The Law on Business Competition (№ 60/NA, 14 July 2015) (“Competition Law”) was passed on 14 July 2015 and came into effect on 9 December 2015. In October 2018 an additional regulation was passed formalizing the establishment of the regulatory authority (the “Competition Authority”).
With the establishment of the Competition Authority we expect to see further regulatory developments in this area in 2019. In anticipation of implementation of the Competition Law we set out below some threshold comments on the mergers regime.
The Competition Law prohibits mergers that result in:
- a market share over a level which is yet to be defined;
- an effect on access to the market or that limit technological development; and
- an effect on consumers, other businesses and the development of national socio-economy.
“Mergers” are defined as including a “business acquisition” which is further defined as the agreement of any enterprise to purchase part or the total assets of another enterprise and thereby coming under the rightful ownership and management of the purchaser. While we expect that this term refers to an acquisition of shares or assets that enable control over a business, further regulatory guidance is required in order to properly determine the application of the merger regime (including with respect to the existence any share acquisition thresholds).
All mergers will be required to file a pre-merger notification unless the merging businesses are small and medium enterprises (which will be subject to post-closing notification). Within seven days of receipt of the notification, the Competition Authority must notify the parties in writing whether the application is complete and provide a decision on the merger within 30 days of receipt of the completed application with a potential for an extension of up to 30 days. A potential exemption for an otherwise prohibited merger may be available where one of the parties is bankrupt or if the merger would expand exports or promote technological or academic progress.
As the Competition Authority has only recently been established, we understand that the pre-merger notification does not yet occur in practice, and the thresholds for triggering the application of the Competition Law have not yet been notified.
We will continue to keep you updated as to implementation of the Competition Law in 2019.
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.
Country Managing Director
DFDL Lao PDR