1. INTRODUCTION
The Law on Competition was promulgated on 05 October 2021 and came into force on 06 October 2021. This law governs any activities that prevent, restrict or distort competition, and establishes and determines the authority of the Cambodia Competition Commission (“CCC”). The commission’s goal is to encourage fair and honest business relations, increase economic efficiency, encourage new businesses, and assist consumer access to high-quality, low-cost, diverse and versatile products and services.
In February 2002, prior to the promulgation of the Law on Competition, the National Assembly adopted the Law on Marks, Trade Names and Acts of Unfair Competition (“Trademark Law”). The Trademark Law protects trademarks but also prohibits acts of unfair competition, however the unfair competition provisions are short, broad and vague. The law states that any act of competition contrary to “honest practices” in business is prohibited. The Law then lists three types of behavior as specifically, but not exclusively, forbidden:
- All acts which create confusion with the establishment, the goods, or services of a competitor;
- False allegations which discredit a competitor or a competitor’s goods or services; and
- Indications or allegations which are liable to mislead the public as to the nature, manufacturing process, characteristics, suitability, or quantity of goods.
As with much of Cambodian law, there appears to have been no official interpretation or precedential cases explaining these provisions.
With the Law on Competition now in place, this law applies to all Persons conducting business activities, or any actions supporting business activities, which significantly prevent, restrict or distort competition in a Market in the Kingdom of Cambodia regardless of whether the activities take place inside or outside the territory of the Kingdom of Cambodia.
1. UNLAWFUL ACTIVITIES WHICH RESTRAIN, RESTRICT OR DISTORT COMPETITION
Should a construction fall under the jurisdiction of the Minister of the MLMUPC, the owner, either an individual or a legal entity, can apply for a construction permit at the one window service of the MLMUPC and may apply for an extension of validity of the construction permit only once. The internal process of the issuance of the construction will take at least 45 days after the one window service has ISSUED the receipt of the application. If necessary, the MLMUPC may assign officer(s) to conduct an on-site investigation of the construction design.
1.1. Agreements which Restrain, Restrict or Distort Competition
* Horizontal Agreements; Persons are prohibited from making and implementing a Horizontal Agreement that directly or indirectly affects competition related to the following:
a) Agreement on fixing, controlling or maintaining the price of goods or services;
b) Agreement on preventing, restricting or limiting: – the quantity of goods or services which are made available for sale; – the type of goods or services which are made available for sale; – the development of new goods or services;
c) Agreement on allocating geographic areas between Competitors;
d) Agreement on allocating customers between Competitors; or
e) Favoring one bidder in bids for a contract in private procurement.
* Vertical Agreements; Persons are prohibited from making and implementing a Vertical Agreement which directly or indirectly requires a purchaser to resell purchased goods or services at a minimum price set by the seller or to accept any conditions of this nature set by the seller. Persons are prohibited from making and implementing a Vertical Agreement which has or could have the object or effect of significantly preventing, restricting or distorting competition in a Market by:
a) Requiring a purchaser to resell purchased goods or services only within a defined geographic area;
b) Requiring a purchaser to resell purchased goods or services only to specified customers or specified categories of customers;
c) Requiring a purchaser to purchase all or nearly all of its requirements for particular goods or services exclusively from the seller;
d) Preventing a seller from selling goods or services to another purchaser; or
e) Requiring a purchaser to purchase unrelated goods or services in addition to the goods and services that the purchaser wants to purchase.
1.2. Unlawful activities on the Abuse of Dominant Market Position
The activities listed below shall be prohibited if undertaken by a Person with a Dominant Market Position, where such activities have the objective or effect of significantly preventing, restricting or distorting competition in a Market as follows:
– Requiring or inducing a supplier or customer not to deal with a Competitor;
– Refusing to supply goods or services to a Competitor;
– Selling goods or services on the condition that the purchaser needs to purchase other goods or services separately, which are unrelated to the object of the contract;
– Selling goods or services below the cost of production; or
– Refusing to give a Competitor access to an Essential Facility.
