HOÀNG LÊ UYÊN PHƯƠNG MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -----------***------------ MANAGING CENTER OF SPECIAL AND INTERNATIONAL PROGRAMS HOÀNG LÊ UYÊN PHƯƠNG EVALUATION OF THE CRITERIA BACHELOR THESIS FOR EFFECTIVE ECONOMIC CONCENTRATION CONTROL UNDER THE COMPETITION LAW 2018 OF VIETNAM AND RECOMMENDATIONS FOR IMPROVEMENT BACHELOR THESIS Faculty: Commercial Law School year: 2015 - 2020 YEAR 2020 HO CHI MINH CITY YEAR 2020 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -----------***------------ MANAGING CENTER OF SPECIAL AND INTERNATIONAL PROGRAMS HOÀNG LÊ UYÊN PHƯƠNG EVALUATION OF THE CRITERIA FOR EFFECTIVE ECONOMIC CONCENTRATION CONTROL UNDER THE COMPETITION LAW 2018 OF VIETNAM AND RECOMMENDATIONS FOR IMPROVEMENT BACHELOR THESIS Faculty: Commercial Law School year: 2015 - 2020 Supervisor: LLM Nguyen Thi Phuong Ha Student: Hoang Le Uyen Phuong Student ID: 1551101030017 Class: 64-CLCQTL40 HO CHI MINH CITY YEAR 2020 STATEMENT OF GUARANTEE I declare that this thesis is the result of my own research, which is implemented under the supervision of LL.M Nguyen Thi Phuong Ha, ensures the honesty and complies with rules and regarding quotation, note of references. I hereby take fully responsibility for this declaration. LIST OF ABBREVIATIONS ACCC Australian Competition and Consumer Commission ASEAN Association of Southeast Asian Nations Decree 35/2020 Decree 35/2020/NĐ-CP detailing and guiding the implementation of a number of articles of the Competition law 2018 EC European Commission EU European Union GDP Gross domestic product HHI Herfindahl-Hirschman Index ICC International Chamber of Commerce ICN International Competition Network JFTC Japan Fair Trade Commission LOC 2004 Law on Competition 2004 LOC 2018 Law on Competition 2018 M&As Mergers and acquisitions MOIT Ministry of Industry and Trade NASC National Assembly Standing Committee NCC National Competition Commission OECD Organization for Economic Cooperation and Development UEL University of Economics and Law UK United Kingdom UNCTAD United Nations Conference on Trade and Development TABLE OF CONTENTS INTRODUCTION. Overview of economic concentration and its control mechanisms .1 Definition and nature of economic concentration .2 Impacts of economic concentration on healthy competition .3 The concept of economic concentration control .4 Purposes of economic concentration control .5 Overview of economic concentration control criteria.
23 Conclusion of Chapter 1. Criteria for economic concentration control under the Vietnamese Law on Competition and recommendations for improvement.1 Criteria for economic concentration control under the Vietnamese Law on Competition .2 Assessment of substantial anti-competitive effects caused or potentially caused .3 Assessment of positive effects .2 Recommendations for improvement. 43 Conclusion of Chapter 2. Problem statement Different organizations implement different measures to achieve its paramount objectives, such as maximizing profits to allow for their survival in the competitive market.
In recent years, mergers and acquisitions (M&As) have become mainstream business strategies, adopted by thousands of companies around the world. Such an approach has evolved to be an essential part of any healthy economy and an essential method to ensure that companies can provide returns to their owners and investors1. Its significance can be explained by the immense advantages that result from such activities. In general, M&As enhance the existing financial and operation power of one company by hunting synergy gains.
For example, the combination of two firms may bring advantages such as cost reduction, increase in efficiency, and most importantly, improvements in revenue. However, it is essential to understand other economic consequences of M&As. Besides being effective tools for less profit-making organizations to survive in the fast-growing market, M&As can also increase the dimensions of a company and set up prerequisites premise for monopoly2. Therefore, it is essential to develop a legal framework for economic concentration assessment in every country in the world.
