Vietnam: Merger Control
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This chapter provides an update on the implementation of the key merger control reforms brought about by the Competition Law 2018 and its guiding instruments since July 2019. It also highlights practice notes transaction parties should be aware of when filing in Vietnam. It is expected that the Vietnamese merger control practice will constantly evolve in the years to come, and gradually move closer towards internationally recognised standards.
- Key changes to the Vietnamese merger control regime under the Competition Law 2018
- Filing thresholds
- The two-staged merger review process
- Practice notes transaction parties should be aware of when filing in Vietnam
Referenced in this article
- Competition Law 2018
- Decree 35/2020/ND-CP dated 24 March 2020 detailing a number of provisions of the Competition Law 2018
- The National Competition Commission (NCC)
- Vietnam Competition and Consumer Authority (VCCA)
It has been over two years since the Competition Law 2018 (ie, Law No. 23/2018/QH14) came into force, replacing its 14-year-old predecessor, the Competition Law 2004, and related guiding instruments. One of the most significant changes introduced by the new Law is a shift in regulatory approach from form-based to effects-based, whereby the antitrust authority will employ the substantial lessening of competition test to decide whether to green-light a merger.
Other notable reforms include the new jurisdictional thresholds and a two-phased appraisal process. A decree providing guidelines for implementation of the Competition Law 2018 (ie, Decree 35/2020/ND-CP), which sets out, among other things, filing thresholds and substantive assessment criteria, took effect on 15 May 2020 (the Guiding Decree). Another decree dealing with competition violations (ie, Decree 75/2019/ND-CP) has also been promulgated, outlining the administrative sanctions and remedies for breaches of merger control regulations, among other relevant matters. Another development that the authors expect to see this year is the establishment of the NCC – the official competition watchdog under the current regime.
Vietnam’s merger control regime is characterised by two core features. First, it is ex ante in nature, which means parties to a contemplated transaction must notify their transaction prior to completion if it qualifies as an economic concentration within the meaning of article 29 of the Competition Law 2018 and crosses any of the jurisdictional thresholds. The current regime noticeably does not provide for any filing or clearance exemption, which means notification is mandatory if the above prerequisites are satisfied.
The second core characteristic of Vietnam’s merger control regime is the standstill obligation. This entails that merger parties are required to put the anticipated transaction on hold until it is cleared, either automatically or after a full review.
Relevant merger authorities
The NCC is Vietnam’s principal merger authority. Under the purview of the Ministry of Industry and Trade (MOIT), the NCC assumes the functions of overseeing the merger control regime and imposing fines and remedies formerly discharged by the VCCA and the Vietnam Competition Council, respectively.
To date, the NCC has not been formally established. As such, the MOIT has directed the VCCA to remain in charge of administering the merger control regime until the new competition watchdog is instituted.
As the merger control regime under the Competition Law 2018 adopts the effects-based approach, an offshore transaction will be caught if it has an actual or potential restrictive impact on the Vietnamese market.
As a general rule, parties to a contemplated foreign-to-foreign transaction that have local subsidiaries or generate sales in or into Vietnam must notify such transaction if any of the filing thresholds is met.
Sector-specific merger filing requirements
Certain mergers in the insurance, finance and telecommunications sectors are also regulated by sector-specific legislation. These provisions do not override merger control regulations under the Competition Law 2018, but rather exist in tandem with the latter. Mergers in the insurance and finance and banking sectors are subject to a separate set of filing thresholds under the Competition Law 2018 as further discussed below.
A written approval of the Ministry of Finance is required when an insurer:
- transfers shares or contributed capital amounting to at least 10 per cent of its charter capital;
- restructures by way of division, merger, consolidation, dissolution or conversion of legal form; or
- makes an offshore investment.
Finance and banking
A credit institution must obtain a written approval of the State Bank of Vietnam when it is restructured by way of division, demerger, consolidation, merger, acquisition or conversion of legal form.
