| 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:
1. Predatory Pricing
Hypothetical Case Study:
Sinar Mart, the largest supermarket chain in a district, began selling essential groceries below cost after a smaller independent grocer opened nearby. Within six months, the smaller grocer could no longer compete and closed down.
Once it was the only supermarket left in the area, Sinar Mart raised its prices well above what it had charged before the smaller grocer entered the market.
Investigation found that Sinar Mart’s below-cost pricing was not a temporary promotion but a deliberate strategy to remove the competitor, followed by a sustained price increase once competition was eliminated.
Predatory pricing by a dominant firm is prohibited under Section 21 of the Competition Act.
2. Exclusionary Dealings
Hypothetical Case Study:
Kilat Distribution Sdn Bhd, the dominant distributor of bottled beverages in Brunei Darussalam, required retailers who wished to carry its products to agree not to stock any beverages from rival distributors.
Retailers who refused this condition found their supply orders delayed or reduced, while retailers who complied received priority delivery and better terms.
Smaller distributors trying to enter the market found it difficult to secure retail shelf space, as most retailers were bound by Kilat’s condition.
When investigated, Kilat Distribution stated the practice was intended to maintain product exclusivity and brand consistency. This did not justify a condition that had the effect of shutting rival distributors out of the retail market.
Exclusionary dealing by a dominant firm is prohibited under Section 21 of the Competition Act.
3. Refusal to Supply / Restricting Supply
Teguh Cement Sdn Bhd was the only local manufacturer of a particular grade of cement used in commercial construction. A construction supplier that had previously purchased from Teguh began also purchasing a small volume from a newly established competitor.
Shortly after, Teguh Cement stopped supplying the construction supplier altogether, citing “stock prioritisation,” even though its production levels had not changed.
With no alternative local source available, the construction supplier faced project delays and was forced to import cement at a significantly higher cost.
Investigation found that Teguh Cement’s refusal to supply was intended to penalise the construction supplier for dealing with a competitor, restricting supply in the market and enabling Teguh to protect its position and pricing power.
Refusal to supply by a dominant firm is prohibited under Section 21 of the Competition Act.