Due to its influence, the economic concentration control becomes one of the indispensable parts of a competition system, along with antitrust rules that prohibit collusive agreements and abuses of companies in a dominant position. Its adoption responds to the need of maintaining the competitive structure of industries that should not be negatively impacted by takeovers or mergers3. Vietnam was one of the first countries in the Association of Southeast Asian Nations (ASEAN) to adopt a comprehensive competition law that covers three major areas: anti-competitive agreements, single-firm abuses, and anti-competitive mergers4. The Law on Competition 2004 (hereinafter referred to as LOC 2004) proved that Vietnam’s legal system had been improved to meet the requirements of integration.
By advocating for competitive-friendly policies and behaviors, this competition law has made important contributions to the evolution of the Vietnamese economy. However, the contributions have been partially constrained by several 1 Andrew Andrew J. Sherman and Milledge A. Hart (2006), Mergers & Acquisition From A to Z, Amacom, pg.6 2 Berinde Mihai (2008), “Economic concentration in the context of the world economy globalization”, Annals of the University of Oradea: Economic Science, Vol 1(207)/2008, pg.
203 3 United Nations Conference on Trade and Development (UNCTAD) (2017), Challenges in the design of a merger control regime for young and small competition authorities, Geneva, pg.1 4 Organization for Economic Cooperation and Development (OECD) (2018), OECD Peer Reviews of Competition Law and Policy: Viet Nam, Viet Nam, pg. 11 1 shortcomings of the competition system of the time. As a result, the form-based approach of the LOC 2004 (which may have had advantages when the economic shift was in the early stage) is no longer applicable in the current state of Vietnam5. Moreover, the country has reached a point where the economy could not further progress without a fully effective competition law and policy6.
Thus, on June 12, 2018, the new amendment of the Law on Competition (so called the Law on Competition 2018 and hereinafter referred to as LOC 2018) was adopted by the National Assembly and came into effect on July 1, 2019. The new law introduces a great number of improvements, especially targeting economic concentration7. The part where this is addressed has been separated from the section of anti-competitive agreements. Despite this, in the current context of the Vietnamese economy, the LOC 2018 still exposes certain inadequacies in the provisions regulating economic concentration.
Therefore, it is of great necessity to conduct further research on problems posed by economic concentration for these following reasons: First, the new law provides several general factors to analyze criterion for merger control, unlike its predecessor, which relied only on market share. This remarkable change was achieved by researching and adopting advanced regulations from countries with an effective competition framework and international practices. However, considering the differences across economies around the world, an issue to be considered is whether the implementation of new provisions will be applicable and effective in Vietnam’s competition environment. Second, the merger control regulations include both qualitative and quantitative criteria, which are not set in the LOC 2018 but in the guidelines of the Government on 24 March 2020, the Decree 35/2020/NĐ-CP detailing and guiding the implementation of a number of articles of the Competition law 2018 (Decree 35/2020).
The effectiveness of these criteria must be ensured by its conformity with socio-economic conditions in each period. Hence, it is essential to have a thorough analysis and evaluation of the criteria in correlation to the current state of Vietnam. This thesis with the topic “Evaluation of the criteria for effective economic concentration control under The Competition law 2018 of Vietnam and recommendations for improvement” aims at providing an in-depth analysis and 5 OECD (2018), supra note 4, pg. 11 6 OECD (2018), supra note 4, pg.
