In summary
This article provides an overview of developments in competition law from 2024 to 2025, including the status of proposed amendments to introduce a cross-sectoral merger control regime in Malaysia, the application of merger control via sectoral laws and cartel enforcement actions in Malaysia.
Discussion points
- Status of amendments to incorporate merger control in the Competition Act 2010
- Sector-specific merger control regimes in Malaysia
- Malaysian Aviation Commission’s dissolution and merger with the Civil Aviation Authority of Malaysia
- Recent enforcement actions targeting bid rigging practices
- Recent enforcement actions against price-fixing cartels
- Malaysia Competition Commission’s statement warning associations promoting cartels
- Malaysia Competition Commission’s increased focus on digital economy markets in Malaysia
Referenced in this article
- The Competition Act 2010
- The Communications and Multimedia Act 1998
- The Malaysian Aviation Commission Act 2015
- The Civil Aviation Authority of Malaysia Act 2017
- The Malaysian Aviation Commission (Dissolution) Act 2024
- The Civil Aviation Authority of Malaysia (Amendment) Act 2024
- The Postal Services Act 2012
- Finding of infringement against Agenda Eksklusif Sdn Bhd and six others
- Finding of infringement against Dindings Poultry Development Centre Sdn Bhd and four others
Introduction
The Malaysia Competition Commission (MyCC) is the cross-sectoral enforcement agency for competition law in Malaysia charged with enforcing the Competition Act 2010 (CA). The CA, which came into effect on 1 January 2012, applies to all commercial activities undertaken within Malaysia as well as outside of Malaysia (if it has an effect on competition in the Malaysian market), with the exception of certain commercial activities that have been carved out of the CA (eg, commercial activities regulated under the Communications and Multimedia Act 1998 (CMA), the Energy Commission Act 2001 and the Malaysian Aviation Commission Act 2015 (MACA)). The main prohibitions under the CA presently relate to anticompetitive agreements (horizontal agreements, including cartels, and vertical agreements)[1] and abuses of dominant position.[2]
Status of amendments to incorporate merger control in the CA
The Minister of Domestic Trade and Living Costs has indicated that amendments to the CA to introduce a cross sectoral merger control regime are expected to be tabled for first reading during the parliamentary debate session scheduled in February 2025.[3]
Unlike the aviation services industry and the communications and multimedia sector, there is presently no merger control regime contained in the CA. During the tabling of the Competition Bill 2010 on 20 April 2010, the then Minister of Domestic Trade and Consumer Affairs remarked that a merger control regime was not included in the CA at the point of its inception ‘…to strengthen the Government’s intention to encourage the development of capital markets in Malaysia’ and ‘…encourage merger and acquisition activities between businesses to strengthen the domestic economy and develop global corporations’.[4]
The policy to leave out a merger control regime in the CA appears to have changed. Recognising that the absence of merger control powers deprives MyCC and the government of a more direct influence over changes in market structures that may be adverse to competition, on 21 December 2021, MyCC obtained policy approval from the Cabinet to incorporate a merger control regime via amendments to the CA.[5]
On 25 April 2022, MyCC issued a public consultation paper setting out its proposed amendments to the CA, which includes provisions to facilitate the introduction of a cross-sector merger control regime.[6] Some of the key features of the proposed merger control regime are summarised in the table below.
| Features | Description |
|---|---|
| Definition of a merger[7] | Two or more previously independent enterprises combine into one single enterpriseacquisition of direct/indirect control of the whole/part of enterprisescreation of a full-functioning joint venture to perform, on a lasting basis, all the functions of an autonomous economic entityacquisition of assets, which replaces the acquired enterprise in the business which it was in before the acquisition |
| Substantive test for prohibition[8] | Mergers/anticipated mergers (if consummated) that may result in a substantial lessening of competition (SLC) within any market for goods or services in Malaysia. |
| Requirement for notification[9] | Hybrid notification:mandatory pre-merger notification – for anticipated mergers exceeding prescribed thresholdvoluntary notification – for mergers/anticipated mergers that do not exceed the prescribed threshold |
| Threshold for mandatory notification[10] | MyCC has the power to prescribe the threshold (which will determine whether it is mandatory for an anticipated merger to be notified).[11] |
| Timeline for approval[12] | 120 days, consisting of:Phase 1 Review – 40 working daysPhase 2 Review – 80 working days |
| Suspensory[13] | Prohibition on consummating an anticipated merger before receiving clearance from MyCC. |
| Power of MyCC to impose penalties[14] | Financial penalty of up to 10% of the value of the merger transaction on enterprises that has committed a merger violation. MyCC may also issue directions to reverse/unscramble the merger transaction. |
| Defence of economic efficiency[15] | Enterprises may relieve their liability on the basis that the economic efficiencies of the merger/anticipated merger outweigh any SLC effect caused. |
| Commitments[16] | Parties may voluntarily offer commitments to MyCC to remedy, mitigate or prevent the SLC effects caused by the merger/anticipated merger. |
Sector-specific merger control regimes in Malaysia
There are sector-specific laws and guidelines that regulate the antitrust aspects of mergers, namely, aviation services and the communications and multimedia sectors, enforced by the Malaysian Aviation Commission (MAVCOM) and the Malaysian Communications and Multimedia Commission (MCMC), respectively.
