If an anticipated merger or concentration is likely to have the effects of SLC on a market, the parties may, at any time before MyCC takes its decision on the proposed merger or concentration, offer MyCC an undertaking under Article 43H to remedy, mitigate or prevent the SLC caused by the merger or anticipated merger, to enable MyCC to adopt a decision approving the merger or anticipated merger. However, one of the shortcomings of CA 2010 is that it does not have a merger control mechanism to govern and regulate mergers and acquisitions in Malaysia. In the long term, unregulated or proposed mergers can have anti-competitive effects that adversely affect consumers and market growth. Therefore, the merger control framework proposed by MyCC aims to fill the gaps in the Malaysian competition law landscape. As regards the Malaysian Air Transport Commission, the Guidelines provide that, even if the thresholds are not met, it still has the power to investigate a proposed concentration if there is reason to believe that this has led or is likely to result in a substantial lessening of competition in an air services market. Similarly, under the Communications and Multimedia Act 1998, the Malaysian Communications and Multimedia Commission encourages merging parties not to file a notification until the merger has been publicly announced (or is generally made public) and they intend in good faith to proceed with the merger. There is no need to conclude binding agreements. The proposed merger control regime will prohibit planned mergers or mergers that could result in a significant lessening of competition in any market for goods or services in Malaysia. A similar SLC criterion was introduced in the Malaysian Aviation Commission Act 2015, which is currently the only legislation in Malaysia specifically containing a merger control system. Under the Communications and Multimedia Act 1998, the Malaysian Communications and Multimedia Commission may, following the investigation, issue a notice of no objection or a notice of objection to the merger.
In addition, `control` shall be acquired by any person or other undertaking when it becomes the owner of the rights or contracts referred to in paragraph 2 or is entitled to use the other means referred to in paragraph 2 or, although it is not the owner or entitled to use those other means, acquires the power to exercise the rights deriving therefrom. This disclaimer discusses MyCC`s proposed amendments to CA 2010 that would create the legal framework for the proposed merger control system. Competition law assumes that companies traditionally seek dominance in order to gain better bargaining power. A dominant position is not prohibited per se, but if a company abused that position, such abuse would become illegal under the law. Even if an undertaking does not hold a dominant position, it can still act in concert or cooperate with its competitors to, inter alia, fix prices, set contractual terms or form illegal cartels, all of which are considered anti-competitive practices. Current competition law aims to prevent such behaviour through the provisions of Chapter 1 – Anti-competitive agreements and Chapter 2 – Abuse of dominant position. In general, competition law is based on 3 main pillars; (i) prohibition of anti-competitive agreements; (ii) the prohibition of abuse of a dominant position; (iii) prohibition of anti-competitive mergers. Currently, Act 712 only regulates anti-competitive agreements and abuses of dominant position without being able to regulate mergers – which is considered a gap and a missing pillar in Malaysia`s competition law. If the MyCC has determined that an anticipated merger or merger, if carried out, does not violate the prohibition of § 10A, the MyCC may issue an approval decision in accordance with § 43F. If the proposed changes to the merger regime are approved by Parliament, companies will have to consider, inter alia, the possibility of MyCC approving the proposed concentration, the review period and any SLC management obligations that may be imposed on MyCC.
Period for the examination of notifications: As regards the review period for the assessment of notified merger proposals, MyCC would have 120 working days9 from the date of receipt of the full notification to decide on the proposed concentration. This deadline would only apply to mandatory notifications and not to voluntary mergers or anticipated mergers. If MyCC has not taken a decision (as required) despite notification of the proposed concentration, the anticipated concentration will be deemed to have been approved after the expiry of the 120-day review period and the parties will be able to implement the concentration. However, MyCC may also stop or suspend the merger review if: If the merger notification has been formally filed, the authority must assess the applicant within 5 working days and inform the applicant of a valid and complete application. Proposal for a new merger control regime At present, the Competition Act contains only prohibitions against anti-competitive agreements and abuses of dominant positions. In Malaysia, merger control regimes exist only in relation to the aviation and communications sector under the Malaysian Aviation Commission Act 2015 and the Communications and Multimedia Act of .dem of 1998. MyCC now proposes to introduce a merger control regime under the Competition Act that would prohibit any proposed merger or merger that could result in a significant lessening of competition in a market for goods or services.2 The merger control system prohibits mergers or anticipated mergers (if realized) inside or outside Malaysia. This results in a significant restriction of competition in a market of 10A ban on goods or services. Merging companies may offer undertakings to MyCC to encourage MyCC to issue clearance decisions concluding that the proposed merger or merger does not contravene the Competition Act.
These are commitments to remedy, mitigate or prevent the significant restriction of competition caused by the concentration or proposed concentration. Commitments may be accepted by MyCC at any time before MyCC takes a decision on the notified concentration or proposed concentration or before the conclusion of any investigation conducted by MyCC. The following types of mergers and proposed concentrations should be excluded from the merger control regime: – will lead to the placing on the market of SLC, but the concentration or proposed concentration has been cleared as a result of the obligation to deal with SLC. Section 10D allows companies to exempt their liability from the prohibition in section 10A if the economic efficiency of the proposed merger outweighs the adverse effects of the SLC resulting from the proposed merger or concentration (“Section 10D relief”). The onus is on the company receiving Section 10D relief to demonstrate economic efficiencies. The proposed merger regime provides for a hybrid notification system covering both mandatory and voluntary notification of proposed concentrations. Under this system, mergers proposed above the prescribed threshold must be notified to MyCC (i.e. 3, and in the case of mergers or anticipated mergers that do not exceed the prescribed threshold, MyCC may notify MyCC before or after the completion of the merger or early merger (i.e. voluntary notification).4 The notification threshold is set by MyCC by means of a decision published in the Official Journal5 after the adoption of the amendments to the Competition Act. MyCC also seeks to require companies not to proceed with a proposed merger for which mandatory notification was made before it was approved by MyCC.6 The Malaysian Aviation Commission Act 2015 provides that “control” over a company is deemed to exist where a dominant influence is exercised over the company`s activities by virtue of a right, by contract or other means, or under any right, contract or other means.
According to the reports, it is likely that companies intending to merge will have to submit a pre-filing notice to MyCC.