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Cambodia: Gov’t lays down conditions for business merging
The Royal Government of Cambodia (RGC) on Monday issued a sub-decree on requirements and procedures for business mergers and acquisitions to enhance the business environment in the country by preventing businesses from blocking or limiting market shares and entrance channels on its path to leaving the Least Developed Country (LDC) category.
The sub-decree on conditions or requirements and procedures for business mergers and acquisitions released on Wednesday by RGC stipulates that either local or foreign businesspeople are required to submit applications of request for mergers or acquisitions to the Competition Commission of Cambodia (CCC) before this transaction completes.
The sub-decree signed by Prime Minister Hun Sen also states that CCC has to consider three main conditions before issuing an approval on coverage of the mergers or acquisitions of business. First, the commission has to examine the total assets that any party or related groups of that party have in Cambodia in their financial year before the year of notification.
Second, CCC also has to look at the total profits or revenue from purchasing orders that any party or related groups of that party make in Cambodia in their financial year before the year of notification and thirdly the transaction value of the mergers or acquisitions, according to the sub-decree, adding that the commission has seven working days to inform the applicants.
Penn Sovicheat, Under-Secretary of State of the Ministry of Commerce (MoC), told Khmer Times yesterday that firstly, the sub-decree is a part of legal documents that Cambodia is obliged to make on behalf of a member of the World Trade Organisation (WTO). Secondly, to leave its LCD category, the country has to be well prepared to respond to the demand and development in the domestic and overseas markets.
Sovicheat further said that to merge businesses in these forms, the parties concerned are required to submit a request to CCC for permission to proceed with the such acquisition and the commission will study impacts and legal procedures before issuing approval to the applicants. All these activities are also specified in Cambodia’s law on competition.
“So far there’s no proof of negative impacts or incidents in the competition in our market as the government has not conducted a comprehensive study or supervision as most probably there are not sufficient laws, regulations and procedures to take all of these actions regarding forms and impacts of mergers and acquisitions on market competition,” he said.
Direct mergers are formed through an acquisition of a company, or when two firms are merged into each other to become a larger one in the market, while indirect mergers are formed through making agreements between counterparts of their joint business to cooperate with each other or one another, which may result in negative impacts on the markets.
“Some mergers have blocked or limited market entrance or coverage for other firms that are running or will enter the markets to run their businesses to sell their similar products or services, which means to strengthen the enforcement of the law on competition more effectively and broadly. That’s why the sub-decree also stipulates notification,” he said.
Sovicheat pointed out further that in the financial industry, Cambodia’s supervisory authority National Bank of Cambodia (NBC) has other laws, regulations and other legal documents to issue a separate approval. “It is to show to the international community that we have sufficient legal documents to support a transparent and attractive environment of doing business here.”
Source: https://www.khmertimeskh.com/501252332/govt-lays-down-conditions-for-business-merging/