Malaysia’s sweeping competition-law reforms will give regulators stronger powers to investigate anti-competitive conduct, halt harmful business practices and reward early cooperation, but the absence of a merger-control regime leaves a major gap in the country’s market safeguards.
The Dewan Rakyat passed the Competition (Amendment) Bill 2026 and the Competition Commission (Amendment) Bill 2026 on July 7, marking the biggest overhaul of Malaysia’s competition framework since the Competition Act came into force in 2010.
Subject to Senate approval and Royal Assent, the reforms will significantly strengthen the Malaysia Competition Commission (MyCC) and raise the compliance stakes for companies operating in the country.
For businesses, the message is clear: Commercial arrangements, industry practices and relationships with competitors, suppliers and distributors will face greater scrutiny.
“The rules of fair play just got firmer, and the referee has more power to enforce them,” Monash University Malaysia’s senior lecturer at the Department of Business Law and Taxation, School of Business Dr Ridoan Karim said to BusinessToday.
Wider Reach, Stronger Enforcement
According to Dr Ridoan, one of the most significant changes is the expansion of the law from “commercial activity” to “commercial or economic activity”.
While the wording appears technical, Karim said the broader definition could bring trade associations, certain non-profit arrangements and other economically significant activities within MyCC’s jurisdiction.
The amendments also remove the need for regulators to first classify anti-competitive agreements as either horizontal — between competitors — or vertical, such as between suppliers and distributors.
Instead, the prohibition will apply more broadly to any agreement that significantly prevents, restricts or distorts competition.
MyCC will also gain wider powers to demand information, including from government ministries and statutory bodies.
The regulator will be able to issue warning letters following preliminary inquiries and impose interim measures requiring companies to pause transactions or stop potentially harmful conduct while investigations are ongoing.
Such powers could allow MyCC to act before anti-competitive behaviour causes lasting damage to consumers or rival businesses.
Discounts for Early Settlement
The reforms introduce a settlement mechanism allowing companies that admit wrongdoing to receive a penalty reduction of up to 40%.
That discount can be combined with existing leniency arrangements for cartel whistle-blowers, under which the first participant to report misconduct may receive a reduction of up to 100%.
However, cartel ringleaders that pressured other companies to participate will qualify for smaller discounts.
Dr Ridoan described the mechanism as commercially practical, arguing that early settlements could reduce legal expenses, management disruption and prolonged reputational uncertainty.
Competition investigations are often lengthy and costly for both companies and regulators. A structured settlement route could encourage faster resolutions while increasing pressure on cartel participants to cooperate early.
Whistle-blowers will also receive stronger identity protection and may become eligible for financial rewards, while confidentiality requirements will be tightened.
High Court Appeals Add Oversight
The legislation also creates a new avenue for businesses to challenge decisions by the Competition Appeal Tribunal.
Companies will be able to appeal to the High Court on questions of law or the size of penalties imposed.
Previously, tribunal decisions represented the end of the appeal process.
Dr Ridoan said the additional judicial oversight should help build more predictable competition case law, giving companies clearer guidance on how the legislation will be interpreted and enforced.
Stronger competition enforcement should not automatically be viewed as hostile to business, he added.
Cartels, bid-rigging and the abuse of market power can disadvantage companies that compete honestly, allowing less efficient rivals to succeed through coordinated pricing or market-sharing arrangements.
A credible regulator can therefore improve the operating environment for productive and innovative businesses while helping contain prices for consumers.
Anti-competitive conduct directly affects the cost of groceries, transport, services and other household essentials, making enforcement part of the broader effort to address Malaysia’s cost-of-living pressures.
Merger Control Still Missing
Despite the expanded enforcement powers, the reforms do not introduce a general merger-control regime, an omission Dr Ridoan described as the legislation’s most significant weakness.
Malaysia currently has no economy-wide system requiring companies to notify MyCC before completing mergers that could substantially reduce competition. Separate frameworks apply in sectors such as aviation and communications.
This means a takeover that creates or reinforces a near-monopoly could proceed without undergoing a competition review.
“Cartel and abuse rules are like arresting a thief after the burglary,” Dr Ridoan said, adding that merger control is the lock on the door.
The omission is particularly striking because MyCC had already presented a detailed merger-control framework during a public consultation in April 2022.
The proposed system included mandatory notification above specified thresholds, a prohibition on mergers that substantially lessen competition, a standstill requirement preventing completion before approval, a 120-day review period and penalties of up to 10% of worldwide turnover.
“The 2026 Bill did not defer a concept,” Dr Ridoan said, instead it left a finished blueprint in the drawer.
Malaysia remains behind markets including Singapore, Australia, Japan, the European Union (EU) and the UK, as well as ASEAN peers such as Indonesia, the Philippines, Thailand and Vietnam, which already operate merger-review systems.
Without such controls, companies may find it easier to acquire a competitor than coordinate with one, potentially producing a similar reduction in competition through a transaction the law does not screen.
Digital Economy Also Left for Later
The reforms also stop short of introducing dedicated measures for digital platforms and dominant technology companies.
Dr Ridoan said conventional competition rules can struggle to respond quickly when powerful digital “gatekeepers” control access to consumers, data and online marketplaces.
The EU, the UK and Germany have introduced specialised regimes to address competition risks in digital markets, including conduct that disadvantages smaller merchants, application developers and service providers.
Malaysia’s amendments acknowledge that business and technology have changed since 2010, but do not create equivalent tools for the platform economy.
Clear safeguards will also be needed to ensure MyCC’s expanded powers are exercised proportionately and independently.
Dr Ridoan urged the regulator to publish transparent penalty guidelines, compliance guidance and minimum-impact thresholds to prevent smaller businesses from facing unnecessary uncertainty.
Businesses Must Prepare
Companies should begin reviewing supply, distribution and service agreements, refreshing competition-law training and examining communications with competitors and industry associations.
They should also monitor the guidelines MyCC is expected to issue once the legislation takes effect.
Dr Ridoan described the reforms as a serious and overdue upgrade that should make Malaysia’s markets fairer and enforcement more credible.
However, he cautioned that stronger powers alone would not complete the country’s competition framework.
“Without merger control, Malaysia is guarding the front door while leaving the side gate open,” he said, while emphasising that without digital-market tools, it risks regulating the economy of 2010 rather than the one of 2026.
The new laws represent a major step forward, but the next legislative round may determine whether Malaysia closes the remaining gaps before market concentration becomes harder to reverse.
