Laws are important to curb anti-competitive mergers

The Malaysia Competition Commission is stymied by the absence of merger control measures.

MALAYSIA remains one of the few countries without merger control laws, and there is no assurance that this will change soon.

The government must prioritise this issue, as the country cannot afford to be held back by the absence of a basic law.

Merger control refers to legislation that prohibits anti-competitive mergers. In the United States, it is called antitrust legislation and is widely applied in mergers and acquisitions.

The absence of merger control in Malaysia means that companies can merge freely to achieve dominant market positions.

The Malaysia Competition Commission (MyCC), the country’s competition regulator, is stymied by the absence of merger control measures. It can only act after the fact.

MyCC can only take action after a merger has occurred, which involves receiving complaints, conducting lengthy investigations that may take years, and even then its decision can be challenged in court.

Under merger control, a deal must first get the green light from the regulator, who can issue three determinations: approval without conditions, approval with specific conditions, or a complete rejection of the deal.

Part of the delay in implementing merger control in Malaysia can be attributed to recent changes in governments, delays caused by Covid-19 and the passing of the minister in charge of the matter.

Once merger control laws are in place in Malaysia, MyCC will have its work cut out.

The decision-making process for applications is complex, involving scenario analysis to predict how the merged entity might behave and whether it could gain unfair advantages in the market.

MyCC will be closely scrutinised as its decisions have to align with those of competition regulators in markets with established merger control legislation.

This will put Malaysia on par with advanced markets where anti-competitive practices are kept in check.