Competition in Digital Economy: Fate of Consumer Welfare in Malaysia

Angayar Kanni Ramaiah
Universiti Teknologi MARA


The digital economy relies on digital computing technologies and online platforms and its consumer market is based on the internet and the World Wide Web. Its rapid technological progress is very innovative and disruptive. Digital market revolutionized and affected the functioning of the established, often regulated business pattern which includes the market competition and consumer welfare both positively and negatively. Digitalization has transformed the manners consumers purchase the goods or services (i.e. the purchasing pattern) and impacted the choice, safety standard, and price determination methods. The platform-based business model involves multisided markets, network effects, and economies of scale, and rather complex and different from the traditional brick and mortar pattern. It has granted beneficial scientific breakthrough for consumers but the way consumers make their choices (consumer market behaviour) on the online platform, related algorithmic pricing, collusion, data gathering manner, and the anti-competitive merger has caused various concerns among the competition regulators concerning the related harm on consumer welfare. Notably, the conventional consumer protection law is unable to address these issues because it is built upon different underlying theories of harm. The objective of the paper is to study the effect of the digital market on consumer welfare generally and specifically within the scope Competition Act 2010. The study examines based on some recent experience and case study involving digital firm, mainly Uber and Grab to discuss how certain characteristics of the digital economy impacts the competition and consequently the consumer welfare in Malaysia.

Keywords: Competition law, Dominance, Digital economy, Consumer welfare