Yes, the Law on Competition 2021 (which came into force on 6 October 2021), the Sub-Decree No. 60 on the Requirements and Procedures for Business Combinations (which was issued on 6 March 2023, but will come into effect on 6 September 2023) and the Decision No. 095 on Pre-Notification Thresholds (which was notified on 14 March 2023) are the key legislations which specifically govern mergers and similar transactions in Cambodia from a competition law perspective.

In general, all mergers and similar transactions concerning a Cambodia-registered entity will be subject to provisions under the Law on Commercial Enterprises (amended in 2022) and the Law on Commercial Rules and Register (amended in 2022), and if applicable (i.e. in case the business is registered for receiving investment incentives and/or guarantees from Cambodian government), the Law on Investment 2021 and its implementing sub-decree.

Moreover, if a business activity falls under a specific regulated sector such as the finance sector, insurance sector, etc., the sector-specific laws and regulations will also apply to a merger or similar transaction concerning such regulated activity.

The Competition Commission of Cambodia ("CCC") is the competition regulator of Cambodia, and it is vested with broad powers to both investigate and adjudicate any anti-competition complaints concerning mergers and similar transactions.

The Department of Business Registration, Ministry of Commerce ("MOC") is the authority that regulates the corporate structure and sets forth general rules for the internal management of a legal entity registered in Cambodia.

If a business activity receives certain investment incentives and/or guarantees under the Law on Investment, the merger or similar transactions concerning such activity will also fall under the regulatory purview of the Council for Development of Cambodia ("CDC") or its subordinate agency.

For specific regulated sectors, such as the finance sector, securities market, etc., mergers or similar transactions will also fall under the regulatory purview of the relevant sectoral regulatory authorities.

No. To our knowledge, there is no supranational regulatory agency having exclusive competence.

Yes. Under the Competition Law, the notion of mergers and similar transactions are covered under the term “Business Combinations”.

Article 3(3) and Article 11 of the Law on Competition 2021, read conjointly with the provisions of Sub-Decree No. 60 on the Requirements and Procedures for Business Combinations (“Sub-Decree No. 60”), set forth the substantial and procedural requirements for filing concerning the Business Combinations.

Decision No. 095 on Pre-Notification Thresholds sets forth the thresholds for filing pre-completion notification by the parties to a Business Combination.

As defined under Article 3(3) of the Law on Competition 2021, the term “Business Combination” refers to either one of the two transactions: (1) the acquisition of the rights of control or voting rights by one person from any other person through the purchase of shares or assets, or (2) the combination of two or more persons to acquire joint ownership of an existing legal person or form a new legal person.

The term “rights of control” is defined broadly under Sub Decree No. 60 to include the rights (i) to directly or indirectly decide on the appointment, removal or dismissal of a majority or all of the members of the board of directors or senior executives of a legal person, (ii) to decide on the amendment of the constating documents of a legal person and (iii) to make important decisions on the business activities of a legal person.

The filing requirements under the Sub Decree No. 60 apply to all Business Combinations, which directly or indirectly, have or may have the object or effect of significantly preventing, restricting or distorting competition in a relevant market within Cambodia regardless of whether the Business Combination takes place inside or outside Cambodia’s jurisdiction.

Yes. Both “Business Combination” and “rights of control” are broadly defined under the Law on Competition 2021 and Sub Decree No. 60 respectively and as such, a minority investment that can be considered to provide any percentage of voting rights or any rights of control to the minority investor may be subject to the filing requirements under Sub Decree No. 60.

In case of a minority investment, if any of the criteria for pre-completion notification is met, it is advisable to apply for an “Advance Ruling Certificate”, which is a fast-track approval process for transactions that are unlikely to adversely affect competition in the relevant market within Cambodia; and if only 50% or more of any of the pre-completion notification criteria is met, a post-completion notification should be filed with CCC.