MAVCOM issues final decision on proposed merger in the aviation sector
MAVCOM has approved the anticipated merger concerning the proposed privatisation of Malaysia Airports Holdings Berhad (MAHB), carried out by a consortium led by Khazanah Nasional Berhad (the Applicants), Malaysia’s sovereign wealth fund. MAHB’s core business involves the management, operation, maintenance and development of airports.[17]
MAVCOM concluded that the anticipated merger does not infringe section 54 of the Malaysian Aviation Commission Act 2015 (MACA), which prohibits mergers that have resulted or may be expected to result in a substantial lessening of competition (SLC). As part of its assessment, MAVCOM assessed 39 aerodrome-related relevant markets, including international and domestic passenger service markets, the air cargo transportation service market, and the ground handling service market.
Notably, MAVCOM determined that the Applicants would have limited ability to engage in self-preferencing practices across aerodrome-related markets. For instance, while Khazanah Nasional Berhad, through Malaysia Aviation Group Berhad, controls or indirectly controls airlines and ground handling service providers operating within these markets, MAVCOM found that restricting access to rival airlines or ground handling service providers would not be in MAHB’s overall commercial interest, as it would result in a loss of potential revenue streams.[18]
Additionally, MAVCOM noted that the Applicants’ submissions that economic efficiencies and social benefits may arise from the anticipated merger – such as plans to alleviate congestion, improve passenger flows and enhance terminal ambiance at MAHB’s airports – were not fully substantiated. MAVCOM’s decision in this regard highlights the importance of substantiating efficiency justifications in merger notifications and applications with robust data.[19]
MCMC publishes competition guidelines for the postal services sector
In addition to regulating the communications and multimedia sector, the MCMC also regulates the postal services sector under the Postal Services Act 2012 (PSA). The PSA prohibits a PSA licensee from engaging in conduct that has the purpose of substantially lessening competition in the postal market, which includes courier services (SLC Prohibition).[20] Mergers and acquisitions in the postal services sector could thus be assessed as conduct that results in a breach of the SLC Prohibition.
On 30 September 2024, the MCMC published the following guidelines:
- Guidelines on Dominant Position (Postal Services Industry), which set out MCMC’s approach in determining the relevant markets and assessing dominance;[21] and
- Guidelines on Substantial Lessening of Competition (Postal Services Industry), which set out MCMC’s approach in assessing SLC (the MCMC SLC Guidelines).[22]
Furthermore, the MCMC recognises that the postal services sector, which includes courier services, is highly competitive due to the rise of e-commerce activities. In particular, the competition for last-mile delivery is intense, with approximately 105 licensees as of August 2024.[23]
Local delivery players had raised concerns that many small-scale companies are struggling with losses or being forced to cease operations due to mounting cost pressures and intense price competition. According to these players, the intense competition is largely driven by foreign-based start-ups, which have been aggressively undercutting prices to capture market share.[24]
Of note is the fact that the MCMC SLC Guidelines now set out self-preferencing as an example of a foreclosure strategy employed by e-commerce platforms.[25] This is where a dominant e-commerce platform is vertically integrated with its in-house delivery partner, and the e-commerce platform favours its own in-house delivery partner over other equally efficient delivery partners.[26] The example highlights that merchants who choose in-house delivery partners are granted certain advantages, such as the opportunity to participate in sales events or eligibility for free shipping offers. Additionally, the e-commerce platform may require its merchants to sign exclusive agreements to allocate all parcel deliveries solely to its in-house delivery partner.[27]
MCMC’s example also highlights its position on predatory pricing – it states that this occurs when a dominant player lowers prices below cost to drive competitors out of the market or to deter a potential competitor or competitors from entering the market.[28] While predatory pricing can result in short-term benefits to consumers from the low pricing, consumers may lose out in the longer term if, once the competitor or competitors exit the market, the player engaging in the predatory pricing raises prices above the competitive price.[29]
The MCMC SLC Guidelines nevertheless acknowledge that not all below-cost pricing is considered ‘predatory’ and likely to substantially lessen competition.[30] For example, a dominant player may be able to offer lower prices due to more efficient operations or a lower cost structure.
