Towards a Regulated M&A Landscape: Impacts of the Proposed Malaysian Merger Control Regime

Mergers and acquisitions (“M&A”) are widely regarded by market players as one of the most efficient mechanisms for business expansion, often offering a faster alternative to organic growth. A primary economic rationale underpinning mergers is the pursuit of efficiency gains, particularly through economies of scale and operational improvements. When executed within a competitive framework, mergers can enhance productivity, strengthen domestic industries, and enable local companies to compete more effectively at both regional and global levels. However, unregulated or inadequately supervised mergers may, over time, distort market structures, undermine competition, and ultimately result in consumer harm through higher prices, reduced choice, or diminished innovation.

At present, Malaysia adopts a sectoral approach to merger control, whereby regulatory oversight is exercised only within specific industries. In the aviation sector, merger activities are regulated by the Civil Aviation Authority of Malaysia (“CAAM”), established under the Civil Aviation Authority of Malaysia Act 2017. Similarly, mergers within the communications and multimedia sector fall under the jurisdiction of the Malaysian Communications and Multimedia Commission (“MCMC”), pursuant to the Communications and Multimedia Act 1998. Outside these regulated sectors however, merger transactions are largely ungoverned by a central merger control framework.

While most mergers do not give rise to competition concerns, certain transactions may significantly alter market structures or provide the merged entity with the ability to exercise market power and significantly distort the market’s competitiveness. The Malaysian Competition Commission (“MyCC”), which is tasked with safeguarding the competitive process for the benefit of businesses, consumers, and the wider economy, is presently unable to investigate or take enforcement action against anti-competitive mergers. This limitation arises from the absence of merger control provisions under the Competition Act 2010 (“Act 712”). This legislative lacuna has prompted calls for reform, as the current framework restricts MyCC’s ability to fulfil its statutory mandate effectively.

In response, MyCC has proposed amendments to Act 712 to introduce a comprehensive merger control regime that would bring Malaysia’s competition law in line with international standards. Although the precise details of the proposed regime remain subject to legislative finalisation, its foundational principles have been outlined in the Consultation Paper on the Proposed Amendments to the Competition Act 2010 issued by MyCC. The introduction of merger control legislation would represent a significant shift in Malaysia’s competition law landscape and is expected to have far-reaching implications for M&A practices across all sectors of the economy.

Under the proposed framework, mergers or anticipated mergers that may result in a substantial lessening of competition (“SLC”) in any market for goods or services would be prohibited. The SLC test is intended to serve as the principal legal standard guiding MyCC’s assessment of whether a merger should be allowed to proceed or prohibited altogether. This approach reflects international best practices and is widely regarded as a flexible and effects-based standard that balances competition enforcement with the need to facilitate economically beneficial transactions. Importantly, the proposed regime is envisaged to apply not only to domestic mergers but also to transactions concluded outside Malaysia where such mergers have an effect on competition within any Malaysian market.

Notification Regime

The proposed merger control regime introduces a hybrid notification system, comprising both mandatory and voluntary notification mechanisms. Under this framework, parties to an anticipated merger that exceeds the prescribed notification thresholds will be required to notify the MyCC prior to consummation of the transaction. In contrast, mergers or anticipated mergers that do not exceed the notification thresholds may be voluntarily notified to MyCC, either before or after completion, to obtain regulatory clarity and mitigate potential competition risks. This hybrid approach is intended to ensure that transactions with the potential to substantially lessen competition are subject to regulatory scrutiny, while preserving flexibility for parties involved in transactions that are less likely to raise competition concerns.

Threshold

The determination of whether a merger is subject to mandatory notification is contingent upon the applicable notification thresholds, which are to be prescribed by an order published in the Gazette following the enactment of the amendments to the Act 712. These thresholds will play a critical role in defining the scope of MyCC’s merger review powers and in shaping transaction planning and regulatory compliance strategies. Until such thresholds are formally introduced, market participants face a degree of uncertainty as to which transactions will trigger mandatory notification, underscoring the importance of clear and proportionate threshold-setting to ensure regulatory effectiveness without imposing unnecessary burdens on routine commercial transactions.

Review Period of One Hundred Twenty (120) Working Days (“Review”)

Under the proposed merger control framework, MyCC will have up to 120 working days from the receipt of a complete mandatory notification to make a decision on anticipated mergers. This is a significant procedural feature that will impact both transaction planning and deal certainty.