An anticipated concentration resulting in the market share of a post-merger telecoms business of 30 to 50 per cent must be notified in advance to the telecoms regulator; namely, the Vietnam Telecommunications Authority under the Ministry of Information and Communications.
Filing requirement under the Competition Law 2018
The Competition Law 2018 does not differentiate the filing obligation based on the type of concentration, and instead mandates that all undertakings participating in a notifiable concentration are responsible for filing, even if only one undertaking technically crosses a jurisdictional threshold.
In practice, the regulator has treated all transaction parties as notifying parties and has requested the notification form to be signed by all such parties (for instance, the buyer, target and seller in case of an acquisition). It also follows that the filing must contain the requisite formality documents of all parties, including the seller’s financial statements and legalised certificate of incorporation.
For each reportable concentration, the regulator only accepts one filing jointly made by the notifying parties.
Types of transactions caught by merger control regime
As mentioned above, a contemplated transaction is notifiable under the Competition Law 2018 if it qualifies as an economic concentration within the meaning of article 29 and crosses any of the jurisdictional thresholds. An economic concentration encompasses a merger, consolidation, acquisition, joint venture and other types of concentration provided by laws:
- A merger is defined as when one or more undertakings transfers all lawful assets, rights, obligations and interests to another business and, concurrently, terminates business activities or ceases to exist.
- A consolidation is defined as when two or more undertakings amalgamate all of their lawful assets, rights, obligations and interests to establish a new entity and, concurrently, terminate their business activities or cease to exist altogether.
- An acquisition is defined as when an undertaking acquires all or part of the capital contribution or assets of another undertaking sufficient to control the acquiree or any of its business lines.
- A joint venture is defined as when two or more undertakings jointly establish a new undertaking by contributing a portion of their lawful assets, rights, obligations and interests.
The joint venture definition focuses on the legal form of the joint venture rather than its activities. Only joint ventures incorporated as legal entities or juridical persons are relevant under Vietnam’s merger control regime, while purely contractual joint ventures are not regarded as an economic concentration for the purposes of Vietnam’s competition law. Unlike the EU’s full-function test, the definition is not concerned with whether the joint venture carries out any business activities, or the extent of its autonomy from the parent companies. If a joint venture exists as a legal entity, it will be construed as an economic concentration subject to merger filing requirement, irrespective of whether it is a greenfield joint venture with no actual business operation or whether it relies almost exclusively on its parent companies for sales revenue on a lasting basis.
The Competition Law 2018 no longer relies on market share as the sole jurisdictional threshold. The current regime also adds financial criteria to its filing test, namely total assets, total turnover and transaction value. The Guiding Decree sheds light on these changes, introducing two sets of jurisdictional thresholds, one applicable to transactions in virtually all sectors, the other reserved for transactions involving credit institutions (CIs), insurers or securities companies.
A contemplated concentration, except for one involving CIs, insurers or securities companies, must be notified to the competition authority if any of the following thresholds are met:
|Total assets or total sales or purchase turnover of any transaction undertaking or the respective group of affiliated undertakings||3 trillion dong|
|Transaction value||1 trillion dong|
|Combined market share of the parties to the transaction in the fiscal year prior to the year the concentration is implemented||20%|
A contemplated transaction involving CIs, insurers or securities companies must be notified if it crosses any of the following thresholds:
|Total assets of any transaction undertaking or the respective group of affiliated undertakings||20% of total assets of all CIs on Vietnamese market||15 trillion dong|
|Total sales or purchase turnover of any transaction undertaking or the respective group of affiliated undertakings||20% of total revenue of all CIs on Vietnamese market||10 trillion dong||3 trillion dong|
|Transaction value||20% of total charter capital of all CIs on Vietnamese market||3 trillion dong|
|Combined market share of the parties to the transaction in the fiscal year prior to the year the concentration is implemented||20%|
The introduction of financial criteria, coupled with the reduction in the combined market share threshold from 30 per cent under the former regime to 20 per cent, has increased the number of transactions caught by the filing requirement. According to a fact sheet published by the VCCA in September 2021, the authority received 125 notifications between 1 July 2019 (the effective date of the Competition Law 2018) and 30 June 2021, 39 (31 per cent) of which concerned foreign-to-foreign transactions. In 2020 alone, the VCCA received 62 notifications, which is approximately five times the annual average between 2005 and 2019. We expect the authority to keep up the momentum going into 2022.
