Introduction

On 2 October 2023, the High Court delivered its full written grounds to quash the proposed decision of Malaysia Competition Commission ("MyCC") dated 23 September 2019 against Grab Inc. and its subsidiaries, MyTeksi Sdn. Bhd. and GrabCar Sdn. Bhd. (collectively, "Grab") ("Proposed Decision") on grounds of procedural impropriety and breach of natural justice.1

This article attempts to summarise some of the important key legal principles elucidated in the High Court's written judgment dated 2 October 2023, without expressing any opinion on the merits of the case.

Background to the High Court's Decision

Investigation

This case stems from the merger that occurred in late March 2018 between Grab and Uber Malaysia Sdn Bhd where the latter sold its Southeast Asian business to Grab Holdings Inc., which led to Grab becoming the perceived dominant player in the e-hailing market in Malaysia. After the Grab-Uber merger, MyCC received numerous complaints against Grab. Upon complaints received, MyCC launched an investigation into the matter.

Issuance of the Proposed Decision by MyCC

Following the investigation, the Proposed Decision was issued pursuant to Section 36(1) of the Competition Act 2010 ("CA 2010").

In the Proposed Decision, MyCC alleged that MyTeksi Sdn Bhd and GrabCar Sdn Bhd had abused their dominant position in the relevant market by imposing a number of restrictive clauses on its e-hailing drivers which prevented them from promoting and providing advertising services for Grab's competitors, thereby infringing Section 10(1) of the CA 2010.

Based on this, MyCC proposed to impose a financial penalty of RM86.8 million against Grab ("Financial Penalty") as well as a daily penalty of RM15,000 per day from the date of service of the Proposed Decision, should Grab fail to take remedial actions directed by MyCC ("Daily Penalty"). These remedial actions include permanently removing the restrictive clauses imposed on its drivers and sending notifications to all of its drivers regarding such removal.

High Court: Proposed Decision is not amenable to Judicial Review

In response to the Proposed Decision, Grab filed an application for leave of judicial review, seeking an order of certiorari to quash the Proposed Decision. Notably, this leave application was filed while the proceedings before MyCC were ongoing, and, at that point, MyCC had not issued findings related to non-infringement or infringement under Sections 39 or 40 of the CA 2010 respectively.

However, the application for leave was dismissed by the High Court. The High Court held that the Proposed Decision, issued under Section 36(1) of the CA 2010 would be subjected to further process by MyCC to determine whether there was a non-infringement or an infringement under Sections 39 or 40 of the CA 2010 respectively. Therefore, it was not considered a final decision.2

Court of Appeal: Proposed Decision is amenable to Judicial Review

Dissatisfied with the High Court's dismissal of its judicial review application, Grab appealed to the Court of Appeal. The Court of Appeal unanimously allowed the appeal, granting Grab leave and remitting the matter back to the High Court to hear substantive arguments.3

In allowing the appeal, the Court of Appeal held that:

  • The content of the Proposed Decision showed that MyCC was effectively making a decision in principle on the infringement. The plain effect of the Proposed Decision itself was indeed a decision in principle. This was because MyCC had imposed a Daily Penalty in the event Grab failed to comply with MyCC's directions.4
  • The content of the Proposed Decision appeared to have legal consequences and was a step in a process capable of affecting the rights, interest or liabilities of Grab.
  • The CA 2010 did not provide for appeals against proposed decisions made under Section 36(1) of the CA 2010. Hence, the Competition Appeal Tribunal ("CAT") did not have jurisdiction to deal with complaints concerning the issuance of a Proposed Decision under Section 36(1) of the CA 2010.

MyCC's Application for Leave to Appeal was Dismissed by the Federal Court

Dissatisfied with the Court of Appeal's decision, MyCC applied to the Federal Court for leave to appeal against the Court of Appeal's decision. MyCC's application for leave to appeal the Court of Appeal's decision to the Federal Court was dismissed on 5 December 2022. With the dismissal of the leave application by the Federal Court, Grab's judicial review is then proceed to be heard on merits by the High Court.

The substantive judicial review before the High Court

This judicial review application is concerned with the Proposed Decision made by MyCC in accordance with Section 36(1) of the CA 2010. For ease of reference, Section 36(1) of the CA 2010 is reproduced below:

"If, after the completion of the investigation, the Commission proposes to make a decision to the effect that one of the prohibitions under Part II has been or is being infringed, the Commission shall give written notice of its proposed decision to each enterprise that may be directly affected by the decision."

Grab's case

Grab argued inter alia that the Proposed Decision was illegal and ultra vires on the following grounds:

  • Section 36(1) of the CA 2010 requires a valid investigation in order for MyCC to issue a proposed decision. Such an investigation is a condition precedent to the jurisdiction of MyCC and its exercise of power under that provision.
  • In this case, Grab argued that the complaint that triggered the investigation by MyCC was filed by Mr. Mohamed Radzwan bin Abdul Wahab and was received by MyCC on 7 March 2019 ("the Radzwan Complaint"). In the Proposed Decision, MyCC found that Radzwan was banned from driving for Grab "for promoting other e-hailing services to riders".

Prior to this, in 2018, MyCC had received complaints regarding alleged discriminatory conduct on the part of Grab ("the 2018 Complaints"). Most of these complaints alleged that Grab had abused its dominant position through the imposition of unfair pricing practices (which is unrelated to the subject matter of the Proposed Decision).

