Merger Controls in Malaysia: Are We Closer to Implementation?

There has been significant discussion surrounding the proposed amendments to Malaysia’s Competition Act 2010 (the “Act”) to introduce a merger control regime. But what exactly are merger controls, and will Malaysia move forward with these laws anytime soon? Given the country’s current political landscape, economic challenges, and the lingering effects of the COVID-19 pandemic, will these factors derail Malaysia’s timeline for introducing merger control legislation?

Understanding Competition Laws in Malaysia

Competition laws aim to promote economic growth by preserving market competition. A competitive environment fosters efficiency, innovation, and entrepreneurship, leading to better prices, higher quality products, and enhanced consumer welfare.

In Malaysia, the Competition Act 2010 currently addresses two primary anti-competitive activities:

1. Anti-competitive agreements, such as price fixing, cartels, and bid rigging.
2. Abuse of dominant position, including practices like predatory pricing, price discrimination, bundling, and tying.

The Malaysia Competition Commission (MyCC) enforces these provisions. Notable enforcement actions include the RM10 million fines imposed on Malaysia Airlines and AirAsia for their 2011 market-sharing agreement,¹ and the RM86.8 million fine proposed against GrabCar for abuse of dominance.²

Under the current regime, holding a dominant position is not unlawful. However, abusing that dominance or colluding with competitors to fix prices, terms, or form cartels is prohibited under Chapter 1 (Anti-Competitive Agreements) and Chapter 2 (Abuse of Dominant Position) of the Act.

The Case for Merger Controls in Malaysia

Many businesses seek mergers or acquisitions to gain market dominance. While such consolidation can create efficiencies, it can also harm competition. Without merger control laws, Malaysia lacks the tools to scrutinize mergers that might reduce competition or harm consumer interests.

Currently, Malaysia stands out as the only Southeast Asian country without a comprehensive merger control regime under its competition law framework. Although some sector-specific merger rules apply³ (e.g., in banking and telecommunications), MyCC has no general mandate to regulate mergers and acquisitions (M&As) that could lessen competition.

What We Know About the Proposed Merger Control Regime

According to reports,⁴ MyCC is preparing to introduce merger control provisions to the Act. Once implemented, MyCC would be empowered to:

• Approve mergers;
• Approve with conditions; or
• Reject mergers that substantially lessen competition.

Experience from other jurisdictions shows that while most mergers are approved, certain mergers undergo detailed scrutiny to assess their potential impact on competition.

Pre-Merger Notification Likely

It is expected that Malaysia will adopt a pre-merger notification regime, requiring companies to notify MyCC of mergers that meet certain thresholds. However, MyCC has yet to specify:

• Notification thresholds;
• Review criteria; or
• Assessment processes.

In line with international practices, Malaysia may impose thresholds based on transaction value, revenue, or market share of the merging entities.

How Other Jurisdictions Handle Merger Notifications

United Kingdom

The UK’s Competition and Markets Authority (CMA) operates a voluntary notification regime. It may review mergers if:

• The target’s UK turnover exceeds £70 million; or
• The merger results in a 25% share (or more) in the supply/purchase of goods or services.⁵

Singapore

The Competition and Consumer Commission of Singapore (CCCS) has a voluntary merger notification system. CCCS typically investigates mergers if:

• The merged entity has a 40% market share or higher; or
• It holds 20-40% market share and the largest post-merger competitor controls 70% or more of the market.
• Turnover thresholds also apply (S$5 million in Singapore or S$50 million globally).⁶

Philippines

The Philippine Competition Commission (PCC) enforces a mandatory merger notification regime:

• Mergers are reportable if one party’s annual revenue exceeds PHP 5.6 billion (~USD 110 million); or
• If the transaction exceeds PHP 2.2 billion (~USD 44 million).⁷

Malaysia may draw from these models, balancing regulatory oversight with business practicality.

Challenges Facing Malaysia’s Merger Control Implementation

Although MyCC has repeatedly indicated that merger control laws are forthcoming, Malaysia’s political transitions and the economic impact of COVID-19 have likely delayed legislative progress. Despite these hurdles, there is growing pressure to align with regional peers and implement merger controls. It is unlikely that Malaysia will want to remain the only Southeast Asian country without comprehensive merger regulation.

Be Prepared for Merger Control in Malaysia

Businesses considering mergers, acquisitions, or joint ventures should prepare for the introduction of merger control rules:

• Pre-merger planning and due diligence will be critical to ensure compliance.
• Mergers concluded prior to the new law’s implementation may not be affected retroactively. However, MyCC may still investigate these entities for post-merger anti-competitive conduct or abuse of dominance.

Global Competition Law Developments Amid COVID-19

Globally, competition regulators have adapted their enforcement strategies in response to the pandemic. While some jurisdictions have temporarily relaxed rules, enforcement agencies remain vigilant against cartels, price fixing, and market manipulation:

• United States: Antitrust laws remain fully enforced, with no COVID-19 exceptions.
• United Kingdom: Temporary exemptions for supermarkets have been introduced to address supply chain disruptions.
• Turkey: The competition authority warns against artificial price increases, particularly in essential goods.
• Indonesia: Exemptions apply for government-appointed businesses in disaster response, but strict action is taken against price hoarding and cartels.
• New Zealand: Relaxed competition rules for businesses supplying essential goods and services during the crisis.

Conclusion: Merger Controls on the Horizon

The proposed amendments to Malaysia’s Competition Act 2010, including a merger control regime, are an inevitable step toward modernizing Malaysia’s competition framework. While delays are understandable given current circumstances, businesses should be proactive:

• Monitor MyCC announcements;
• Seek legal counsel on potential merger control obligations;
• Review current and future M&A transactions for compliance risks.

Malaysia’s entry into the merger control landscape will bring it in line with international best practices, ensuring a more competitive, transparent, and consumer-friendly economy.