A Person with a Dominant Market Position may lawfully perform the activities as determined in Article 9 of this law if the Cambodian Competition Commission (“CCC”) determines that the Person has fulfilled the following 2 (two) conditions:
1) The Person establishes a reasonable reason to legally perform those activities for the benefits of its business.
2) Those activities do not significantly prevent, restrict or distort competition in a Market.
1.3. Business Combinations
Any Business Combination which has or may have the effect of significantly preventing, restricting or distorting competition in a Market shall be prohibited. Business Combinations shall be subject to examination, inspection and evaluation of their effect on competition as stipulated in the above paragraph by the CCC. The Requirements and Procedures for Business Combinations shall be determined by Sub-Decree.
1.4. Exemptions on Horizontal Agreements, Vertical Agreements, the Abuse of Dominant Market Position and Business Combinations
Any prohibited Agreement, activities of abuse of a dominant position, or activities of business combinations of this law may be granted an exemption from such prohibition, if those Agreements or activities fulfil the four following requirements:
- There are significant identifiable technological, economic or social benefits;
- Such benefits would not exist without those Agreements or activities;
- Those benefits significantly outweigh the effects caused by any determined preventing, restricting, and distorting of competition; and
- They do not eliminate competition in any important aspects of goods or services.
1.5. Leniency Policy
Any Person participating or assisting in a Horizontal Agreements may be granted leniency from the pecuniary fine as determined by the CCC where the Person gives evidence or important information related to the unlawful Horizontal Agreement. Any granted leniency shall be applied even if there is a complaint filed against the CCC decision to grant it. The Requirements and Procedures on the determination of leniency shall be determined by CCC.
The CCC has the authority to receive complaints on the following grounds:
– Its own initiative; or
– Receipt of a complaint from any competent regulator; or
– Receipt of a complaint from any person other than the competent regulators.
2. COMPLAINT AND INVESTIGATION PROCEDURE
Under the Law on Competition, there are three procedures for an infringement case:
– Its own initiative; or
– Issuance of interim measures and decisions; and
– Filing an appeal against an interim measure or decision.
3. PENALTIES
Under the Law on Competition, the available penalties include a warning letter, suspension, revocation or the withdrawal of business registration certificates, business licenses, or business permits, monetary fines, pecuniary penalties and imprisonment. The penalties for a natural person or a legal person who violate the Law on Competition are detailed as follows:
3.1. Horizontal Agreement
- Natural Persons: a term of imprisonment from one (1) month to two (2) years, and a fine from KHR5,000,000 to KHR100,000,000 (approximately US$1,250 to US$25,000)
- Legal Persons: a fine from KHR100,000,000 to KHR2,000,000,000 (approximately US$25,000- to US$500,000)
3.2. Vertical Agreement / Abuse of Dominant Market Position/ Business Combinations
- Natural Persons: a written warning and a fine of 3% to 10% of its total turnover up to three years of the years of the infringement issued by CCC. In the case of having received a written warning and a fine previously, where the Person continues committing the same violation, this may lead to a revocation or withdrawal of business registration certificates or permits, or business licenses.
- Legal Persons: a written warning and a fine of 3% to 10% of its total turnover up to three years of the years of the infringement issued by CCC. In the case of having received a written warning and a fine previously, where the Person continues committing the same violation, this may lead to a revocation or withdrawal of business registration certificates or permits, or business licenses.
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. For more details or any question related to Law on Competition, please contact our professionals via [email protected].
TABLE OF CONTENTS
| * | Introduction |
| 1. | Unlawful Activities which Restrain, Restrict, or Distort Competition |
| 2. | Complaint and Investigation Procedure |
| 3. | Penalties |
AUTHORS/CO
- Mr. Darwin HEM
- Ms. Keopichchenda LONG
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