Yes, foreign-to-foreign transactions are captured if, directly or indirectly, have or may have the object or effect of significantly preventing, restricting, or distorting competition in a relevant market within Cambodia.

There is no separate local effects test. If a foreign-to-foreign transaction meets any of the criteria for pre-completion notification, the parties to such transaction are required to file a pre-completion notification with CCC.

Decision No. 095 on Pre-Notification Thresholds sets forth the thresholds for filing pre-completion notification by the parties to a Business Combination.

Where any of the parties to a Business Combination is a banking or financial Institution, an insurance company or in the securities business, the Decision No. 095 on Pre-Notification Thresholds specifies separate thresholds—tailored specifically for those sectors.

Table – Thresholds for Pre-Completion Notification

The conversion rate for this chart is USD 1 = KHR 4,000.

^*Total assets/sales/input turnover in the previous financial year

If a Business Combination meets any of the above thresholds, the parties to the Business Combination must file a pre-completion notification to CCC.

For a Business Combination that does not meet any of the above thresholds for pre-completion notification, a post-completion notification to CCC is still required if the Business Combination meets at least 50 percent of any of the listed thresholds above.

Both pre-completion notification and post-completion notification filing requirements are mandatory.

If a Business Combination meets any of the threshold criteria specified under Decision No. 095 on Pre-Notification Thresholds, the filing must be done before the substantial completion of the Business Combination. The Business Combination must be registered with CCC within 30 working days following its substantive completion.

For transactions that meet at least 50 percent of any of the abovementioned thresholds, the timeframe for filing the post-competition notification with CCC is also 30 working days from the substantial completion

Per our understanding of the current practice of government authorities in Cambodia, the substantial completion of a Business Combination is likely to be interpreted to mean the registration of the transaction with the relevant regulatory authority for legal recognition. If the target entity is registered in Cambodia, substantial completion refers to the due registration of the Business Combination with the Department of Business Registration, MOC.

Yes. A Business Combination, which is required to file a pre-completion notification, cannot be completed unless it has received approval from CCC per the applicable provisions under Sub Decree No. 60.

Initial filing concerning a Business Combination, which meets any of the pre-completion notification threshold criteria, is done by submitting a filled-in application (prepared in the CCC-issued standard format) to CCC and the requisite supporting documents, including the following:

• a written description of the key terms of the definitive agreements concerning the transaction;
• a copy of the current draft or executed version of the definitive agreements or the memorandum of understanding;
• copies of the enterprise registration certificate and the statutes of each party to the transaction;
• a list of major shareholders of each party to the transaction, including the details of the ultimate parent company of each party;
• a list of any affiliates or member-entities of the group concerning each party to the transaction, potentially relevant to the transaction;
• a copy of the financial statements of each party concerning the year immediately preceding the year of filing and the latest quarterly management accounts of each party; and
• detailed identification of each type of business activity (goods or services) operated by each party (including affiliates and members of the same group) for the last two years.

However, in the following cases, parties can go through a simplified filing process:

• if all parties to the proposed merger or similar transaction belong to the same group;
• if the proposed transaction has been approved by the Royal Government of Cambodia and notified to CCC within 30 working days from the date of such approval; or
• any other class of transactions as may be prescribed by CCC from time to time.

Yes. However, the filing fees for notification are to be determined under separate subordinate legislation, which is currently being developed jointly by the Ministry of Commerce and the Ministry of Economy and Finance.

Please find below a brief description of the merger review process under the Cambodian competition regime:

Three types of filing requirements apply to Business Combinations:

1. Pre-completion notification
2. Advance ruling certificate
3. Post-completion notification

Pre-Completion Notification

As discussed above, if a Business Combination meets the threshold requirement stipulated under Decision No. 095 on Pre-Notification Thresholds, the parties must file a pre-completion notification to CCC.

Two separate procedures apply depending on the nature of the Business Combination: (i) the normal procedure and (ii) the simplified procedure.

