According to the Malaysian Competition Commission (MyCC), the third regulator to oversee M&A exercises, it would not take more than 40 days to review and approve an application but the process may stretch for another 80 days if more scrutiny is required.
M&As are time-sensitive and industry players fear that the additional layer of approval under the proposed amendment to the Competition Act 2010 could cause delays.
As entrepreneur Teong Teck Lean told FMT Business, timing is crucial in such exercises. “For instance, listed companies also need to seek the approval of shareholders for an M&A,” he said.
The CEO of logistics company GD Express Sdn Bhd also pointed out that businesses that are merging would need to integrate their digital platforms.
“These platforms have a significant impact on consumers and businesses given their wide reach and conglomerate effect,” he said. “Ideally the additional process should not take more than a month.”
At the closing of the third MyCC Competition Law Conference 2022 last week, domestic trade and consumer affairs ministry secretary-general Azman Mohd Yusof announced that amendments to the Competition Act are likely to be tabled in parliament near the end of the year.
Apart from MyCC, companies involved in an M&A must also seek the green light from the Securities Commission (SC) and Bursa Malaysia Securities Bhd.
SC corporate finance and investments executive director Zain Azhari Mazlan told FMT Business that while the SC, which is the secondary regulator, deals with the capital market, the role of MyCC, the primary regulator, is to protect the consumers.
“They (companies involved in M&A) will need to clear with the primary regulator first before coming to us. However, we will work together with MyCC,” he said during the conference.
Concerns in the corporate world is not lost on MyCC. Its CEO, Iskandar Ismail, told FMT Business that more than 50 local and foreign parties had already stressed the need for clear rules, consistency and transparency and that the rules must be synchronised with those of other regulators.
He explained that the processing of applications for M&A would be divided into two phases – the first phase taking not more than 40 working days and the second stretching for another 80 days.
“The merger application will be approved in phase one if there is no substantial lessening of competition (SLC) in the market,” Iskandar said.
“But if it is found that it will lead to an SLC, the process moves into phase two where a more thorough scrutiny is conducted. This could take an additional 80 working days.”
After that, the application can be approved without condition, approved with conditions or rejected.
Iskandar pointed out that problems arise when a merger causes market concentration or distortion, leading to fewer competitors or worse, none at all. “When that happens, consumers will be left with fewer choices and little competitive pricing, leaving them at the mercy of a monopoly,” he said.
Group investment banking and Islamic banking advisor at Kenanga Investment Bank Tan Wei Han advised companies planning to go into an M&A to actively engage with the relevant regulators early to ensure that the targeted timeline is met.
“A coordinated engagement can help to shorten the time to process applications,” he said.
Nonetheless, he pointed out, history has shown that Malaysian regulators can be accommodative. For instance, he said, the SC had given adequate time for Jacobs Douwe Egberts to obtain clearance from the authorities in Singapore when it wanted to acquire Old Town Bhd.
Tan said it would be helpful for market participants to have access to clear guidelines and be able to engage with the relevant regulators so the application process can be optimised under the new requirements.
He also called for feedback loop post-M&A to assess the outcome of a merger.
Currently, Malaysia is the only Asean country where its competition commission does not have the power to regulate M&A activities.