Cambodian Competition Law 2021

Overview

On 5 October 2021, Cambodia enacted Law on Competition which helps to fulfil her obligation as a member of the World Trade Organization and the ASEAN. This law aims to promote fair commercial relationships, economic efficiency, the new start-up, as well as to assist the consumers to obtain goods or services of higher quality at lower prices with greater varieties and choices.

This new law consists of 7 Chapters with a total of 41 articles. it applies to all persons conducting business activities, or any activity which supports business activities and to significantly prevent, restrict, or distort competition in the market of Cambodia regardless of whether the activities occur within or beyond the territory of the Kingdom.

Competent Institution

A Competition Commission of Cambodia (“CCC”) will soon be established to act as a competent institution in implementing the law. The CCC shall be led by the Minister of Commerce and composed of representative members from relevant ministries or institutions and five (5) independent individuals such as: a former judge, two individuals with legal knowledge and experiences, and two individuals with economic knowledge and experiences.

Functions and duties of the CCC are defined under article 6 of the law.

Crimes Under Competition Law

Unlawful horizontal agreement: the horizontal agreement which contains the following activities shall be considered as illegal agreement: (1) fix, control or maintain prices of goods or services; (2) prevent, restrict or limit the development, or the quantity or type of goods or services which are made available for sales in the market; (3) allocate geographic areas or customers between competitor, and (4) favour one bidder in bids for the contract which is used for private acquisition.
Unlawful vertical agreement: a vertical agreement that requires the purchaser to resell the goods or services at a minimum price or requires the purchaser to accept certain conditions. The Law also makes the list of activities in article 12 which tend to prevent, restrict, or distort competition in the markets which prohibits any person to join a vertical agreement that contains such activities.
Abuse of dominant position in a market: the Law issues a list of activities under article 13 which may prevent, restrict, or distort the competition if it is done by the person with a dominant position in the market. Those activities include (1) requiring or inducing a supplier or customer not to deal with a competitor; (2) refusing to supply goods or services to a competitor; (3) selling goods or services on conditions that the purchaser needs to purchase the unrelated goods or services to the object of the contract; (4) selling goods or services below the cost of production; and (5) refusing to give access to an essential facility to a competitor.
Business combination: Any business combination which tends to significantly prevent, restrict, or distort the competition in the market shall be prohibited. CCC has the authority to examine, evaluate, and monitor the effect of this combination on the competition.

Procedures and Measures Against Competition Crimes

Complaint and Investigation Procedure: the CCC has the authority to receive complaints via CCC’s initiative itself, authorized regulators, or any person for any violation or possible violation under the Law. The investigation shall be conducted by the judicial police officer under the General Department of Consumer Protection, Competition, and Fraud Repression of the Ministry of Commerce. The investigator shall have the investigation power in accordance with Law on Criminal Procedure and may seek cooperation from relevant authorities. During the investigation, the judicial police officer may request CCC to issue interim measures if necessary.
Interim Measures and Orders of CCC: Upon the request from the judicial police officer, CCC can issue interim measures such as the temporary suspension of legal effect or operation arising out of any agreement, desisting from engaging in any conduct, or any kind of sanctions or omission. CCC may issue interim measures only to prevent any serious damages or to protect the public interest in emergency circumstances. CCC may end or renew the measures on a reasonable basis. Additionally, CCC may also issue an order upon the request of the investigator to any person in relation to the violation of Competition Law. Both interim measures and orders issued by CCC may be appealed in 15 working days to the competent court.

The Structure Format of the Law on Competition

Chapter	Tittle	Article
Chapter 1	General Provisions	Article 1 – 3
Chapter 2	Competent Institution	Article 4 – 6
Chapter 3	Unlawful Activities which Prevent, Restrict or Distort Competition	Article 7 – 15
Chapter 4	Complaint and Investigation Procedures	Article 16 – 25
Chapter 5	Interim Measures and Orders of the CCC	Article 26 – 33
Chapter 6	Penalties	Article 34 – 39
Chapter 7	Final Provisions	Article 40 – 41

Frequently Asked Questions by Client

What is the main law or regulation governing the competition in Cambodia?

The main law governing the competition in Cambodia is Law on Competition. It can be found under Royal Kram No. NS/RKM/1021/013 (Law on Competition), which came into effect on 6 October 2021.

Is there any authority that enforce and administer the competition law in Cambodia?

The primary enforcement authority is the Competition Commission of Cambodia (CCC).

