KUALA LUMPUR: The government has identified possible anti-competitive practices among online travel agencies (OTAs), including price parity clauses, following a market review by the Malaysia Competition Commission (MyCC).
Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said the review of the digital economy ecosystem under the Competition Act 2010 revealed tendencies of business practices that may be contrary to the law.
He said such practices, particularly price parity clauses, restrict hotels from offering preferential rates through other platforms, forcing them to comply with OTA-imposed terms, including high commission fees.
“As a result, hotels are compelled to comply with the OTAs’ terms, including high commission fees.
“To offset these costs, hotels often increase room rates, limiting consumers’ access to better deals and leading to higher prices,” he said at a press conference on Tuesday (Feb 10) after the launch of the market review.
Armizan said the findings were part of a market review of Malaysia’s digital economy ecosystem, which includes 18 recommendations to strengthen regulation, enforcement and monitoring, including the establishment of a Central Digital Economy Task Force to identify regulatory gaps.
The market review will be presented to the Cabinet in the near future, he said.
He added that similar practices have already been examined by competition authorities in other jurisdictions, including Hong Kong, Japan and China, underscoring the need for closer regulatory attention in Malaysia.
He said closer cooperation is needed among MyCC, the Tourism, Arts and Culture Ministry (Motac) and the Malaysian Communications and Multimedia Commission (MCMC) to enhance enforcement effectiveness in addressing such practices, especially in accessing industry data and engaging with stakeholders.
Meanwhile, the review also found that improvements in digital taxation methods must be implemented to ensure that digital platforms contribute fairly to national development, he said.
“Data on the Service Tax on Digital Services (SToDS) shows an increase to RM1.62bil in 2024, compared with RM802mil in 2021.
“However, the study estimates that there is a significant potential annual tax gap due to differences in tax rates between digital platforms and local businesses,” he said.
The review also examined issues related to privacy and data protection, which found that certain practices by digital platforms have the potential to undermine fair competition, affecting the cost of living and the competitiveness of local businesses, particularly micro, small and medium enterprises (MSMEs).
“These include high commission structures, restrictive contractual terms, limited transparency in pricing mechanisms and control over user data,” he said.
