Beyond high time for change: Malaysia is the only South-East Asian country without merger control laws, says Iskandar. — AZLINA ABDULLAH/The Star
KUALA LUMPUR: A law overseeing any potential mergers is set to be introduced later this year.
According to the Malaysia Competition Commission (MyCC), the merger control legislation – regulating mergers of a certain size – is targeted for tabling during the Parliament sitting in June.
“Hopefully we can table it by June. It is currently about 80% complete.
“There are (still) some areas that need tweaking so that everybody is happy,” its chief executive officer Iskandar Ismail told The Star in an interview.
The inclusion of this merger control regime would be done through amendments to the Competition Act 2010, he pointed out.
Under this merger control law, any companies intending to merge will have to go through MyCC.
The value of the mergers must also cross a certain threshold, Iskandar said, adding that it could amount into the hundreds of millions.
Iskandar said currently, Malaysia is the only country in South-East Asia that does not have the merger control laws.
“We will analyse the proposed merger once they submit their application, in which they need to explain the reasons behind the merger and its impact on the relevant markets.
“We may also approve it without conditions or reject it altogether.
“It will impact all enterprises as long as it crosses the threshold,” he said.
Iskandar added that three types of decisions could be handed out during merger applications.
They are approvals without any conditions, as the merger would not affect the market; approval with conditions; and being rejected due to findings that the merger will cause substantial lessening of competition in the relevant market.
He pointed out that various engagement exercises had been carried out to amend the Competition Act since 2019 but it was delayed due to the Covid-19 outbreak and political changes.
He said the overall objective of the merger control law is to ensure that there is no lessening of competition in the market.
The lessening of competition could be due to the formation of cartels or monopolies that would cause unnecessary concentration in the market, he added.
Describing it as the missing piece from the commission’s legislation, Iskandar said the introduction of the merger control regime would make up the third pillar of competition laws in the country.
The existing two pillars in the Competition Act – the prohibition of cartels and the prohibition of abusive monopolies or dominant players – are reactive approaches, he said.
“For example, the chicken feed cartel that took place between January 2020 and June 2022. We acted based on complaints.
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“But here (the merger control legislation) is a preventative method,” he said.
He was referring to the case of five companies, which MyCC found to have infringed the Competition Act 2010 by forming a cartel to fix the price of chicken feed.
They had been fined a total of RM415mil, the commission announced last month.
Iskandar said the amendment would also focus on enhancing MyCC’s investigation and enforcement powers.
A majority of the business industry would be subjected to this merger control, except for the telecommunications and multimedia sector, water sector, and the aviation sectors, among others, which have their own regulators such as the Malaysian Multimedia and Competition Commission, National Water Commission and the Malaysian Aviation Commission, he added.
Iskandar said the merger control law would also not clash with the Malaysian Code on Take-Overs & Mergers 2010 that governs take-over processes of public listed companies.
He explained that the latter intended to protect minority shareholders.
“In fact, we are working with the Securities Commission to harmonise the application of the merger control law and take-over codes to ensure smooth implementation,” he said.
