The Order prohibits agreements between undertakings, which have the object or effect of preventing, distorting or restricting competition within Brunei Darussalam. These may be oral or written agreements and need not necessarily be legally binding (e.g. unwritten agreements’).
This includes agreements or decisions made by undertakings and associations such as agreements among competing firms to fix prices, control supply, share market or bid rig. Such agreements are also known as hard-core cartel:
i. Price fixing: Agreement made between businesses to fix, control or maintain the prices of goods and services that are charged onto consumers in order to reap very high profits. It may also happen indirectly, which is when businesses set similar credit terms and discounts.
ii. Supply control: This refers to the agreement made between businesses to limit the quantity of goods and services provided which will indirectly increase price.
iii. Market sharing: Agreement made between businesses to each sell to different segments of a market, either in terms of geographical area or size or type of consumer. Consequently, competition will be eliminated as each has its own allotted segments all to itself and as a result, consumers’ choices will be restricted.
iv. Bid rigging: This refers to agreement made between businesses to raise prices to purchasers through manipulating procurement process which then eliminate competition through pre-determined winner.
2. Abuse of Dominant Position (Section 21)
A firm is considered dominant when it has substantial market power/share which can be determined first by defining which market the firm falls under. Becoming dominant in the market itself is not prohibited. However, it is illegal when the firm abuses its power to engage in conducts that intent or effect the prevention, restriction or distortion of competition in Brunei Darussalam such as:
i. Predatory Pricing: This occurs when a firm sets their prices unreasonably low with the intent of driving competitors out of the market which would then enable the firm to set a higher price in the long run.
ii. Exclusionary dealings: This occurs when a dominant firm trades with another firm and restricts with whom the other firm trades with.
iii. Refusal to/restricting supply: This occurs when a firm intentionally refuse to or limit its supply so that prices would increase and so will its profits.
3. Anti-Competitive Mergers (Section 23)
A merger occurs when two previously independent entities join together, as result of lasting joint venture or acquisitions. Not all mergers will give rise the competition issues as it may be pro-competitive or competitively neutral to the relevant market. Section 23 of the Order covers mergers, which have resulted, or expected to result, in a substantial lessening of competition in Brunei Darussalam market and absence of net economic efficiencies.
In Competition Order 2015, merger notification is voluntarily – no statutory requirement to notify mergers or anticipated mergers to the Commission. However parties may notify their agreement if they have concerns on whether the merger has infringed or whether the anticipated mergers may infringed the Order.
