KUALA LUMPUR, Jan 4 — A new law to regulate the size of companies in Malaysia that merge so as to ensure market competitiveness remains alive could be tabled in Parliament this year, The Star reported today.
Malaysia Competition Commission (MyCC) chief executive Iskandar Ismail told the daily in an interview that Malaysia is the only country in South-east Asia not to have a merger control law and hopes it can be presented in the Dewan Rakyat by June.
“Hopefully we can table it by June. It is currently about 80 per cent complete.
“There are some areas that need tweaking so that everybody is happy,” he was quoted as saying.
He added that the inclusion of this merger control regime would be carried out through amendments to the Competition Act 2010.
Under this new law, any companies intending to merge will have to go through MyCC.
“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,” Iskandar was quoted as saying.
He said the value of the mergers could be based on a certain threshold that has yet to be set, adding that it could amount into hundreds of millions of ringgit.
Iskandar said the overall objective of the merger control law is to ensure that there is no reduced competition in the market.
Reduced 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 MyCC’s legislation, Iskandar said the introduction of the merger control law would make up the third pillar of competition laws in the country.
He said the existing two pillars in the Competition Act — the prohibition of cartels and the prohibition of abusive monopolies or dominant players — are reactive approaches.
“For example, the chicken feed cartel that took place between January 2020 and June 2022. We acted based on complaints.
“But here (the merger control legislation) is a preventative method,” he was quoted as saying.
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.
The five companies were subsequently fined a total of RM415 million last month.
Among others, Iskandar said the amendment would also focus on enhancing MyCC’s investigation and enforcement powers.
He said 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.
Iskandar also said the merger control law will not overlap with the Malaysian Code on Take-Overs & Mergers 2010 that governs takeover 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 was quoted as saying.
Iskandar listed three types of decisions that could be made during merger applications: approvals without any conditions as the merger would not affect the market; approval with conditions; and rejection due to findings that the merger will cause substantial lessening of competition in the relevant market.
He also said that various attempts to amend the Competition Act have been made since 2019, but it was delayed due to the Covid-19 outbreak and changes to the government.
