On March 6, 2023, Cambodia issued requirements and procedures for merger and acquisition (M&A) filings to allow the country’s competition regulator to monitor the impact of M&A transactions on the Cambodian market. These rules are contained in Sub-decree No. 60 on the Requirements and Procedures for Business Combinations.
This subdecree is the latest in a series of detailed regulations issued to develop Cambodia’s competition and antitrust law framework since the 2021 enactment of the Law on Competition, which formally established the Cambodia Competition Commission (CCC), set out the CCC’s complaint and investigation procedures, listed prohibited anticompetitive practices, and outlined applicable penalties.
Sub-decree No. 60 applies to any business combination that may materially affect competition in Cambodia, regardless of where in the world it takes place.
Premerger and Postmerger Notifications
The parties to a business combination must notify the CCC of the proposed combination if the transaction meets certain thresholds, which will be determined by the CCC at a future date. The notification must include, among other things, key terms of the relevant agreements, incorporation documents and financial statements of the parties, and an indication of the types of goods or services provided by the parties. All documentation submitted must be in Khmer, except for names, addresses, and certain other items.
The CCC will determine within seven working days whether it requires additional information or documentation. Once it has all necessary documentation, the CCC will issue a decision on the proposed business combination within 30 days—the combination may be approved outright or declared subject to a secondary review. Sub-decree No. 60 states that a proposed business combination will not be subject to secondary review if the market share of each party does not exceed 30 percent in each relevant market, among other criteria. However, the CCC reserves to right to require a secondary review if it is concerned that the combination could materially affect competition.
For its secondary review, the CCC may request additional information or documentation from the parties. After receiving the additional information, the CCC has 60 working days (which may be extended by 60 working days) to issue a decision, which may approve the combination, approve the combination subject to restrictions, or reject the combination.
If the CCC fails to issue a decision within the prescribed deadlines, the proposed business combination is deemed approved.
After substantive completion of a business combination is approved by the CCC, at least one of the parties must inform the CCC of the status of the transaction within 30 working days.
Simplified Notification and Exemptions
Certain business combinations are subject only to a simplified notification to the CCC. Such combinations include:
- transactions in which all parties are part of the same corporate group;
- transactions that have been approved by the Royal Government of Cambodia; and
- other transactions as prescribed by the CCC.
The simplified notification must include the application form and general information of the parties to the proposed transaction.
After receipt of the simplified notification, the CCC will determine within seven working days whether the notification is valid and complete, if additional information is required, or if the proposed combination does not fulfil the criteria for simplified notification. If additional information is required, the parties will likewise have seven working days to provide it.
In addition, certain business combinations that would normally be prohibited may be granted an exemption by the CCC if:
- there are sufficient technological, economic, or social benefits resulting from the combination;
- such benefits would not exist without the proposed combination;
- the benefits significantly outweigh the anti-competitive effects; and
- the combination does not eliminate competition in relevant goods or services.
Parties seeking an exemption must submit documents and other information (not detailed in the subdecree) as evidence that the proposed combination complies with the criteria laid out above.
Advance Ruling Certificate
When it has no grounds to restrict or prohibit a proposed business combination, the CCC may—either proactively or at the request of the parties—issue an advance ruling certificate. Business combinations subject to an advance ruling certificate are deemed approved and may be substantively completed.
Further details on the requirements and procedures for an advance ruling certificate will be outlined in a future regulation.
Over the last two years, the competition law framework in Cambodia has grown steadily more robust. The mandate and powers of the CCC are well established under existing regulations. For instance, a Ministry of Commerce subdecree issued in February 2022 set out the composition of the CCC, and its functions, duties, and financial resources. On January 25, 2023, the Ministries of Commerce and Justice issued an interministerial prakas further refining the penalty provisions of the Competition Law and the role of the Consumer Protection, Competition and Fraud Repression Directorate-General in imposing fines. Then, on February 22, 2023, the Ministry of Commerce issued a prakas further detailing the CCC’s mechanisms for issuing decisions to combat anticompetitive practices.
While Sub-decree No. 60 clarifies the procedure for merger filings, certain gaps remain—most notably, the thresholds that trigger the requirement for merger filing. In addition, provisions regarding fines and penalties are still unclear.
Given the speed in which the Cambodian competition regulations have been enacted, we expect to see more clear definitions of thresholds, fines, and other clarifications in the next 12 to 18 months.
For further information, please contact:
Jay Cohen, Partner, Tilleke & Gibbins