What is the scope of the Law on Competition?

The Law on Competition applies to all Persons or any actions relating to business activities that significantly prevent, restrict, or distort competition in Cambodia’s market whether the activities take place inside or outside the Cambodia’s territory.

What are the prohibitions on the anti-competition agreements?

Cambodian Law on Competition prohibit the followings:

A horizontal agreement is defined as an agreement between Persons which operate or are likely to operate “at the same level of production and distribution chain.” (Chapter 1 Article 3 (8)). Making or implementing a horizontal agreement affecting the competition is illegal. Horizontal agreements include price-fixing, output-control, market-allocation, and bid-rigging agreements (Chapter II Article 7).

A vertical agreement is defined as an agreement between Persons which operate or are likely to operate “at different levels in the production and distribution chain.” (Chapter 1 Article 3 (9)). Vertical agreements having minimum resale price maintenance (RPM) or setting any condition on buyers are illegal. It is also unlawful to make or implement other vertical agreements with anticompetitive intent or effect. Examples include agreements containing customer or territorial restraints on resale, exclusive dealing, exclusive distributorships, and tying arrangements. (Chapter II Article 8.)

Abuse of dominant position: Chapter III Section 2 (Article 9) of the Law on Competition prohibits abuse of a dominant position. However, Article 10 provides that activities listed under Article 9 may be lawful if the CCC determines that there is a reasonable justification to perform the activity for legitimate business interests and the activity does not have a significant anticompetitive effect on a market.

Business combination: Chapter III Section 3 (Article 11) of the Law on Competition prohibits any business combinations that have the effect of significantly preventing, restricting, or distorting market competition. The CCC shall examine, inspect, and evaluate the effect of such business combination on competition.

Are there any exceptions under the Law on Competition?

The anticompetitive agreements or activities can be exempted from the penalties under the Competition Law in the event that such agreements offer significant identifiable technological, economic, or social benefits that significantly outweigh the anticompetitive effect, would not eliminate competition in any substantial part of a market, and could not have arisen without such agreements or activities (Chapter III, Section 4, Article 12). The exemption application shall be decided by the CCC. (Chapter III, Section 4, Article 13-14).

What is the primary body for adjudication and appeal for the Law on Competition?

The CCC is the primary body for the adjudication of non-compliance penalties and appeals. The CCC’s interim measure and/or order may be appealed to a competent court. (Chapter IV, Article 31)

Is there any leniency program under the Law on Competition?

The CCC would determine the leniency policy. A person might be granted leniency from fines related to horizontal agreements if they could provide evidence of information relating to the agreement.

What are the procedures and formalities for the notification of mergers?

Further details on business combinations would be announced in future sub-decrees.

Does the Law on Competition set forth any settlement provisions?

Chapter IV Article 25 of the Law on Competition Law sets out that the CCC has the authority to decide whether such case can be settled through negotiation as per the request from the investigation officer. The decision from the negotiation shall be made available to the public.

Is there any criminal liability under the Law on Competition?

The Law on Competition imposes criminal liability for infringement of provisions of the Law concerning the unlawful horizontal agreement A natural person who commits such crime shall be subject to an imprisonment from 01 (one) month to 2 (two) years, and monetary penalty from 5 million Riels to 100 million Riels (USD 1250 – USD 25,000). A legal person shall be subject to monetary penalty from 100 million Riels to 2 billion Riels (USD 25,000 – USD 500,000). (Chapter VI, Article 38)

Does CCC has the authority to initiate the investigation for the complaint related to the Law on Competition?

Chapter IV of the Competition Law sets forth the complaint and investigation procedure. Article 16 of the Law offers the authority to the CCC to receive the complaint which subsequently initiates the investigation.

Does Law on Competition offer any right of private action?

Chapter VI Article 37(4) provides that the CCC may require parties that infringed the Law and caused damage to another person to provide compensation for any financial harm suffered.

Authors

Mr. HOUN Vannak
Managing Partner
RHTLaw Cambodia

M +(855) 12 737 123
T +(855) 23 886 616
E vannak.houn@rhtlawcambodia.com

Ms. TAN Sambathmarina
Associate
RHTLaw Cambodia

M +(855) 89 780 452
T +(855) 23 886 616
E marina.tan@rhtlawcambodia.com

Mr. SAT Sokvisal
Associate
RHTLaw Cambodia

M +(855) 60 333 161
T +(855) 23 886 616
E sat.sokvisal@rhtlawcambodia.com