In a bid to fortify market competitiveness and deter the formation of cartels, Malaysia is considering the introduction of a merger control law, with hopes to table it in Parliament by June, according to a recent report by The Star.
Iskandar Ismail, Chief Executive of the Malaysia Competition Commission (MyCC), revealed in an interview that Malaysia is the only country in Southeast Asia lacking a merger control law. The proposed legislation, about 80% complete, is expected to undergo final adjustments for presentation in the Dewan Rakyat.
Under this prospective law, companies planning mergers would be required to seek approval from MyCC. Iskandar highlighted that the goal is to analyze and ensure that mergers do not lead to reduced competition in the market, stemming from the formation of cartels or monopolies.
The proposed legislation would act preventatively, complementing the existing reactive approaches outlined in the Competition Act, specifically addressing cartels and abusive monopolies. Iskandar emphasized that this merger control law would serve as the third pillar of competition laws in Malaysia.
While the value threshold for mergers is yet to be defined, Iskandar suggested it could reach into the hundreds of millions of ringgit. The legislation, aiming to prevent undue concentration in the market, would subject a majority of business industries to MyCC scrutiny, excluding sectors with their regulators, such as the telecommunications, water, and aviation sectors.
Iskandar clarified that the merger control law would not overlap with the Malaysian Code on Take-Overs & Mergers 2010, which governs takeover processes for public listed companies. MyCC is working with the Securities Commission to harmonize the application of both the merger control law and take-over codes.
The proposed amendments would also enhance MyCC’s investigation and enforcement powers. Iskandar outlined three potential decisions for merger applications: approvals without conditions, approvals with conditions, and rejections based on findings that the merger would substantially lessen competition in the relevant market.
Attempts to amend the Competition Act have been ongoing since 2019, with delays attributed to the COVID-19 outbreak and changes in the government. The new legislation seeks to proactively address competition concerns and further strengthen Malaysia’s regulatory framework.