The curious case of Bank Negara versus MyCC

PETALING JAYA: The Malaysia Competition Commission’s (MyCC) proposed decision against General Insurance Association of Malaysia (PIAM) is a curious case to say the least, not only because of its whopping RM213.45 million in proposed penalties, but also because of the ensuing sharp response from the likes of Bank Negara Malaysia (BNM) which has always been rather measured in its responses via the media.

It raises the question of what led to the rather public admonishment of MyCC’s findings.

Essentially, both regulators are fighting the same battle – safeguarding public interests. And yet here we have BNM calling the MyCC out on its proposed decision, one not yet cast in stone.

Is this a case of communication breakdown?

BNM and MyCC after all signed a very public memorandum of understanding in 2014 to avert the very situation they find themselves in today.

On June 5, 2014 in acknowledgement of the very real possibility of either regulator usurping the other’s role, the two agreed to the setting-up of an ad-hoc working committee to mutually iron out any infringement detected in a prompt manner.

“The principles of competition and the implications on financial stability will be taken into account in deciding on the appropriate course of action,” MyCC had said in a statement issued after the signing ceremony then.

Such engagements, after all, have worked. In the case of school bus operators making an unanimous arrangement to increase fares by 30% in 2014, despite a warning issued against such collusion by MyCC, records show that no further action was taken.

It is understood that the matter was resolved when the Land Transport Public Commission was consulted on the matter.

On the matter at hand, MyCC CEO Datuk Abu Samah issued a statement on its investigation into general insurers as early as October 2016.

BNM in its statement on Wednesday said the arrangement in 2011 was necessary to reflect reasonable costs of repairs in an environment where motor insurance premiums are regulated by a tariff, and had worked to halve complaints on high repair costs, which numbered more than 500 in 2011.

So did BNM not ask? Or did MyCC not tell?

Either way, is it right to now question the authority of the country’s custodian of free and fair competition for the benefit of consumer welfare? Is due process not to be followed?

MyCC’s proposed decision sets out the facts on which MyCC made its assessment and has been shared with the aggrieved parties for the purpose of their representations, which is to be done in 30 days. Then only is a final decision to be made.

That too is not fixed. As we saw in the case of Malaysian Airline System Bhd and AirAsia Bhd, MyCC’s final decision was overturned by a five-member appeal tribunal.

And while the issue at hand may be more complicated than what meets the eye, a country still struggling to claim adherence to free and fair competition has little room for second guessing its role.