Definition of ‘control’
An undertaking (A) is deemed to control or govern another undertaking (B) if:
- A owns more than 50 per cent of B’s charter capital or voting shares;
- A owns or has the right to use more than 50 per cent of B’s assets in all or one of B’s business lines; or
- A has any of the following rights to:
- directly or indirectly appoint or dismiss all or the majority of B’s executive management or senior officers (eg, chair of the Members’ Council or the general manager);
- alter B’s constitutional document; or
- make crucial decisions with regard to B’s business.
The ‘control’ concept is pivotal to the definitions of ‘acquisition’ and ‘group of affiliated undertakings’. The VCCA has clarified that control for merger filing purposes does not encompass negative control. Consequently, acquisition of minority interest with veto rights or other standard minority shareholders protection rights would not be deemed a concentration for Vietnamese merger filing purposes. This is a welcomed clarification, for there was much uncertainty surrounding the notifiability of, for instance, private equity fund’s acquisition of strategic minority interests in portfolio companies. Similarly, if the purchaser already controls the target pre-concentration (for instance, by holding a more than 50 per cent interest or a less than 50 per cent interest and certain controlling rights), a buyout to increase the purchaser’s shareholding would not constitute an acquisition for filing purposes.
However, it is noted that intra-group transactions (eg, parent-subsidiary mergers and other types of internal restructurings) remain subject to the Vietnamese merger control regime. The authority rationalises this view on the ground that there is no exemption to the merger filing requirement in Vietnam, which means any transaction that qualifies as a concentration for Vietnamese merger filing purposes and crosses any filing threshold must be notified to and greenlit by the regulator prior to completion. Multinational corporations intending to streamline the businesses of its member companies should therefore be mindful of the filing requirement under the Vietnamese merger control regime. Notwithstanding this unique approach, the authority has recently adopted an informal fast-track approval process for intra-group transactions, which substantially simplifies the dossier requirements (such as relevant market definition analysis and market shares calculation) and reduces the review timeline.
Group of affiliated undertakings
‘Group of affiliated undertakings’ is a crucial element in the asset and turnover tests, especially in transactions that involve a member company of a corporate group. The Guiding Decree defines a group of affiliated undertakings as a collection of businesses that are under the common control or governance of one or more undertakings within the group in question, or that shares the same management.
Calculation of jurisdictional thresholds
‘Assets’ in this test refer to assets in the Vietnamese market of each party in the anticipated merger or, where such party belongs to a group of affiliated undertakings, the total assets in the Vietnamese market of the whole group. By taking the group’s assets into account, this test in effect nullifies any attempt to circumvent the filing requirement by simply establishing a special purpose vehicle to acquire a target business.
The asset test is applied in a non-discriminatory way; that is, assets of the entire corporate group on the Vietnamese market will be taken into account irrespective of whether other member undertakings have relation to the target business or whether they are offshore.
The current merger control regime does not define ‘assets’. In practice, references are often made to the financial statements of each relevant party for their respective asset value.
In this test, the relevant turnover refers to sales in or into Vietnam, or both, of each party in the transaction or the group of affiliated undertakings.
Transaction value test
As provided by the Guiding Decree, transactions taking place entirely outside of Vietnam are exempt from the transaction value test.
The guiding laws, however, is notably silent on how this test would apply in, for instance, stock swap transactions or transactions where part of the consideration is not fixed but subject to the target’s performance in the future. In these transactions, the deal value is not always clear-cut, making application of the test a practical challenge.
