PETALING JAYA: Corporate Malaysia should implement holistic merger control laws to prevent rising unhealthy monopolistic practices as this will further enhance investor confidence, which are hallmarks towards a vibrant economy, experts say.
Currently, countries like Singapore, Indonesia, Vietnam, Thailand, and the Philippines, have merger control regimes, and said Malaysia could fall out of investors’ radar if such laws are not implemented which could have a negative spillover on its economy.
A transparent merger control regime with proper safeguards and a clear framework need to be implemented to ensure the efficacy of such laws would attract foreign investment and safeguard consumers’ interest, they said.
Currently, Malaysia does not have a merger control regime for merger and acquisition (M&A) transactions, but only sector specific merger laws in the aviation and communication and multimedia sectors.Early this year, the Malaysia Competition Commission (MyCC) announced that merger control laws would be introduced through amendments to the Competition Act 2010 which are to be tabled in Parliament this year although the details of the merger control laws remain to be confirmed.
PwC Malaysia deals partner and corporate finance leader Gregory BournetPwC Malaysia deals partner and corporate finance leader Gregory Bournet told StarBiz Malaysia can consider implementing merger control laws, particularly when compared to the existing frameworks in other South-East Asian countries.
He said countries like Singapore, Indonesia, Vietnam, Thailand and the Philippines already have merger control systems in place, each with varying degrees of mandatory notifications and substantive analysis.For example, he said Singapore operates a voluntary merger notification regime, while Indonesia and Vietnam have more structured and mandatory post-merger notification systems.
Given Malaysia’s aspirations to further develop its economy, he said implementing merger control laws would align the country with regional and global best practices.
“From the consumer perspective, Malaysia’s lack of specific merger control laws leaves its market potentially vulnerable to monopolistic behaviour and market dominance, which could harm consumer welfare, reduce competition, and stifle innovation.
“By not regulating mergers, Malaysia risks creating an uneven playing field where large corporations could consolidate power, limiting choices for consumers and potentially driving up prices. This could discourage small and medium enterprises from competing, which are crucial for Malaysia’s economic growth and job creation.”
From the investor perspective, Bournet said in the long term, robust merger control laws can enhance investor confidence in the overall market by ensuring that companies compete fairly and that anti-competitive practices are curbed.
He said this can lead to a healthier economic environment, which is beneficial for share prices across the market.
“If investors perceive that the regulatory framework prevents harmful monopolistic behaviour, it can lead to more stable and sustainable share price growth.
“Overall, having such a legislation would foster a business environment where competition thrives, benefiting both consumers and smaller businesses, which are essential for sustaining innovation and economic resilience,” he said.
Wei Lih Ho & Co managing partner Ho Wei Lih
Wei Lih Ho & Co managing partner Ho Wei Lih said merger control regime is important to protect consumer interests and maintain healthy competition in the market.
Separately, experts agree the MyCC is the appropriate body to oversee anti-competitive mergers.
Ho said MyCC should be given the powers to enforce the merger control laws as it is best placed to evaluate whether a merger has substantial anti-competitive effects, since it would be exposed to various merger control filings. The Competition Appeal tribunal should have jurisdiction to review the decisions made by MyCC, she noted.
“Based on Malaysia’s current economic development and the administrative capacity of MyCC, a simplistic hybrid merger control regime is sufficient, similar to what has been adopted in some of the other countries.
“The hybrid regime will enable MyCC to focus its resources on mergers that will trigger the mandatory prescribed threshold and will concurrently allow greater flexibility to companies undertaking M&As in deciding when to notify the authority.
“The parties to a merger and acquisition should conduct a self-assessment to determine whether a proposed transaction would meet the prescribed threshold.
“It is likely that the introduction of merger control laws will lead to a longer deal timeline to complete transactions.
“Sufficient time and costs would thus have to be allocated,” Ho said.
Concurring with Ho, Bournet said empowering MyCC to oversee anti-competitive mergers would be a practical and efficient approach.
“Most countries in South-East Asia have designated competition authorities responsible for enforcing merger control laws.
“These regulatory bodies handle both general competition enforcement and merger review, ensuring consistency in the application of competition laws.”
He said creating a separate body to handle mergers could result in bureaucratic delays, jurisdictional overlaps, and inefficiencies, as seen in countries that lack coordination between different agencies.