15 7 The terms “economic concentration” and “merger” are used by economist and legal researchers with the same meaning. Therefore, in this thesis, the author will use the term “economic concentration” and “merger” interchangeably. 2 recommendations to improve the above-mentioned problems. Literature review After the implementation of the LOC 2004, a considerable number of research on economic concentration has been recorded, for instance: Nguyễn Ngọc Sơn, “Kiểm soát tập trung kinh tế theo pháp luật cạnh tranh và vấn đề của Việt Nam” (Economic concentration control under competition law and issues of Vietnam)8; Phạm Thị Ngoan, “Kiểm soát tập trung kinh tế theo quy định của pháp luật Việt Nam” (Economic concentration control under provisions of Vietnamese law)9; Vũ Thị Ngọc Hà, “Pháp luật về kiểm soát tập trung kinh tế ở Việt Nam hiện nay” (Legislation on economic concentration control in Vietnam today)10; Võ Thị Minh Thư, “Merger control in the U.S and pointers for Vietnam”11; Hà Ngọc Anh, “Pháp luật kiểm soát tập trung kinh tế ở Việt Nam” (Legislation on economic concentration control in Vietnam)12.
In general, these studies have offered arguments for lawmaking by presenting an overview of economic concentration and including the essence and the importance of a control mechanism. Additionally, by analyzing provisions of the LOC 2004 and investigating law application, the authors have found the inefficiencies of the merger control regime. From that point, researchers have made valuable recommendations based on lessons learnt from other countries’ competition law highlights. However, because of the introduction of the LOC 2018, the works as mentioned above are no longer up-to-date nor highly applicable in the current context.
Overall, unlike studies from the previous period, these following studies, with the focus on the provisions of the LOC 2018, are more up-to-date. However, the economic concentration control regime has not been comprehensively researched. - Phạm Hoài Huấn, “Các tiêu chí đánh giá tác động hạn chế cạnh tranh trong tập trung kinh tế” (The Benchmarks for Assessment of Competition Limitations of Economic Concentration on Markets)13: the author analyzes the regulation of the 8 Nguyễn Ngọc Sơn (2006), “Kiểm soát tập trung kinh tế theo pháp luật cạnh tranh và vấn đề của Việt Nam” (Economic concentration control under competition law and issues of Vietnam), The Journal of Legislative Studies, No. 79/2006 9 Phạm Thị Ngoan (2011), Kiểm soát tập trung kinh tế theo quy định của pháp luật Việt Nam (Economic concentration control under provisions of Vietnamese law), Master of Law thesis, Vietnam National University, Hanoi 10 Vũ Thị Ngọc Hà (2013), Pháp luật về kiểm soát tập trung kinh tế ở Việt Nam hiện nay (Legislation on economic concentration control in Vietnam today), Master of Law thesis, Vietnam Graduate Academy of Social Science 11 Võ Thị Minh Thư (2017), Merger control in the U.S and pointers for Vietnam, Bachelor of Law thesis, Ho Chi Minh City University of Law 12 Hà Ngọc Anh (2018), Pháp luật kiểm soát tập trung kinh tế ở Việt Nam (Legislation on economic concentration control in Vietnam), PhD thesis, Ho Chi Minh City University of Law 13 Phạm Hoài Huấn (2017), “Các tiêu chí đánh giá tác động hạn chế cạnh tranh trong tập trung kinh tế” (The Benchmarks for Assessment of Competition Limitations of Economic Concentration on Markets), The Journal of Legislative Studies, No.
15/2017 3 Draft of LOC 2018 and provides advice for lawmakers. Considering the differences between the LOC 2018 and its draft, this article is for limited reference only. - Trần Linh Huân (2019), “Những điểm mới trong các quy định của luật cạnh tranh năm 2018 về kiểm soát tập trung kinh tế” (New points in the provisions regulating economic concentration control under the Law on Competition 2018)14; Hoàng Minh Chiến, “Kiểm soát tập trung kinh tế theo Luật Cạnh tranh năm 2018” (Economic concentration control under the Law on Competition 2018)15: Addresses the improvements of the LOC 2018 in comparison with its predecessor, especially those concerning economic concentration. Nonetheless, because of their focus only on the LOC 2018 improvements, these articles have yet to provide an in-depth evaluation on the applicability of the current law’s regulations.
In other words, the shortcomings of the economic concentration regime under the LOC 2018 have not been analyzed.