Several Noted Points on Law Competition of 2018

On Jun 12^th, 2018, The National Assembly promulgated Competition Law which will take effect from July 1^st, 2019 and replace the Competition Law 2004. According to Article 3.9, violation of regulations on economic concentration is one of three signs of violation of competition law.

Firstly, economic concentration includes the following forms:

(1) Merger of enterprises;

(2) Consolidation of enterprises;

(3) Acquisition of enterprises;

(4) Joint venture between/among enterprises;

(5) Other forms of economic concentration under regulation of the laws (Article 29). Subject carrying out activities of economic concentration is enterprises and the purpose of economic concentration is to gain control the objective enterprises and to govern the market to a certain extent.

Secondly, economic concentration shall be prohibited if it makes or potentially makes significant competition-restraining impact on the Vietnamese market. Specifically, the National Competition Commission shall assess the impact or ability making significant competition-restraining impact of economic concentration based on the following factors:

(1) Combined market share of enterprises engaging in the economic concentration on the relevant market;

(2) The degree of concentration on the relevant market before and after the economic concentration;

(3) The relationship of the enterprises engaging in the economic concentration in the production, distribution or supply chain for a certain kind of goods/service or the business lines of the enterprises engaging in the economic concentration which are inputs or complementary to one another;

(4) Competitive advantage brought about by economic concentration in the relevant market;

(5) The ability of enterprises after the economic concentration for increasing significantly their prices or Return on sales;

(6) The ability of enterprises after the economic concentration for removing or preventing other enterprises from market entry or expansion;

(7) Particular factors in the sectors, areas which enterprises are engaging in economic concentration.

Thirdly, enterprises engaging in the economic concentration shall submit notification dossier of economic concentration to the National Competition Commission before initiating economic concentration if they reach the threshold of economic concentration notification. The notification threshold shall be determined based on one of the following criterias:

(1) Total assets of the enterprises engaging in the economic concentration on the Vietnamese market;

(2) Total turnover of enterprises engaging in the economic concentration on the Vietnamese market;

(3) The transaction value of the economic concentration;

(4) Combined market share of enterprises engaging in the economic concentration on the relevant market. For efficient preparation of dossiers, the consultation with M&A lawyers, anti competition lawyer are suggested.

Fourthly, regarding assessment procedure, the National Competition Commission shall receive notification dossier of economic concentration, preliminarily assess the economic concentration. Matters of preliminary assessment of economic concentration include:

(1) Combined market share of enterprises engaging in the economic concentration on the relevant market;

(2) The degree of concentration on the relevant market before and after the economic concentration;

(3) The relationship of the enterprises engaging in the economic concentration in the production, distribution or supply chain for a certain kind of goods, service or the business lines of the enterprises engaging in the economic concentration which are inputs or complementary to one another. Within 7 working days from receipt of notification dossier of economic concentration, the National Competitive Commission shall notify the applicant in writing that whether the dossier is complete and valid. If the dossier is incomplete or invalid, the National Competition Commission shall notify the applicant in writing of specific content needed to amend, supplement within 30 days from the date of notice. Upon expiry of 30 days, if no amendment, supplementation is made or the dossier is not amended, supplemented completely at request, the National Competition Commission shall return the notification dossier.

After preliminary assessment of economic concentration, the National Competition Commission shall officially assess the economic concentration within 90 days from the date of notice of preliminary assessment result. In complicated cases, the National Competition Commission may extend the time limit of official assessment but it can not exceed 60 days and inform in writing enterprises submitting the notification dossier of economic concentration. Matters of official assessment of economic concentration include:

(1) Assessing the impact or ability making significant competition-restraining impact of economic concentration;

(2) Assessing the positive impact of economic concentration;

(3) Assessing generally the ability making competition-restraining impact and ability making positive impact of economic concentration to. In process of official assessment of economic concentration, the National Competition Commission require the enterprise to submit notification dossier of economic concentration in order to supplement information, documents but this does not exceed 2 times. The enterprise submitting notification dossier of economic concentration shall be responsible for supplementing the information, documents relating to economic concentration and be responsible for the completeness and accuracy of such information, documents at the request of the National Competition Commission.

This supplementation duration shall not be included in the time limit for assessing economic concentration. If the enterprise fails to supplement fully information, documents or supplement incompletely information, documents at request, the National Competition Commission shall consider, decide on the basis of available information, documents.

The fifth matter is right, responsibility and authority of the parties. In process of assessing economic concentration, the National Competition Commission is entitled to consult the bodies managing sectors, areas which enterprises are engaging in operating economic concentration, consult other relevant enterprises, organizations, and individuals; be responsible for ensuring confidentiality of information, documents provided under regulations of the laws; has the authority to handle complaints against decisions on settlement of violations against regulations on economic concentration.

The consulted bodies are responsible for responding to consulted  matters in writing within 15 days from the date on which the request for consultation made by the National Competition Commission is received. Relevant bodies, organizations, and individuals is responsible for fully, accurately and promptly providing information, documents at request of the National Competition Commission in the process of assessing economic concentration unless otherwise stipulated.

Sixthly, regarding decision on economic concentration, after and based on the official assessment of economic concentration, the National Competition Commission shall issue a decision determining that:

(1) The economic concentration is approved. This decision shall be sent to enterprises engaging in economic concentration within 5 working days from the date of issue;

(2) the economic concentration is conditional;

(3) the economic concentration is prohibited. If the National Competition Commission issues a decision behind schedule which causes damage to enterprises, it shall compensate for such damage under regulation of the laws. Decision on economic concentration shall be announced, except for the matter relating to State secrets or trade secrets.

Seventhly, conditional economic concentration is economic concentration which is approved and it shall meet one or more of the following conditions:

(1) Division, split, resale of a part of capital contribution and property of enterprises engaging in economic concentration;

(2) Control of the matters relating to the purchase and sale prices of goods, services or other trading conditions in contracts of enterprises formed after the economic concentration;

(3) Other measure for remedying the ability making competition-restraining impact on the market;

(4) Other measures for enhancing the positive impact of economic concentration.

Finally, violations against regulations on economic concentration includes the following violations:

(1) An enterprise fails to notify of economic concentration;

(2) An enterprise implements economic concentration without receiving a notification of preliminary assessment from the National Competition Commission;

(3) An enterprise in cases of official assessment implements economic concentration before the National Competition Commission issues a decision;

(4) An enterprise fails to perform or incompletely perform conditions specified in the decision on economic concentration;

(5) An enterprise implements economic concentration which is prohibited.

For consultation, we at ANT Lawyers, a law firm in Vietnam will be available for legal help.