Market share test
Combined market share is the sum of market share in the relevant market of all undertakings involved in the anticipated merger. The market share of the member undertaking in a group of affiliated undertakings corresponds to that of the entire group. When calculating the turnover of a group of affiliated undertakings for market share purposes, intra-group turnover should be excluded.
The application of the market share test is not easy given, on the one hand, the general lack of reliable and accessible market data in Vietnam, and, on the other, the regulator’s reluctance to accept regional market shares as proxies for local shares. Critics perceive the test as a burden on businesses and argue that it should not have been retained. However, proponents maintain that market share is a relevant filing threshold and it is inconceivable that a business cannot determine its position on the market.
The VCCA recently clarified that the combined market share threshold only applies to horizontal mergers. In other words, offshore transactions where the parties do not have any overlaps or vertical relationships in Vietnam would only be notifiable if either party crosses the total local turnovers or assets thresholds. This is a much-welcomed clarification and is expected to ease the filing test for conglomerate mergers in the future. For clarity, however, the combined market share test does not require a market share increment from below to above 20 per cent, such that a Vietnam filing will be triggered if the market share on the relevant market of one undertaking to the horizontal merger is already above 20 per cent prior to the concentration.
The ‘relevant market’ is determined on the basis of relevant product market and relevant geographical market. In practice, the competition regulator’s approach to this issue is relatively conservative. For instance, the authority does not favour any drafting that proposes to ‘leave the relevant market definition open’ (even if the transaction is not capable of lessening competition under any conceivable market definition) and prefers that the filing parties advocate a precise definition for their assessment. Zooming in on the relevant product market in particular, in cases where there is no relevant local precedent, parties should generally be prepared to provide a detailed and comprehensive relevant product market analysis – often more so than in other jurisdictions. While references to decisional practice of overseas regulators, such as the European Commission, would be helpful, filing parties would still be expected to discuss relevant Vietnamese regulations and categorisation systems (if any) in their analysis.
With respect to the relevant geographic market, the regulator has maintained the view that ‘nationwide’ is the widest possible relevant geographical market, reasoning that they are only concerned about the impact of the contemplated concentration on the Vietnamese market. Filing parties should thus provide national share data for review even if their position is that the relevant geographical market is regional or global in scope.
Notwithstanding the above, the authors have observed some degree of liberalisation by the VCCA in certain types of transactions. For instance, the authority has been more willing to accept a simplified relevant market analysis where the products in question concern a regulated industry with which the authority is familiar (eg, insurance), or where the transaction is an intra-group restructuring or involves a target company that has no operations in Vietnam.
As mentioned above, the Competition Law 2018 does not provide for exemptions to filing or review. All reportable transactions must be notified to, and subsequently green-lit by, the competition regulator prior to implementation. This principle covers transactions that are inherently not capable of harming competition such as intragroup transactions (as mentioned above) and transactions where the target does not have any commercial presence or revenues in Vietnam.
However, in our experience, the regulator has started rolling out an informal fast-track review process for intra-group restructurings. It remains to be seen whether the fast-track procedure will be extended to other inherently harmless transactions that are only notifiable due to technicality.
Steps in the regulatory process
Neither the Competition Law 2018 nor the Guiding Decree provide for a notification deadline. In practice, notification can be filed after signing of the transactional documents, or as soon as a term sheet is available, preferably once the transaction structure and principle terms are sufficiently clear to identify the relevant parties and market.
Preliminary appraisal phase
The Competition Law 2018 provides for a two-stage review process. Within seven working days of receiving the notification file, the NCC must inform the filing parties whether such file is valid and complete. If the notification requires further clarification or amendment, or both, the parties will have 30 calendar days to finalise it.
