any presumption that any licensee is in a dominant position in any communications market. The Commission's initial presumption when deciding to make a determination under section 138 is that a licensee shall not be considered in a dominant position unless otherwise demonstrated. This will be the case whether the Commission is deciding whether to make an original determination that a licensee is in a dominant position, or is deciding whether to revoke an earlier determination that a licensee is in a dominant position.
3.4 The concept of "dominant position" has many antecedents in other jurisdictions which may provide useful guidance. However, in applying the convergence market definition which underpins the Act and the national policy objectives, foreign experience will be useful, but cannot be regarded as definitive - particularly where it reflects a "pre-convergence" market definition confined to the telecommunications sector.
3.5 Malaysia's convergence regulatory framework embodied in the Act is designed to encourage the merging of markets and to enable effective competition. The Commission will have due regard to that goal when making a determination on whether a licensee is in a dominant position. The issues raised by these considerations are addressed more fully below.
4. Policy Context
4.1 Policy objectives
The Act is designed to achieve certain policy objects which are set out in section 3. The Commission must have regard to these objects in the implementation of the Act. Section 3 states:-
(1) The objects of this Act are -
(a) to promote national policy objectives for the communications and multimedia industry;
(b) to establish a licensing and regulatory framework in support of national policy objectives for the communications and multimedia industry;
(c) to establish the powers and functions of the Malaysian Communications and Multimedia Commission; and
(d) to establish powers and procedures for the administration of this Act.
(2) The national policy objectives for the communications and multimedia industry are -
(a) to establish Malaysia as a major global centre and hub for communications and multimedia information and content services;
(b) to promote a civil society where information-based services will provide the basis of continuing enhancements to quality or work and life;
(c) to grow and nurture local information resources and cultural representation that facilitate the national identity and global diversity;
(d) to regulate for the long-term benefit of the end user;
(e) to promote a high level of consumer confidence in service delivery from the industry;
(f) to ensure an equitable provision of affordable services over ubiquitous national infrastructure;
(g) to create a robust applications environment for end users;
(h) to facilitate the efficient allocation of resources such as skilled labour, capital, knowledge and national assets;
(i) to promote the development of capabilities and skills within Malaysia's convergence industries; and
(j) to ensure information security and network reliability and integrity".
4.2 The Explanatory Statement to the Bill, sets out specific objectives for the economic regulation in Part VI. These objectives explicitly link the prohibitions of Part VI to the implementation of the objects of the Act, including the national policy objectives for the development of the communications and multimedia industry. These objectives are:-
- to promote consumer markets which offer choice, quality and affordability;
- to promote any-to-any connectivity for network services used for communications between end users;
- to promote competition in all communications markets; and
- to promote investment and innovation in network facilities, network services and applications services,
and their efficient utilisation.
4.3 In addition, the Explanatory Statement sets out a number of goals for the administration of Chapter 2 of Part VI, including sections 137 to 139. These goals are:-
- to provide protection for smaller operators in the absence of a general competitive policy or trade practices regulatory regime;
- to provide a context for, and certainty about, the manner in which the general powers and procedures under the Act should be administered. This reinforces the regulatory intent of the national policy for the development of the communications and multimedia sector;
- to establish a framework and clear powers for the Commission to ensure that anti-competitive practices do not undermine the national policy.