PETALING JAYA: While the proposed new merger regulations in Malaysia is a welcome move, there should be a one-year grace period and awareness programmes for companies to better understand the law, say business groups.
They said businesses must also be made aware of the merger review period to be imposed by the Malaysia Competition Commission (MyCC) once the law comes into effect.
National Chamber of Commerce and Industry Malaysia president Tan Sri Soh Thian Lai said businesses had to consider the review period as it could affect the length of the merger process.
He said this could also affect potential commitments that might be imposed by the regulator to address the likelihood of less competition in the market.
“The merger control law will definitely add to the regulatory burden of companies and uncertainties to the timeline and structure of the merger based on the regulator’s decisions.
“It adds to the administrative burden of businesses as compliance would require companies to go through complex and time-consuming processes and this can be burdensome, particularly for smaller businesses,” he added.
Soh, who is also the Federation of Malaysian Manufacturers president, said merger control laws could deter small businesses from engaging in mergers and acquisitions (M&As).
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“This is especially for those aiming for economies of scale or realising synergies among the parties merging that could ultimately benefit consumers,” he said.
He added that the consumer goods and retail sector might be more affected by the new law, as regulators could be concerned about how the merger would reduce options and lead to higher prices.
Other sectors that could be affected were technology, financial services and healthcare, he said.
“Small businesses will be affected in some way, mainly due to their lack of resources to navigate the regulatory requirements. Compliance can be costly for them as they may need to hire experts to ensure that the merger aligns with regulatory requirements,” he said.
Soh also said the industry generally viewed the proposed law as positive, including from an investment perspective.
“This is because many countries adopt merger control laws that are aligned with international best practices, fostering a transparent and predictable business environment that can attract foreign investments. It provides legal clarity for businesses operating in the country by helping businesses under the regulatory framework and for them to make better informed business decisions,” he said.
Malay Chamber of Commerce Malaysia president Norsyahrin Hamidon backed the idea for a grace period to be given once the law takes effect.
“The grace period should be practical. A year is good. Concurrently, awareness programmes should be carried out within a given time frame to ensure all businesses understand and take the necessary measures to understand the law,” he said.
Norsyahrin added that any law that made things better should be supported.
“When bigger and unlisted companies merge, monopolies or oligopolies can happen, and MyCC has to investigate and take action,” he said.
Associated Chinese Chambers of Commerce and Industry of Malaysia president Tan Sri Low Kian Chuan said a lengthy assessment period could disrupt the proposed merger or acquisition.
“This is due to rapid changes in market conditions that could render the proposed M&A (susceptible) to potential corporate manoeuvres by other interested parties.
“We propose the assessment period be shortened to less than 100 calendar days,” he said.
On Tuesday, MyCC told The Star that a law to regulate mergers of a certain size was targeted for tabling in Parliament during its sitting in June.
MyCC chief executive officer Iskandar Ismail said this would be done via amendments to the Competition Act 2010.
With the proposed amendment, companies intending to merge will have to go through MyCC. The value of the merger must also cross a certain threshold that could amount to hundreds of millions of ringgit.