It was argued that MyCC did not conduct an investigation into the Radzwan Complaint, which forms the crux of the infringement issue in this case.

  • MyCC did not have the power to impose a penalty that took effect upon the issuance of the Proposed Decision.
  • MyCC wrongfully made public the Proposed Decision and the Financial Penalty. Section 36(1) of the CA 2010 does not empower MyCC to notify the world at large of the Proposed Decision through the news release and press conference.

The response from MyCC

In response, MyCC submitted that this application for judicial review should be dismissed on the following grounds:

  • The Proposed Decision is not a final decision that is amenable to judicial review.
  • This judicial review application is premature. Grab should have exhausted the appeal mechanism under Section 51 of the CA 2010. If Grab are aggrieved by the Proposed Decision, they should have appealed to the CAT.
  • There was no illegality with regard to MyCC's investigations. Grab are not entitled to challenge the investigation processes of MyCC., as MyCC had conducted its investigations and arrived at the Proposed Decision pursuant to the provisions of the CA 2010 and the Competition Commission Act 2010 ("CCA").
  • Grab were well aware and appraised of the nature of the investigations against them by MyCC at all material times.
  • Publication of the facts of the Proposed Decision is not illegal or ultra vires the provisions under the CA 2010.
  • There was no procedural impropriety on the part of MyCC as Grab had been duly given the opportunity to be heard.

Summary of Key Legal Principles from the High Court Decision

1. This application for judicial review in respect of a proposed decision by MyCC is not premature

Under the doctrine of stare decisis, the High Court is bound by the Court of Appeal decision which unequivocally stated that the Proposed Decision is amenable to judicial review, even if it has not been crystallised into a final decision either under Sections 39 or 40 of the CA 2010.5

2. CAT did not have jurisdictions to deal with complaints concerning the issuance of the Proposed Decision

As to the issue of domestic remedy, the CAT under the CA 2010 did not have jurisdiction to deal with complaints concerning the issuance of a Proposed Decision under Section 36(1) of the CA 2010. Accordingly, the issue of the need of Grab to exhaust the domestic remedy does not arise.

3. The investigation process was tainted with procedural impropriety and the Proposed Decision which was founded on the wrong investigation process, infringed Section 36 of the CA 2010

The High Court found no evidence to support that MyCC had taken the investigative steps on the Radzwan Complaint in the same manner that it had handled the 2018 Complaints. In this case, no proper investigation was made on the Radzwan Complaint – only a Proposed Decision.

Therefore, it was impossible for MyCC to make a fair Proposed Decision concerning the Radzwan Complaint because, during the investigation process, Grab were only asked to address issues related to the 2018 Complaints. There was a prima facie infringement of Section 36(1) of the CA 2010. The Proposed Decision is sufficiently connected with the Final Decision to be made by MyCC. While no final decision was made under either Section 39 or Section 40 of the CA 2010, the Proposed Decision, based on the wrong investigative process, would have prejudiced Grab.

The High Court stressed that the correct investigation process on the correct allegation of infringement was necessary in order to enable Grab to defend and meet the case alleged against them adequately. The investigation process was therefore tainted with procedural impropriety. Grab were not given the right to be heard. The end result would be the Proposed Decision is equally tainted and therefore amenable to judicial review.

4. The role of MyCC as investigation, prosecutor and adjudicator is statutorily provided

As to the allegation of apparent bias that MyCC is the investigator, prosecutor and adjudicator, the High Court held that the statutory role of MyCC is spelt out in the CA 2010 and the CCA.

5. Publication by MyCC is preferable after issuing a final decision

The High Court ruled that it was fair in that MyCC's press statements made it clear that the Proposed Decision itself is not final and that Grab may still make representations to challenge MyCC's findings.

While there is nothing in the CA 2010 or the CCA that prohibits the publication of the Proposed Decision, which includes the proposed findings, it is more desirable that such a press release is only to be issued after MyCC has arrived at a Final Decision.

Concluding Remarks

This High Court's decision, granting Grab's application for judicial review and quashing MyCC's Proposed Decision, has the potential to pave the way for diverting parties from the usual representation process before MyCC (and appeal before CAT), leapfrogging to High Court in the future, if a proposed decision is tainted with procedural impropriety and breach of natural justice. However, it is important to note the High Court's decision is not the final resolution for the Grab case. If the High Court's decision is overturned by the appellate court(s), the process of the Grab case before MyCC and beyond will recommence. This will then raise the question of whether judicial review route will result in a prolonged and time-consuming process, effectively returning to ground zero. Making a tactical move can be beneficial, but it requires careful strategizing.

Footnotes

1. See Myteksi Sdn Bhd & Ors v Suruhanjaya Persaingan [2023] MLJU 2142

2. See MyTeksi Sdn Bhd & Ors v Suruhanjaya Persaingan [2020] 11 MLJ 93

3. See MyTeksi Sdn Bhd & Ors v Competition Commission [2022] 6 MLJ 767

4. The Court of Appeal did not decide on the issue of whether MyCC is empowered to order the Daily Penalty under the Proposed Decision, as this is an issue that needs to be addressed during the substantive stage. However, this issue was not answered during the substantive stage before the High Court.

5. See MyTeksi Sdn Bhd & Ors v Competition Commission [2022] 6 MLJ 767, paragraphs 42 to 43.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.