Myanmar Competition Law

In February, Parliament passed the Myanmar Competition Law. The new law establishes the Myanmar Competition Commission to administer and enforce its provisions. The law will only come into force on the day stipulated by the President in a commencement order.

The new law establishes various new rules designed to promote competition and it is worth highlighting that criminal sanctions apply to individuals for infringements of some of its provisions. Some of the key rules are set out below.

• A general prohibition on acts restricting competition. The type of conduct prohibited under this chapter includes price fixing, bid rigging and market allocation.  Consistent with established competition law regimes, there is a recognition that certain arrangements which may restrict competition will be exempt for a specified period of time - to be determined by the Commission on a case-by-case basis - insofar as the arrangements, (i) “reduce costs for consumers”, and (ii) give rise to efficiencies including, among others, the enhancement of technology and improvements to the distribution of goods.  We expect the exemption to be applied narrowly.

• A prohibition on “creating monopolies” through various practices.While the law does not prohibit monopolies per se, the “creation” of monopolies through certain prohibited practices such as, among others, obstructing market access or “unfairly interfering in the business activities of other persons”, is not permitted.  “Monopolies” is not a defined term and it is left to the Commission to specify what may amount to a “monopoly” by reference to such factors as market shares and sales volumes.

• A prohibition of practices of unfair competition. The term “Unfair competition” is very broadly defined as “any act of competition…which affects or has the potential to affect the rights and benefits to which consumers or other businesses are entitled or the well-being of the state”. Furthermore, the law also provides that any act which is specified as an act of unfair competition can be prohibited “in order to protect the interests of consumers”.  This prohibition therefore has the potential to be of very broad application and the discretion of the Commission appears extensive. 

• The regulation of certain M&A activity. Under the law, certain mergers, acquisitions, establishment of joint ventures or other forms of “collaboration” as specified by the Commission will be prohibited if the “collaboration” is established with an intent to exercise “excessive market influence” or “lessen competition in order to have only one business or only a small market” or if the collaboration results in a market share which exceeds a cap set by the Commission (yet to be determined). Exemptions from the prohibition can be obtained if the collaboration, among other things, promotes imports, supports the improvement of technology or establishes businesses with “stronger entrepreneurial acumen”. There is no further guidance yet as to how this will be interpreted or how collaborations will be reviewed by the Commission. The current drafting creates considerable uncertainty as to how the merger control regime will be applied.

Given the numerous uncertainties as to the interpretation of many of the provisions of the new law and the very wide margin of discretion of the Commission, it is concerning that there are criminal sanctions for individuals for infringements of the provisions on “acts restricting competition”, the creation of monopolies, collaboration between businesses and some of the practices relating to unfair competition. The penalties may involve imprisonment for a term not exceeding three years or a fine of up to Ks 15,000,000 (approximately US$15,000).

Although the new law is not yet in force, businesses will be concerned as to the competition risks they may face from investing or carrying out business in Myanmar and the potential criminal sanctions. It is to be hoped that before the law comes into force, greater clarity will be provided around some of the key provisions.

(Freshfields Spotlight on Myanmar , march 2015)

Investment laws re-considered (Myanmar)

According to the Myanmar Time, the government has begun accepting public feedback on a proposed amalgamation of two investment laws that it says will give equal opportunities to both domestic and foreign firms.

The Directorate of Investment and Company Administration launched the public consultation window yesterday and will accept feedback on the draft of Myanmar Investment Law until March 26(read more).

Mining Law Reform in Myanmar

Myanmar Times, 12 may 2014 (original text)
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Private industry is set to benefit from proposed amendments in the mining law which is likely to be approved in the upcoming parliamentary sessions, officials say.

The amendments to the 1994 law passed the Amyotha Hluttaw in March after two years’ delay and now await a vote in the Pyithu Hluttaw, with proponents saying they’re aimed at boosting foreign investment and government revenue in the sector.

U Nay Win Tun, a prominent mining businessperson and chair of Amyotha Hluttaw Mining and Resources Committee, said the government would halve its standard production-sharing portion of 30pc of production to 15pc, while the private firm would increase its share from 70pc to 85pc with the changes.

Both foreign and local firms are able to invest in the sector under the amended law, with maximum different time limits for licences extended depending on the scale of the site.

“The law has been amended to the advantage of all different levels of communities benefiting from mineral resources,” said U Nay Win Tun.

“The mining sector will be the main economic activity in our country when the newly amended law is active.”

He said that a lack of specific knowledge of the sector among parliament members delayed the amendments.

U Nay Win Tun is the owner of Ruby Dragon Mining, which has at least five mining sites in Shan State.

Department of Mining director general U Win Htein said current foreign investment in the sector is primarily from ASEAN members.

“Now other countries are interesting in our mining sector, but [international investors] don’t want the investment if it is not responsible,” he said, pointing to the Letpadaung copper mine as a problematic investment.

The amended law is seen as a key piece of legal framework that could usher in sizable new investment in Myanmar’s natural resources sector, but has been slow to materialise as other laws like the Foreign Investment Law have made their way through Parliament relatively quickly.

The Ministry of Mines has been preparing to amend the 1994 mining law since 2012, initially targeting an early 2013 introduction.

The delays come despite international efforts to assist the Ministry of Mines. Mineral-rich Australia has been particularly active. In May 2013 a 17-member delegation from the ministry, including Minister U Myint Aung, took a two week tour hosted by AusAID to meet with Australian government officials and view mining operations in New South Wales and Queensland.

Foreign firms from countries including the US, the UK and Australia have visited the mining ministry expressing interest in long-term investment, but experts said the current regulatory regime under the 1994 law made it difficult for foreign firms to enter the sector.

“There is a lack of certainty that foreign investors usually want,” Sebastian Pawlita, a partner at Polastri Wint and Partners, a tax and legal advisory firm in Yangon, said of the 1994 law, which he described as “not attractive to investors”, in its current form.

He pointed to the need to approach the ministry for permission when moving from one stage in the mining process to the next, such as from exploration into the production phase.

“It adds to the uncertainty because you are never sure what the reply will be,” he said.

Mr Pawlita added that there needed to be more clarity surrounding the production-sharing contracts, not only to attract mining and exploration companies to Myanmar but also so that those firms could in turn attract investment.

Hluttaw members say they expect to see a number of benefits from a revamped mining law.

Amyotha Hluttaw bill committee member U Aung Kyi Nyunt said the main aims with the amendments are to generate more tax income and provide a process to legalise small-scale and illegal miners.

Investment regime and arbitration in Myanmar

Shaun Lee, " Investment regime and arbitration in Myanmar ", Singapore International Arbitration Blog, 13 march 2013 (online version).