(i). Normal Procedure

Step one – Sufficiency check by CCC

• Upon filing by the parties, CCC is required to check and inform the filing parties regarding the sufficiency of the information and documents received within seven working days from the filing date.
• If CCC notifies the parties requesting any additional information or documents, those must be provided within 30 working days.

Step two – Primary review by CCC

• Upon receipt of the complete application and set of documents, CCC is to conduct a primary review and notify the filing parties within 30 working days from the date of receipt.
• CCC may either approve the proposed Business Combination or subject it to a secondary review depending upon its preliminary assessment of the impact of such a transaction on competition in the relevant market in Cambodia.

Step three – Secondary review by CCC

• In principle, the secondary review will be more comprehensive than the primary review and the prescribed statutory period for such review is 120 working days (inclusive of all of the permitted extensions – CCC is entitled to extend the period for secondary review completion by up to 30 working days, up to two times by providing notice to the filing parties).
• At the end of the secondary review, CCC may either approve or disapprove the proposed Business Combination. It is worth noting that CCC may or may not conduct a secondary review based on a substantive test for clearance as mentioned in our response to "What is the substantive test for clearance?" hereinbelow.

(ii). Simplified Procedure

In certain circumstances, as specified above in the last paragraph of our response to "What are the form and content of the initial filing?", the filing will be subject to a simplified procedure. Such a procedure does not involve the primary or secondary review steps.

Within seven working days from the receipt of the complete application and set of documents, CCC to conduct a formality check as to whether any of the conditions for the simplified procedure is met and whether all of the necessary documents and information have been provided by the parties to the proposed Business Combination and accordingly, CCC will either approve the proposed Business Combination or direct the parties to re-apply through the normal procedure.

If the Business Combination obtains approval from CCC, either through the normal or simplified procedures, the Business Combination must be registered with CCC within 30 working days after its substantive completion.

Advanced Ruling Certificate (ARC)

In cases where the threshold for pre-completion notification is met, it is still possible to skip the pre-completion notification procedure by applying for ARC. However, the CCC would issue an ARC only if the proposed Business Combination is unlikely to have any adverse effect on competition in the relevant market in Cambodia. Substantial completion can then be done within one year from the issuance of the ARC without any objection from CCC.

Post-Completion Notification

In case any Business Combination meets at least 50 percent of any of the thresholds for the pre-completion notification, it must file a post-competition notification to CCC within 30 working days from the substantial completion of the Business Combination.

The substantive test for clearance is whether, directly or indirectly, a Business Combination has or may have the object or effect of significantly preventing, restricting, or distorting competition in a relevant market within Cambodia.

In principle, the substantive test for clearance is likely to be conducted by CCC during the secondary review phase, depending on the following:

• the market share of the parties to a Business Combination and their related groups;
• how concentrated the current market is, as measured by the Herfindahl-Hirschman Index (HHI); and
• how the proposed Business Combination may affect the market concentration.

CCC may decide not to conduct a secondary review of a Business Combination if any of the following conditions are met:

Despite the satisfaction of the above requirements, CCC may issue a decision requiring the proposed Business Combination to be subject to a secondary review if CCC has a reasonable concern that the proposed Business Combination will, or is likely to, have the object or effect of significantly preventing, restricting, or distorting competition in a relevant Market in Cambodia.

After the primary review, CCC can decide as follows:

• the Business Combination may be completed; or
• the Business Combination should be subject to secondary review.

Following the secondary review, CCC can decide as follows:

• the Business Combination may be completed;
• the Business Combination may be completed subject to conditions; or
• the Business Combination be prohibited if CCC opines that the proposed Business Combination will, or is likely to, have the object or effect of significantly preventing, restricting, or distorting competition in a relevant Market.

The Law on Competition 2021, Sub Decree No. 60 and other relevant regulations are silent on this aspect. Since the practice has not fully developed yet, it remains to be seen whether or not parties can offer commitments to CCC for remedying identified competition concerns.