From a commercial standpoint, a review period of this length introduces extended deal timelines, which may translate into higher transaction costs. Parties will need to factor in prolonged timelines for legal, financial and operational planning, and may need to keep internal resources committed to the transaction for longer. This can also impact financing arrangements, including the validity period of financing commitments and the ability to maintain pricing assumptions.

The review timeline may also affect how parties negotiate the transaction documents. Parties are likely to include more detailed conditions precedent, long-stop dates, and allocation of regulatory risk clauses. This includes “drop-dead dates”, termination rights, and provisions on who bears the risk (or cost) if MyCC requests additional information or imposes commitments.

For mergers that are voluntarily notified and do not exceed the threshold, the framework indicates that the 120 working day time limit does not apply. However, parties must still consider that voluntary notification may still create uncertainty in timing, depending on the MyCC’s handling of the case.

Obligation Not to Consummate the Merger

A key feature of the proposed regime is the prohibition on consummating an anticipated merger that is mandatory to notify until the Commission has made its decision within the review period. In practice, this introduces a “standstill obligation” similar to what is seen in many established merger control jurisdictions.

This obligation has major practical implications. Businesses will need to ensure that closing (completion) of the transaction does not occur before approval. This will directly impact transaction timetables and deal structuring, particularly in transactions where closing is intended to occur quickly after signing.

More importantly, the standstill obligation raises the risk of “gun-jumping”, where parties may inadvertently implement aspects of the transaction early—such as operational integration, sharing competitively sensitive information, or taking steps that effectively change control before clearance. This can lead to enforcement action and penalties under the ancillary provisions.

As a result, businesses should anticipate the need for stronger compliance safeguards throughout the transaction process. In particular, parties may need to adopt clean team arrangements to manage the exchange of competitively sensitive information, impose tighter controls over pre-closing integration planning, and ensure that interim operating covenants in the transaction documentation are sufficiently robust to preserve the parties’ independence pending clearance. This should also be supported by internal training and compliance controls to minimise the risk of premature implementation and potential gun-jumping concerns.

Outcome of the Review

The proposed framework contemplates two principal outcomes at the conclusion of the Commission’s assessment: either a clearance decision, which allows the parties to proceed with the merger, or a prohibition decision, which prevents the transaction from being consummated where the Commission determines that the merger would result in a substantial lessening of competition in the relevant market. From a dealmaking perspective, the availability of a prohibition outcome introduces a new level of regulatory deal risk in Malaysia, particularly for transactions involving high market shares or concentrated sectors where competition concerns are more likely to be raised.

At the same time, the framework suggests that clearance may still be available even where competition concerns are identified, provided that these concerns can be addressed through commitments accepted by the Commission. This is significant because it signals that the regime is not intended to be purely restrictive, but rather to provide a mechanism for transactions to proceed under conditions that mitigate competition harm. However, clearance subject to commitments may come with meaningful commercial consequences. Commitments, whether structural (such as divestments) or behavioural (such as operational restrictions) can affect the overall value of the transaction, change the strategic rationale of the deal, and impose continuing obligations on the merged entity after completion. Accordingly, parties will need to anticipate the potential decision for conditional outcomes and incorporate this into their transaction planning, including through competition due diligence, early risk assessment, and drafting transaction terms that appropriately allocate regulatory risk between the parties.

Ultimately, the proposed outcome framework reinforces that merger control will no longer be treated as a mere formality, but as a material determinant of whether and how transactions may proceed. Businesses will therefore need to engage with competition considerations much earlier in the deal process, not only to assess the likelihood of clearance, but also to evaluate whether they would be willing to accept conditions that could reshape the transaction’s commercial and operational objectives.

Ancillary Merger Provisions

The ancillary merger provisions contained in Malaysia’s proposed merger control regime constitute a critical enforcement and procedural framework that supports the substantive assessment of mergers under the Act 712. While the primary inquiry in merger review focuses on whether a transaction results in a SLC, ancillary provisions ensure that mergers are properly notified, assessed, and, where necessary, restrained or remedied to prevent harm to competitive market structures. These provisions are central to ensuring regulatory effectiveness, legal certainty, and compliance with competition law principles.

A cornerstone of the ancillary regime is the mandatory obligation to notify anticipated mergers that exceed prescribed thresholds. This obligation is paired with a standstill requirement, which prohibits parties from consummating or implementing a notifiable anticipated merger prior to receiving clearance from the MyCC. The prohibition on premature implementation commonly referred to as “gun-jumping” is intended to prevent irreversible integration of businesses that could undermine the Commission’s ability to conduct an effective competition assessment or restore competitive conditions if the merger is ultimately found to be anti-competitive. Such standstill obligations are widely recognised as essential to effective merger control and are consistent with international best practices.

