The American Chamber of Commerce (AmCham) in Cambodia organised an event focused on the country's Competition Law on April 30, 2024 at the Raffles Hotel Le Royal in Phnom Penh.
Sponsored by Tilleke & Gibbins, the event was organised as a special lunch discussion bringing together legal experts to discuss how to avoid any activities that prevent, restrict or distort competition in Cambodia.
Welcoming attendees, AmCham President, Casey Barnett, stressed the chamber's commitment to promoting free and fair competition and support the Cambodian government in this endeavour.
He shared a key finding from a recent research paper published by the United States National Bureau of Economic Research (NBER), based on 18 years of management and company data, that identified the top structural reforms a country can undergo to most effectively enhance productivity and sustainable growth.
The number one recommendation, he said, was to have free and fair competition, followed by the recommendation to increase international trade and foreign direct investment (FDI).
Competition is the most powerful force to improve management practices, to improve productivity and to improve quality, and so in that spirit, we hope, for the sake of the Cambodian economy, that we can also support free and fair competition.
Cambodia's Competition Law (2021)
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Delivering the keynote opening address, H.E. Phan Oun, Director General of the Consumer Protection, Competition and Fraud Repression (CCF) department under the Ministry of Commerce, noted that Cambodia's Law on Competition was signed into force fairly recently in 2021, following which all 10 ASEAN member states finally established a competition law into their national legal systems as envisioned under the ASEAN Economic Community Blueprint.
“The enactment of this law satisfies one of Cambodia's commitments to not only ASEAN, but also to the World Trade Organisation (WTO),” he added.
Further speaking to the merits of a strong competition law, Oun explained how it can help micro, small and medium enterprises prosper through protection from anti-competitive conduct of bigger firms holding market power, while also building trust with foreign investors in Cambodia through the establishment of a level playing field, with fair competition between domestic and foreign firms.
The Cambodia Competition Commission (CCC) acts as the sole body responsible for developing and implementing Cambodia's competition laws and regulations, while the CCF acts as its secretariat and implementing body.
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“Following the enactment of the Competition Law in late 2021, the CCC have issued a set of 16 regulations under the law, including sub degrees on business combination, otherwise called merger and acquisition, and a Prakas on negotiated settlement decision or procedural requirement of assumption,” shared Oun.
He also announced that the CCC would soon be adopting a new procedural requirement concerning leniency.
Additionally, I am delighted to share the news that CCC have recently adopted the decision on procedural requirements of leniency, which is soon to be signed by the Chairwoman, the Minister of Commerce. Hopefully by this week, we will get a new decision on leniency which grants another solution for people who have infringed the law to confess, and CCC will request to return grant immunity.
Updates Of Laws And Regulations On Competition In Cambodia
Meng Songkheang, Director of the Department of Competition at the CCF, delivered a presentation breaking down key legal concepts relevant to Cambodia's competition law, including: agreements that prevent, restrict or distort competition; abuses of market dominance; how business combination prevents, restricts or distorts competition; the complaint and investigation procedure; and penalties.
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The main purposes of the Law on Competition, he summarised, are to:
- Promote fair and honest business relations;
- Increase economic efficiency encourage new business;
- Help consumers to access high quality, low price, diverse and versatile products and service
Horizontal And Vertical Agreements
Agreements that can prevent, restrict or distort competition can be summarised under two categories: horizontal agreements (between competitors) and vertical agreements (between entities at different levels of the supply chain). Songkheang detailed specific practices like price fixing, market sharing, and bid-rigging that are considered anti-competitive, and outlined the corresponding articles in Cambodia's Law on Competition that cover these practices.
He also offered examples of actions by dominant market players that restrict competition, including refusal to supply, selling below cost to eliminate competition, and exclusive dealing.
Business Combinations: Mergers And Acquisitions
Regarding business combinations, Songkheang discussed the impacts of mergers and acquisitions, including increased market power and potential reduction in competition. Parties proposing to undertake a Business Combination are obligated to notify the CCC prior to, or after, the completion of the proposed Business Combination, based on the thresholds outlined in the slide below:
Penalties
Songkheang specified the sanctions for violations of the law, which include a written warning; pecuniary penalty; financial penalty and imprisonment; and suspension, revocation or withdrawal of business registration certificates, business licenses, or business permits.
The event concluded with a panel discussion and Q&A session moderated by Sok Vanseka, AmCham Governor and Managing Partner of Sethalay Law Office.
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