KUALA LUMPUR: Competition laws like the Malaysia Competition Act 2010 — which currently does not have any merger control provisions — should cover reviews of mergers as it is crucial in promoting effective performance of the market, said two experienced economists in competition laws.
Dr Adrian Majumdar, partner in RBB Economics, said it is important for competition laws to have merger control provisions to ensure no further compliations are created with regards to business.
“What would be unfortunate if you then have a merger that the competition authority doesn’t like and then they try to block it by the back door, by finding some restriction that the merger creates that somehow amounts to an anti-competitive agreement, territory or sale,” he told The Edge Financial Daily yesterday after a lunch talk organised by S K Chambers on “Competition Law: Issues in Mergers, Collaborations and Exclusive Arrangements”.
He said the best way for an authority in charge of promoting and ensuring fair competition is to address such a problem in the merger control regime, as that would not require companies to backtrack or rectify the situation later.
Majumdar, who previously served as deputy director of economics at the United Kingdom’s Office of Fair Trading, now known as the Competition and Markets Authority, said the UK’s competition laws, in contrast, call for a review of a merger if the total gross assets of the company to be taken over exceed £70 million (RM369.4 million).
Similarly, if the merger results in 25% or more of the supply or purchase of goods or services of a particular description in the UK under common control, a review is then called for. And any mergers that are found not in compliance with the laws in UK can be prohibited.The parties involved can also be compelled to divest a part of the merged business as a remedial measure.
Meanwhile, competition economist Ibrahim Bah said reviewing mergers at an early stage is important as it will help stave off mergers that affect the effective performance of a market.
This article first appeared in The Edge Financial Daily, on October 30, 2014.