MAVCOM’s dissolution and merger with the Civil Aviation Authority of Malaysia
Currently, civil aviation is jointly supervised by two regulatory bodies, MAVCOM and the Civil Aviation Authority of Malaysia (CAAM). MAVCOM was established by MACA to regulate economic matters relating to the civil aviation industry, while CAAM was established pursuant to the Civil Aviation Authority of Malaysia Act 2017 (the CAAM Act) to oversee technical matters such as safety, maintenance and security of the civil aviation industry.
However, on 25 September 2024, the Civil Aviation Authority of Malaysia (Amendment) Act 2024 (the CAAM Amendment Act) and the Malaysian Aviation Commission (Dissolution) Act 2024 (the MAVCOM Dissolution Act) were gazetted. Each of the Acts will come into operation on a date to be appointed by the relevant Minister by notification in the Gazette. The two Acts will transfer all MAVCOM’s objectives, powers and functions to CAAM, thereby making CAAM the sole regulatory body for civil aviation in Malaysia.
Notably, once the CAAM Amendment Act and the MAVCOM Dissolution Act come into force, the competition-related provisions under Part VII of MACA will, among others, be subsumed into the CAAM Act.
One of the key reasons cited for the merger is to streamline bureaucratic processes and improve the efficiency of licensing services in civil aviation. This unified regulatory approach is also adopted in other countries, such as the United States, the United Kingdom, Singapore and China.[31]
An interesting point to note is that under section 18 of the CAAM Act, the Minister of Transport has the power to give directions to CAAM on matters relating to the performance of the functions and powers of CAAM that it will give effect to. This potentially allows the Minister to take a more direct role in economic matters within the aviation industry than previously possible under the MACA. In this respect, among the functions subsumed by CAAM, is the power to regulate economic matters that include:
- improving connectivity, both globally and locally, so as to promote economic ties, integration and growth, trade, investment and tourism; and
- encouraging effective competition within the civil aviation industry by promoting an economic environment that allows Malaysian carriers to maintain their ability to compete effectively in the civil aviation market in a sustainably profitable, efficient and fair manner.[32]
The merger is expected to take place in the second half of 2025 and that several agencies must approve the merger before it can proceed.[33]
MyCC’s recent enforcement actions targeting bid rigging practices
There has been considerable enforcement activity recently by the MyCC, particularly against bid rigging practices.
In September 2024, MyCC reported its fourth bid rigging case, following its first case in 2022. With over 500 companies currently under investigation for bid rigging in tenders worth more than 2 billion ringgit, the number of cases is expected to rise.[34] Notably, all reported cases to date have involved public procurement.
MyCC has emphasised that bid rigging cartels have long threatened the integrity of public procurement, draining valuable public resources.[35] Studies suggest that curbing such practices could yield significant savings – equivalent to at least 1 per cent of the country’s gross domestic products. For Malaysia, this could translate into approximately US$4.3 billion in savings based on 2023 GDP estimates.[36]
Given the scale of ongoing investigations and the potential economic impact of curbing such practices, MyCC’s enforcement actions signal its firm stance to pursue anticompetitive conduct.
Proposed decision against eight contractors for big rigging in tenders issued by the Public Works Department and Department of Drainage and Irrigation
On 16 April 2024, MyCC issued a proposed decision against eight contractors for infringing section 4(2) of the CA by engaging in bid rigging in respect of two tenders by the Public Works Department and one tender by the Department of Drainage and Irrigation.[37] The three tenders are worth approximately 473 million ringgit and relate to the provision of services for road construction works and flood mitigation systems.
The eight contractors were allegedly found to have colluded in bid rigging through information sharing and coordination in the participation of the three tenders. The contractors concerned have been notified of the proposed penalties and have been accorded the opportunity to submit their respective written and oral representations.
The final decision is presently pending.
