The Royal Government of Cambodia has issued the Sub-Decree on Requirements and Procedures for Business Combinations dated 6 March 2023 (“Merger Sub-Decree”). The Merger Sub-Decree elaborates on the prohibition on anti-competitive business combinations set out in Article 11 of the Law on Competition. The Merger Sub-Decree was officially implemented on its signature date (of 6 March 2023) and will be enforced within 6 months of that date. Consistent with the Law on Competition, the scope of the Merger Sub-Decree extends to any business combination that may significantly prevent, restrict or distort competition in the Cambodian market, regardless of whether it takes place within or outside Cambodia.
In this alert, we briefly outline some of the key elements of the Merger Sub-Decree, but stress that there are still a number of important aspects left for later determination by regulation or decision of the Cambodia Competition Commission (“CCC”).
The Merger Sub-Decree contemplates both a pre- and post-merger notification process, as well as the potential for the issuance of an Advance Ruling Certificate (“ARC”). With respect to the pre-merger notification process, the Merger Sub-Decree provides that a transaction will be subject to this process if it satisfies any of the relevant notification thresholds to be established by CCC. These thresholds are to be based on the Cambodian assets or revenues of the parties or the transaction value of the business combination.
The Merger Sub-Decree sets out the information required to be submitted with a pre-merger notification but the required notification form has not been issued as of the date of this alert. The information identified in the Merger Sub-Decree is essentially basic information about the parties, transaction and business without substantive analysis of the implications of the transaction or the relevant markets being required at this stage.
Once a pre-merger notification is received, the CCC has 7 working days to verify that it is complete and 30 working days from the date of submission of a complete notification to conduct a preliminary review. If the CCC does not issue a notice to the parties at the end of this period stating that the transaction is subject to secondary review, the transaction may be completed. The criteria for determining if a transaction will be subject to secondary review are set out in the Merger Sub-Decree. However, the CCC is not strictly bound to follow these criteria so long as it states its reasons for not following the secondary review thresholds. In addition, a secondary review may also be avoided regardless of the criteria in certain circumstances, such as where a transaction involves a failing firm or foreclosure.
When the CCC notifies the parties that a transaction is subject to secondary review, it will also provide a request for additional information required to conduct its review and the timeline for its submission to the CCC. The CCC will have 60 working days from the date the information requested in this notice is provided to conduct the secondary review. This review period is subject to two extensions of 30 days each and may also be suspended if the CCC provides a notice requesting additional information until such request is satisfied.
In certain cases, such as intra-group transactions and transactions approved by the Royal Government, a simplified pre-merger notification process is contemplated. Other classes of transactions to be determined by the CCC may also be eligible for simplified notifications.
Finally, the parties to a transaction subject to pre-merger notification are required to register its status within 30 days after substantive completion.
Some additional guidance in relation to business combinations is provided on the granting of a potential exemption under Article 12 of the Law on Competition. In particular, the Merger Sub-Decree clarifies the nature of efficiencies and benefits that will be considered in the granting such exemption.
The details on the post-closing merger notification process are left to a Prakas that has not been issued as at the date of this alert.
Details with respect to the ARC are to be provided in a decision of the CCC that has not been issued as at the date of this alert. The Merger Sub-Decree does, however, clarify that issuance of an ARC would: (1) satisfy applicable notification obligations; and (2) provide immunity from the transaction being challenged under Article 11 of the Law on Competition within one year of the ARC’s issuance based on the same information and documents that were the basis on which the certificate was issued.
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The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.