The preliminary appraisal or initial review phase (Phase I) formally starts once the NCC has confirmed receipt of a complete and valid notification file. A notification must be complete and valid both in terms of formalities and substance, which means the parties must have submitted all required formality documents and the competition authority must be satisfied with the parties’ responses to their substantive requests for information. After a 30-calendar-day period lapses, the NCC shall:
- issue a decision stating that the transaction is either unconditionally cleared or must undergo a more thorough assessment; or
- not issue any decision or findings at all, in which case the transaction is automatically green-lit (ie, the auto-clearance mechanism), effectively ending the regulatory process.
The Competition Law 2018 introduces for the first time the concept of automatic clearance, meaning merger parties may proceed with the transaction if they have not received any response from the authority within 30 days of receiving a complete and valid merger notification. The NCC cannot retroactively investigate and prosecute mergers that have been automatically green-lit even if such mergers may later be found to have a significant restrictive impact on market competition. Neither does the NCC have grounds to impose remedies or conditions on such merger.
Official appraisal phase
Anticipated transactions that fail to satisfy the safe harbours (see below) will proceed to the official appraisal or full review phase (Phase II).
Depending on the complexity of a case, the NCC shall, within 90 calendar days for typical mergers or a maximum of 150 calendar days in complex cases of the announcement of Phase I findings, decide whether a proposed merger is unconditionally green-lit, conditionally cleared or entirely blocked.
The NCC in Phase II has the power to ‘stop the clock’ and request the parties to provide further information: the time frame is suspended unless and until the parties have adequately satisfied all NCC’s information requests. This ‘stopping the clock’ power has limitation, however, as such requests can only be made at most on two occasions.
The NCC is also empowered to consult relevant industry regulators, who are mandated to respond within 15 calendar days of receiving the consultation request, and other third parties such as experts and industry associations, who are responsible for timely furnishing the NCC with complete and accurate information upon request.
In the filings we have advised on, the authority had reached out to the line ministry, industry association, competitors or the parties’ distributors to enquire on a wide range of matters, such as the number of undertakings active on the market in question, their market share estimates and whether the contemplated transaction poses any antitrust or consumer interest concerns. In addition, if the filing concerns imported products and the parties are unable to furnish official import data to substantiate their market share estimates, the authority would reach out to Vietnam Customs to collect the relevant data. If Vietnam Customs is similarly unable to provide the requested data, we understand that the competition regulator will rely on all information available to it at the point of assessment to produce the final findings without making any further request for information. It should go without saying that the notifying parties are responsible for the accuracy and truthfulness of any and all information provided.
Assessing the transaction
The NCC employs the ‘substantial lessening of competition’ approach to decide whether to block a merger.
In the initial review phase, the NCC primarily relies on the combined market share of the involved parties, the Herfindahl-Hirschman Index (HHI) and the delta between pre-merger HHI and post-merger HHI to determine whether a contemplated transaction should be green-lit. In the later phase, during which a more comprehensive appraisal takes place, the NCC will assess both the significant restrictive impact and positive effects of the anticipated merger.
In the initial review phase, the NCC will unconditionally green-light a horizontal merger if:
- the combined market share is less than 20 per cent;
- the combined market share is equal to or more than 20 per cent and the post-merger HHI is less than 1,800; or
- the combined market share is equal to or more than 20 per cent, the post-merger HHI exceeds 1,800 and the delta is lower than 100.
A vertical or conglomerate merger will receive unconditional clearance in Phase I if the market share of each merger party in each relevant market is less than 20 per cent. While this is the general rule, our recent experiences suggest that the VCCA is relaxing their review approach. Specifically, with respect to conglomerate mergers, the authority has been more willing to conclude the review process within Phase I even if the market share of one party on its relevant market exceeds the 20 per cent safe harbour. In such circumstances, the VCCA would be more willing to recommend clearance in Phase I if the parties are able to establish that the estimated market shares do not necessarily reflect their positions in the relevant local markets.
A contemplated transaction that fails to pass the safe harbour test must go through a more thorough assessment, which ascertains whether it will be green-lit (conditionally or unconditionally) or blocked as discussed below.