Finding of infringement against seven enterprises for bid rigging in tenders issued by the Ministry of Defence
On 5 September 2024, MyCC issued an infringement decision against seven enterprises for infringing section 4(2) of the CA by participating in a bid rigging cartel relating to tenders issued by the Ministry of Defence (MINDEF) worth around 20 million ringgit.[38]
The infringement decision was issued following an investigation that was initiated in response to a complaint submitted to the Ministry of Finance of Malaysia (MOF) alleging that two of the enterprises attempted to manipulate the MOF registration certificate to meet the eligibility criteria for submitting bids.
As part of its investigation, MyCC conducted dawn raids at the offices of the parties involved. The evidence gathered – including possession of another enterprise’s bid price submissions, price patterns, the close timing of document creation and modification on computers, the timing of bid submissions to MINDEF and similarities in tender details and prices – strongly indicated collusion. The modus operandi, according to MyCC, that was employed was that one enterprise would be setting a base price while the other enterprises would submit a higher price than the base price on their bid submissions.[39]
Notably, three of the entities involved (Agenda Eksklusif Sdn Bhd, Star Apax Enterprise and Nekad Waja Resources) argued that there is no horizontal agreement between them because they constituted a single economic unit as defined under the term ‘enterprise’ in the CA.[40]
Section 4 of the CA prohibits anticompetitive horizontal agreements between enterprisesinsofar as the agreement has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services. The term ‘enterprise’ is defined under the CA as:
any entity carrying on commercial activities relating to goods or services, and for the purposes of this Act, a parent and subsidiary company shall be regarded as a single enterprise if, despite their separate legal entity, both form a single economic unit within which the subsidiaries do not enjoy real autonomy in determining the actions of the subsidiaries on the market.[41]
Agreements between a parent and a subsidiary company that does not enjoy real autonomy in determining its actions on the market are therefore exempt from the prohibition against anticompetitive agreements if the parent and subsidiary are regarded as a single economic unit.
The parties argued that based on the principle of decisive influence, as applied in MyCC’s earlier decision of Langkawi Auto Express Sdn Bhd[42] (the Langkawi case), a relationship beyond that of a parent company and a subsidiary could fall within the scope of the doctrine of single economic unit.[43] MyCC rejected the parties’ argument. It first highlighted that the definition of ‘enterprise’ under the CA and found that factually, two of the enterprises (Star Apax Enterprise and Nekad Waja Resources) are not ‘companies’ but are either a sole proprietorship or a partnership. Hence, legally, they are incapable of being ‘subsidiaries’ of Agenda Eksklusif, as defined under the CA.[44]
MyCC conceded that, in the Langkawi case, it had expanded the definition of ‘enterprise’ in the CA so as to include situations beyond those prescribed in the CA. Thus, in the Langkawi case, applying the principle of decisive influence, MyCC held that there may exist a relationship other than that of a parent-subsidiary relationship, which falls within the scope of the doctrine of single economic unit.[45]
However, MyCC distinguished the cases, noting that the Langkawi case involved price-fixing, whereas the present case concerned bid rigging. The whole intent of the tendering process is to ensure that the procurer received genuine, independent and competitive bid. MyCC stated that if the parties consciously submitted their bids as separate bids despite being in the same group, parties represented themselves to the procurer as independent decision-making centres. Therefore, the parties cannot later claim single economic unit status to evade liability under the CA, as this would defeat the purpose of the CA.[46]
MyCC ultimately found that the enterprises had engaged in anticompetitive conduct by fixing their bidding prices, exchanging bid information and coordinating the preparation and submission of their bids. The infringing parties were imposed with a total of 446,092.95 ringgit in fines.
Proposed decision against three enterprises for bid rigging in tenders issued by Perbadanan Putrajaya for maintenance works
On 10 September 2024, MyCC provisionally found three enterprises to be engaging in big rigging conduct with respect to six tenders issued by Perbadanan Putrajaya[47] for maintenance works, valued at approximately 45 million ringgit.[48] The enterprises were alleged to have entered into agreements and colluded in their conduct to fix bidding prices, share bid information and coordinate the preparation and submission of bids.
The final decision is pending.
MyCC’s recent enforcement actions targeting price-fixing cartels
Proposed decision against 81 enterprises for a price-fixing cartel
On 30 September 2024, MyCC issued a proposed decision against 81 enterprises for infringing section 4(2) of the CA for their alleged involvement in a price-fixing cartel regarding the provision of umrah travel services in Malaysia.[49]
According to MyCC’s media release, the enterprises, who are members of an association registered in Malaysia, allegedly agreed with each other to fix the floor prices for both economy and premium umrah package services. This occurred during meetings which they held in early 2023. MyCC also discovered that the association then went on to make public announcements to inform the public of the agreed floor prices.
