2023 has shown that the Competition regulators in Southeast Asia are a force to be reckoned with, taking a front-seat in the region. Six of the 10 countries now have robust merger regimes with several of the regulators clearly matured enough to tackle difficult transaction reviews, take them into Phase 2 reviews and considering remedies to try and meet parties some way so as to be able to close the merger. Nine of the 10 countries have robust behavioural competition laws, and cartel and abuse investigations have increased in the various countries, where some regulators have not hesitated to penalise individuals directly. An example of the former is the Trade Competition Commission of Thailand which released a detailed 145-page summary decision explaining its decision to approve the Bangchak / Esso merger. An example of the latter is how the Indonesia Competition Commission dealt with cases of bid rigging of road tenders, and in one of them imposed a penalty on an individual for their involvement in the bid rigging. We have in this Annual Report provided an overview of the trends in 2023 and highlighted updates from the final quarter of 2023. We do expect 2024 to be a year where competition issues will be ignored to businesses’ peril. Take a step back, take stock as you move forward. We stand ready to assist as always.
Anti-Competitive Conduct
Anti-competitive agreements were a dominant theme for the various regulators in Southeast Asia. The nature of the reviews has been primarily domestic, and yet not all were small investigations. For example, in Malaysia, the Malaysia Competition Commission (MyCC) meted out a record MYR 415m (approx. USD 90m) fine in a price-fixing cartel amongst poultry feed millers. Additionally, in a show of seriousness in enforcement, in Indonesia, the Indonesia Competition Commission (KPPU) fined an individual for involvement in bid rigging. As a reflection of the focus on investigations, the Competition & Consumer Commission (CCCS) in Singapore published news of dawn raids conducted in the building construction sector in November 2023. The trends here are not unique to Southeast Asia and do mirror international approaches as well. It goes without saying that businesses do need to ensure they are on top of how they go to market.
Abuse of Dominance
Abuse of dominance investigations remain important even as the number of investigations seem fewer. This could be because of increased engagement with potentially dominant players and seeking to have them change their behaviours rather than to investigate and penalise them. Yet, regulators in each of the Southeast Asian countries continue to be alert as regards how dominant players behave. Traditional concerns over exclusivities, growth rebates, foreclosure and tying remain of grave concerns, and are seen playing out time and again. Over 2023, we did see these issues reviewed and needed to be dealt with. On the flip, as part of compliance, larger companies tend to review and ensure compliance to avoid the investigation as well. The question is are all businesses readily aware and alert.
Merger Control
Whilst M&A transactions are seemingly down from its heights in 2021 and 2022, there continue to be deals being reviewed and entered into. It follows that merger control remains an important area of review for competition regulators. The key thing about Southeast Asia is that merger control is now in six of the 10 countries, with a seventh likely to follow within a matter of months. Each of these regulators with merger control have slightly different approaches as to how they approach and handle transactions; yet all are aggressive and seek to review transactions. They are active, and do not hesitate to formally or informally reach out with queries. Cambodia, which saw its merger regime kick into force in September 2023, is one such jurisdiction where the Cambodian Competition Commission (CCC), is reviewing several transactions and has also reached out where notifications have not been made. The RTA team has been directly or indirectly involved in a significant number of these mergers across the region. Another trend is the desire to have remedies included, and with that monitoring trustees appointed. This is an added costs that merging parties will need to be alert to. All said, business involved in transactions will need to review their mergers carefully and assess whether there is a need to notify in the various Southeast Asian jurisdictions as a failure to notify can have severe implications. It is no longer a geography to be ignored.
Digital and E-Commerce
Digital markets remain an area of keen interest in Southeast Asia as it does across the world. As many grapple with the likes of the Digital Markets Act and dealing with gatekeeper issues, Regulators in the region have also continued the trend of focusing on digital markets. Following Singapore’s 2022 amendments to its guidelines to take into account digital markets issues and the Philippines’ recent rollout of guidelines for mergers in digital markets, Indonesia and Thailand are now considering adopting laws and guidelines for this sector. This follows robust enforcement in the digital space, including ongoing investigations in Indonesia as well as prior action against Grab in multiple Southeast Asian countries.
Competition Law Inter-plays with Other Areas of Laws, Regs and Regulators
With evolving businesses practices and creation of new areas of the laws, we see increased cooperation between competition regulators and other agencies. Additionally, given how competition law is reviewed generically but also by certain sector focussed regulators, cooperation between the generic competition regulator and the sectoral regulator is important. Hence, the fact that this is publicly being done is welcomed. Separately, as competition law become pervasive in all business activities, it is clear that it cannot be reviewed in isolation, but must be undertaken holistically. One important area in this regard is managing consumer protection, even if not all competition regulators are responsible for consumer protection regulations. The two are so intertwined with consumer welfare playing a big role in competition reviews, be it in investigations or in mergers.
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