In case of an incomplete application for pre-completion notification, CCC will notify the filing parties requiring them to submit the complete set of information and document within 30 working days from the date of the CCC’s notification to the filing parties, failing which CCC is entitled to reject the application.

In case of incomplete registration information or post-completion notification, CCC will notify the filing parties requiring them to submit the complete set of information and document within 15 working days from the date of the CCC’s notification to the filing parties, failing which CCC is entitled to reject the application.

If a Business Combination is completed in violation of any provisions of Sub-Decree No. 60, the Business Combination and the associated parties are subject to penalty as prescribed under the Competition Law and other applicable regulations.

The applicable penalty consists of a written warning and fines of 3% to 10% of the total turnover during the period of the violation (the maximum period for penalty computation is three years).

In case of a repetitive offense, additional penalties such as revocation, suspension or withdrawal of the business registration certificate or relevant business licenses or permits will apply.

Please see our response to "Describe the sanctions for not filing or filing an incorrect/incomplete notification".

Yes. CCC has broad powers to investigate and adjudicate a Business Combination if it has or may have the object or effect of significantly preventing, restricting, or distorting competition in a relevant market within Cambodia.

According to Prakas No. 226 on the Formalities and Procedures of Inspection and Investigation, CCC is empowered to review anti-competitive practice complaints and decide whether or not to commence a preliminary examination.

An investigation into a suspected anti-competitive practice can be initiated as follows:

• A written complaint by any person, irrespective of whether or not such person has any interest in or from a suspected anti-competitive agreement or conduct;
• A written complaint by any Cambodian governmental authority; or
• Suo motu, at the initiative of CCC.

Upon receipt of a complaint, CCC will review and decide whether or not to initiate a preliminary examination of a suspected anti-competitive practice.  If CCC decides to proceed with a preliminary examination, an ad hoc committee – the “Competition Case Committee” – will be formed and will have the authority to appoint investigating officers, analyze the preliminary examination report prepared by the investigating officers and conduct a preliminary quasi-judicial hearing of the concerned parties.

Based on the review of the preliminary examination report, the gathered evidence and a quasi-judicial hearing by the Competition Case Committee, CCC decides whether or not to conduct a full-fledged investigation.

After a full-fledged investigation, the appointed investigator will prepare the final investigation report. The Competition Case Committee will analyze the final investigation report and provide its opinion to CCC to make the final decision.

Based on the investigation report, the gathered evidence and the opinion of the Competition Case Committee, CCC will decide whether or not a suspected anti-competitive practice exists and whether to impose any penalties as set forth under the Law on Competition 2021.

So far, we have not heard or seen any case where CCC has investigated or taken any action against alleged anti-competitive practices or arrangements. The reason is that the legislative framework for competition is still relatively new and thus, the laws and regulations have not yet been not fully implemented in practice.

On 4 August 2023, CCC announced that Sub-Decree No. 60 will enter into force on 6 September 2023.  Therefore, it is recommended that all investors and concerned businesses that are a party to any ongoing merger or acquisition transactions, or contemplating entering into such transaction in the near future, should carefully assess if any anti-trust filing requirement applied to their ongoing or contemplated Business Combination and if applicable, proceed with the filing for a pre-completion notification or post-completion notification, as relevant.

It is also advisable that businesses and prospective investors should take steps to ensure compliance with other aspects of the Law on Competition and applicable regulations. With regards to Prakas No. 226 specifically, businesses should begin training their staff and employees on how to conduct themselves in the event CCC initiates or conducts an investigation.

Moreover, parties to any merger or similar transaction should carry out a “merger control due diligence” to check if any merger filing requirements are triggered in Cambodia, regardless of whether or not the target entity is located in Cambodia.

The parties to a merger or similar transaction should also take into consideration the other competition aspects during the due diligence and drafting stage, such as any provisions of the underlying definitive agreements (such as a shareholder agreement) which may be construed as to prevent, restrict or distort competition in Cambodia (for example, a non-competition clause).