Following the article “Economic Concentration and Merger – Acquisition Transactions as Notifiable Economic Concentrations” this article outlines the process for reviewing a notifiable economic concentration filing.
Filing the economic concentration notification dossier and review process
The steps for filing the economic concentration notification dossier and the subsequent review process are as follows:
(1) Review Steps
1.1. Preliminary appraisal
At the preliminary appraisal phase, the National Competition Commission will consider the following factors:
a. The Combined Market Share of enterprises participating in the economic concentration in the relevant market;
b. The Herfindahl-Hirschman Index (“HHI”), determined by the sum of the squares of the market share of each enterprise in a relevant market;
c. The relationship of enterprises participating in the economic concentration within the production, distribution, and supply chain for a particular type of goods, services, or business sector, where the enterprises serve as inputs for each other or complement each other.
1.2. Official appraisal
For certain complex cases, in addition to the factors considered during the preliminary assessment stage, the Viet Nam Competition Commission will evaluate the following issues:
a. Evaluation of the impact or potential significant anti-competitive effects of the economic concentration based on one or a combination of the following factors:
(i) The Combined Market Share of enterprises participating in the economic concentration in the relevant market;
(ii) The level of market concentration in the relevant market before and after the economic concentration;
(iii) The relationship of enterprises participating in the economic concentration within the production, distribution, and supply chain for a particular type of goods, services, or business sector, where the enterprises serve as inputs for each other or complement each other;
(iv) Competitive advantages brought by the economic concentration in the relevant market;
(v) The ability of the post-concentration enterprise to significantly increase prices or profit margins;
(vi) The ability of the post-concentration enterprise to eliminate or prevent other enterprises from entering or expanding in the market;
(vii) Industry-specific factors related to the sector in which the enterprises participating in the economic concentration operate.
b. Assessment of the positive effects of the economic concentration based on one or a combination of the following factors, as well as measures to enhance the positive effects of the economic concentration:
(i) The positive impact on the development of sectors, industries, and science and technology in line with the State’s strategies and plans;
(ii) The positive impact on the development of small and medium-sized enterprises;
(iii) Strengthening the competitiveness of Vietnamese enterprises in the international market.
c. A comprehensive assessment of both the potential anti-competitive effects and the potential positive effects of the economic concentration to serve as a basis for considering and deciding on the economic concentration.
(2) Evaluation Results
2.1. Economic Concentration is Executed
Economic concentration is executed when it falls under one of the following cases:
Case 1 |
The enterprises involved in the economic concentration are related to each other within the production, distribution, and supply chain for a particular type of goods, services, or business sector, where the enterprises serve as inputs for each other or complement each other, and have a market share of less than 20% in each relevant market. | ||
Combined Market Share |
Post HHI |
Post HHI minus (-) Pre HHI |
|
Case 2 |
Less than 20% in the relevant market |
N/A |
|
Case 3 |
From 20% or more in the relevant market |
Less than 1,800 |
N/A |
Case 4 | From 20% or more in the relevant market |
Above 1,800 |
Less than 100 |
2.2. Conditional Economic Concentration
Conditional economic concentration is an economic concentration that is executed but must meet one or more of the following conditions:
a. Dividing, separating, or selling part of the equity or assets of the enterprises involved in the economic concentration;
b. Controlling the terms related to the purchase price, sale price of goods, services, or other transaction conditions in the contract of the enterprise formed after the economic concentration;
c. Other measures to address the potential anti-competitive effects in the market;
d. Other measures to enhance the positive effects of the economic concentration.
2.3. Prohibited Economic Concentration
Prohibited economic concentration refers to cases where the economic concentration by the enterprises significantly affects or has the potential to significantly affect competition in the Vietnamese market.
Note: The information provided above is for reference only. Depending on the specific time and the parties involved, the content of the advice may no longer be applicable. For further details, please contact LMP Lawyers.