The final decision is pending.
Feed millers’ application for stay of a 415 million ringgit fine imposed by MyCC
In December 2024, the Competition Appeal Tribunal (CAT) denied a stay of a 415 million ringgit fine – the largest fine imposed by MyCC to date – on five poultry feed millers for infringing section 4(2) of the CA by entering into an anticompetitive agreement to fix the quantum of poultry feed prices.[50]
Following the CAT’s decision, the poultry feed millers filed for leave to seek judicial review of the denial of their request for a stay of MyCC’s fines. On 2 January 2025, the High Court allowed the poultry feed millers’ leave application, and an ad interim stay has also been granted until 8 April 2025.
The fines imposed by MyCC were based on its finding of infringement against the poultry feed millers, following an investigation that revealed identical increments in the quantum of their poultry feed prices between January 2020 and March 2022.[51] Apart from evidence of parallel behaviour, MyCC states that it fortified its findings with evidence of direct and indirect communications between competitors, demonstrating a clear pattern of coordination.[52] The decision states that:
the concept of a ‘concerted practice’ has been developed to capture forms in coordination in which enterprises, without reaching an agreement or establishing a concrete plan of action, knowingly and based on mutual understanding, replace ‘competition risks’ with practical cooperation.[53]
MyCC’sstatement warning associations promoting cartels
On 21 December 2024,[54] MyCC expressed grave concern over recent actions by associations that have announced price increases, set minimum prices for goods or services including introducing new trading conditions that negatively have impacted the cost-of-living challenges faced by Malaysians. MyCC highlighted that these activities negatively impact essential sectors such as transportation, care services, healthcare and food.
MyCC emphasised that it takes a firm stance against associations that openly announce price hikes, minimum pricing or new trading conditions, especially through the media. MyCC stated that such announcements may constitute anticompetitive agreements or cartel activities, as they reflect decisions made by association committee members who are competitors in the same industry. These announcements can also serve as signals to association members that encourage coordinated participation in cartel practices.
MyCC stated that it has conducted a number of investigations into associations including its committee members and association members. It found that these parties used the association platforms to encourage the formation of cartels among themselves.
MyCC further highlighted that information obtained from major media outlets and social media platforms indicates that some associations, through their leaders, have attempted to mislead the public by claiming that the price increase announcements are merely projections for the future or price guidelines when in fact these announcements are cartel-like decisions made by the associations. MyCC stated that it is also aware that some associations have attempted to conceal their decisions.
MyCC’s statement serves as a reminder that while associations play an important role in furthering legitimate industry interests, parties must ensure that they do not participate in conduct which may be perceived as cartel-like behaviour.
MyCC’s increased focus on digital economy markets in Malaysia
Following the increasing trend of competition authorities proactively pursuing antitrust investigations involving digital markets, MyCC is similarly placing emphasis on the dynamic and ever-evolving digital economy market in Malaysia, which includes the industry for online marketplace platforms.
Market review on the digital economy ecosystem under the CA
On 16 August 2024, MyCC initiated a market review on the digital economy ecosystem, including online advertising services, mobile operating and payment system, e-commerce and online travel agencies.[55]
On mobile operating and payment systems, particular attention is paid to integrating an application programming interface (API) payment system for in-app purchases. The e-commerce landscape, particularly large B2C marketplace platforms, will also be scrutinised. The review includes online digital advertising, evaluating various methods such as search engine marketing, social media ads, display advertising and video promotions. Data privacy and protection concerns are also central to the study, with a focus on issues like switching costs, data misuse and control of data by players in each relevant subsector.
The market review aims to examine the digital economy ecosystem and its impact on the cost of living, as well as to determine whether any feature or combination of features of the digital economy would affect competition in the market.
A market review falls within the scope of MyCC’s powers under section 11 of the CA. MyCC may on its own initiative or upon request of the Minister conduct a review into any market to determine whether any feature of combination of features of the market prevents, restricts or distorts competition in the market.[56] The market review includes a study into the structure of the market concerned, conduct of enterprises in the market, and the conduct of suppliers and consumers to the enterprises in the market.[57]
To date, MyCC has undertaken seven market reviews between 2012 and 2022 on sectors including the pharmaceutical, food and transportation sectors.[58] MyCC has, in the past, released a draft report of the market review for public consultation prior to publishing a final report.