Written by Richard Wee, Fatin Ismail and Farra Natalea
Introduction
The Malaysia Competition Commission (”MyCC”) presented a summary of its proposed modifications to the Competition Act 2010 (”the Competition Act”) seeking public input dated 25 April 2022. MyCC suggests, amongst others, revising 25 existing policies of the Competition Act as well as the introduction of 40 new provisions, 20 of which will develop a merger control regime of general applicability in the Malaysian legal system, as stated mostly in Consultation Document.
These suggested revisions focus on improving not only MyCC’s investigation and compliance capabilities, but to create a Malaysian merger control framework and expanding its authority within the Competition Act.
The proposed revisions, according to MyCC, were primarily created to enable Malaysian competition law “inconsistent with global finest practise standard (sic)” thus allowing MyCC to “successfully fulfil its statutory responsibilities” as a competition law enforcer. Malaysia is the only ASEAN nation which does not have a merger control method, hence one must be implemented.
MyCC, is the only Southeast Asian competition commission which does not have the ability to control mergers and acquisitions. As a result, the most important recommendation is the establishment of said merger control regime.
Merger control regime
MyCC recently suggested a merger control system that would prevent mergers or expected mergers in whatsoever Malaysian market involving goods and/or services that might cause a “significant reduction of competitiveness” (“SLC”). The SLC criterion has been used in different countries, along with the EU, to analyse mergers for competition as well as antitrust purposes.
Following MyCC’s newly proposed merger control regime, firms will also be required to inform MyCC of every projected merger which, if completed, surpasses its stipulated threshold. Businesses may opt to submit a voluntary notification for business assurance for mergers that do not surpass the Companies Act level.
These Proposals envision MyCC having that authority to make a clearance ruling allowing the merger or anticipated merger should continue once its merger evaluation is complete. Conversely, MyCC can order that the planned merger be put on hold instantly and levy a financial fine of up to 10% of such a company’s global revenue for a period of the violation. A merger control system will ban merges including projected mergers (if completed) which may lead to a significant decrease in competitiveness (“SLC”) inside any industry for products or services (“the s 10A prohibition”).
Rather than being strictly voluntary, the merger control regime will be a mixed one that makes it imperative to inform the MyCC of proposed mergers that surpass the MyCC’s mandated threshold and permits for voluntary notification of expected mergers or mergers that would not surpass the appropriate threshold to MyCC per ss 10H and 10I, accordingly, either during the mergers or projected mergers are completed.
This implies that parties to almost any prospective mergers which are already informed to the MyCC are banned from carrying out all or parts of the merger before the MyCC’s approval under s 10G. If this condition is not met, the merger will indeed be nullified. Refusal to release mergers or planned mergers constitutes a merger violation, that carries pecuniary fines of up to 10% of the transaction value.
Conclusion
The suggested amendments to the Competition Act is just a small part of MyCC’s larger set of changes. Because the Competition Act affects every enterprise in Malaysia, the suggested adjustments must be considered by all.
As such, MyCC welcomes any interested stakeholders or members of the public to make a written submission in response to the proposed amendments to Act 712. Those interested are invited to do so by 27 May 2022 via Email to the Amendment Team of MyCC at amendment@mycc.gov.my or The Malaysia Productivity Corporation’s Unified Public Consultation (UPC) portal.
For more detailed information on the salient points of the proposed amendments to the Competition Act, please click here.
Published on 24 May 2022
Photo by Héctor J. Rivas on Unsplash