Importantly, the proposed framework extends beyond notified transactions by conferring on MyCC the power to investigate non-notified mergers, including those that do not exceed the notification thresholds. Where such mergers raise concerns of an SLC in the market, the Commission may initiate investigations on its own initiative. This discretionary power reflects an effects-based approach to merger enforcement, recognising that anti-competitive harm may arise even from transactions that fall below formal thresholds. It also mitigates the risk of strategic avoidance of notification requirements and ensures comprehensive market oversight.

The ancillary provisions further empower MyCC to investigate procedural infringements, including failures to notify and gun-jumping conduct. In the course of such investigations, the Commission may impose interim measures to prevent serious or irreparable damage to competition pending the final determination of the merger review. Interim measures are particularly significant in concentrated or fast-moving markets, where early integration could distort competition in ways that are difficult or impossible to reverse.

To safeguard procedural fairness and uphold principles of natural justice, the regime guarantees merging enterprises a right to be heard, allowing them to submit written and oral representations before adverse decisions are made. In addition, MyCC may accept commitments offered by the merging parties to address identified competition concerns. The acceptance of commitments provides a flexible regulatory tool, enabling the Commission to clear mergers subject to remedies that mitigate SLC risks, rather than resorting solely to prohibition. Such negotiated outcomes are increasingly favoured in modern competition enforcement for their efficiency and proportionality.

Finally, the ancillary merger regime establishes a robust penalty and enforcement mechanism. MyCC is authorised to impose financial penalties and issue directions against enterprises that engage in mergers or anticipated mergers resulting in an SLC, as well as against those that commit merger violations such as failure to notify or gun-jumping. These sanctions serve both deterrent and corrective functions, reinforcing compliance and underscoring the seriousness of merger control obligations under Malaysian competition law.

In summary, the ancillary merger provisions form the procedural and enforcement backbone of Malaysia’s proposed merger control framework. By integrating notification obligations, standstill requirements, investigatory powers, and penalties, the regime aligns Malaysia’s competition law with international standards and significantly enhances MyCC’s capacity to prevent mergers from undermining effective competition in Malaysian markets.

Conclusion

In conclusion, the proposed Malaysian merger control regime marks a significant transformation in the country’s M&A landscape, introducing mandatory notifications, extended review timelines, and a strict standstill obligation. These changes elevate merger control from a peripheral compliance issue to a central deal consideration, with direct implications for transaction timing, costs, risk allocation, and deal certainty. Businesses will need to adapt by embedding competition analysis earlier in transaction planning and by strengthening internal controls to manage regulatory and gun-jumping risks.

At the same time, the framework adopts a balanced and effects-based approach by allowing voluntary notification and conditional clearances. Ultimately, the regime signals Malaysia’s move towards a more mature, internationally aligned merger control system, requiring both dealmakers and advisers to recalibrate their strategies in an increasingly regulated M&A environment.

Authors:

1. Husna Shariff
2. Aqilah Zaki
3. Zahid Zulkifli
4. Irfanah Imnaz

References:

1. CMSpro, ‘Proposed Amendments to Malaysia’s Competition Act’ (One Asia Lawyers | One Asia Lawyers, 13 May 2022) <https://oneasia.legal/en/4373> accessed 6 January 2026
2. Abdul Rahman, N., Tupari, M. A., & Ahamat, H. (2024). Merger Control Regime in Malaysia: Past, Present and Way Forward. IIUM Law Journal, 32(2).
3. ‘Salient points of the proposed amendments of Act 712’, April 2022’<https://www.mycc.gov.my/sites/default/files/Salient Points of the Proposed Amendments of Act 712 [25.4.22].pdf> accessed 5 January 2026
4. ‘MyCC Consultation Paper on Proposed Amendments to Competition Act 2010 ’, April 2022) <https://www.mycc.gov.my/sites/default/files/Consultation Document for the Proposed Amendments of Act 712 [25.4.22].pdf> accessed 5 January 2026
5. Wen TS, Looi TPJ and Hii A, ‘Merger Control: The Third Pillar of Malaysian Competition Law’ (Lexology, 13 May 2022) <https://www.lexology.com/library/detail.aspx?g=678a5a4e-1785-40f9-b3d6-3fc552fcfee6> accessed 5 January 2026