The Introduction Of Merger Control Regime And The Impact On Businesses

• Published date: 20 May 2022
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Antitrust, EU Competition
• Law Firm: Azmi & Associates
• Author: Ms Asiah Siddiqah Abdurrahman

The Merger Control Regime - The Missing Pillar?

Recently, the Malaysia Competition Commission ("MyCC") released a Consultation Paper on the Proposed Amendments to the Competition Act 2010 ("Act 712") inviting the public to share their feedbacks by 27 May 2022.¹

Among the main focus of the proposed amendments includes the insertion of merger control regime provisions into the Act 712. In ASEAN, Malaysia is the only country that does not have a merger control regime yet.

Generally, competition law has 3 main pillars; i) prohibition against anti-competitive agreements; ii) prohibition against an abuse of dominant position; iii) prohibition against anti-competitive mergers. Currently, the Act 712 only regulates anti-competitive agreements and abuse of dominant position without the powers to regulate mergers - which is viewed as the lacuna and the missing pillar in the competition law in Malaysia.

Despite the contribution of mergers to a functioning economy, unregulated mergers may reduce the number of competitors in a market, strengthen the position of one firm or increase barriers to entry to new entrants. In the long run, mergers may create anti-competitive effects that are detrimental to the consumers.²

Cartels are often viewed as the supreme evils in competition law. Some enterprises would utilise mergers to avoid being termed cartels. In essence, MyCC views the merger control regime as a preventive measure that would go hand in hand with the current enforcement measures that regulate post-merger conducts³.

The Proposed Merger Control Regime Framework⁴

Under the proposed amendments, the merger control regime would be implemented as follows:

1. Prohibitions
   Any Merger or anticipated merger that may result in a substantial lessening of competition ("SLC") within any market for goods or services.
2. Jurisdiction
   Any merger or anticipated mergers transacted within and outside of Malaysia that has an effect on competition in any market in Malaysia.
3. Notification Regime - Hybrid Notification
   
   • Mandatory: a pre-notification is mandatory for any anticipated merger that exceeds the threshold (which will be prescribed by an order published in the Gazette after the amendments to Act 712 have been passed).
   • Voluntary: any anticipated merger or merger that does not exceed the notification threshold can be voluntarily notified to the MyCC before or after it has been consummated.
4. Review Period
   
   • Mandatory Notification: MyCC will review the anticipated merger within 120...