Assessment of significant restrictive impact
When it comes to assessing the significant restrictive impact or the ability to cause such impact, the NCC mainly focuses on competition issues such as the ability of the post-merger undertaking to foreclose the market or raise market barrier. As mandated by the Guiding Decree, the NCC needs to take all of these factors into account to the applicable extent:
- pre- and post-merger combined market share and concentration ratio;
- complementary relationship of the parties involved in the contemplated merger;
- competitive advantages brought by the merger in terms of product characteristics, chain of production and distribution, financial capacity, goodwill, technology, intellectual property rights and other factors that give the post-merger undertaking an edge over its rivals;
- the ability of the post-merger undertaking to considerably increase price or return on sales ratio, or to exclude or impede other undertakings from penetrating or expanding the market; and
- other relevant special factors in the sector or industry in question.
Assessment of positive effect or efficiencies
In assessing the positive effect, the NCC also considers efficiencies. Accordingly, the NCC is required to rely on any one or a combination of the following factors:
- the development of the industry, science, and technology in alignment with the state’s master plans (by assessing, inter alia, economies of scale and the application of technological advancements and innovation);
- the development and promotion of small and medium-sized businesses; and
- the competitiveness of Vietnamese undertakings (ie, advancing national champions).
It is the authors’ understanding that, in practice, the NCC is open to expand the factors relevant to the positive effect test: the aforementioned list is not exhaustive and other factors such as contribution to GDP or state budget may also be taken into account so long as the supporting data is bona fide.
In general, mergers that have a net positive impact will be more likely green-lit than not, although conditions and remedies may apply. As we experienced in the past with the former regime, this largely depends on the authority’s discretionary assessment as there is no specific guideline as to how each factor should be included in the equation. Until the VCCA issues a merger review guideline, pre-filing consultation with the authority is recommended to anticipate a reasonable timeline for closing of a merger.
Appeal to a merger clearance decision
There is no formal process for complaints about, or objections to, merger clearance decision under the Competition Law 2018. An appeal can nevertheless be filed on the basis of administrative legislation, namely the Law on Complaints 2011 (as amended) and the Law on Administrative Proceedings 2015, which provide for two distinct formal appeal regimes, respectively: administrative complaint or reconsideration, and administrative litigation.
Accordingly, any party (including competitors, consumers and other third parties) dissatisfied with the decision on merger clearance may choose either procedure to raise complaint or objection.
The procedure unfolds in two steps:
- first-instance complaint: within 90 calendar days from the NCC’s decision on merger clearance, the complainant needs to lodge a complaint to the NCC chairperson; and
- second-instance complaint: if still unsatisfied with the NCC chairperson’s resolution of the first-instance complaint or the lack thereof, the complainant will have 30 calendar days from the issue date of the decision on first-instance resolution, or the expiry date of first-instance time limit, to file a complaint to the Minister of Industry and Trade.
Alternatively, a party may choose to initiate administrative proceedings before the courts. Any administrative claim must be filed within one year of the NCC’s decision on merger clearance or the decision on complaint resolution by either the NCC or the Minister of Industry and Trade. As such, this procedure can commence without or after the conclusion of the administrative complaint but not concurrently.
Violations under the current merger control regime can be categorised into four types: failure to file, gun-jumping, unlawful mergers and unfulfilled remedies.
Failure to file
Failure to file a notifiable transaction contradicts the very core principle of Vietnam’s ex ante regime and results in a fine as high as 5 per cent of the respective violator’s total turnover. Given that all transaction parties are subject to the filing obligation, each will be held liable for failure to file.
For failure to fully observe waiting periods or standstill obligations, except for cases where a merger is automatically cleared, the violator may be fined up to 1 per cent of its total turnover.
The merger control regulations, however, stop short of specifying which activity constitutes an implementation of concentration. The authors understand that it may not encompass auxiliary or preparatory actions such as the cessation or termination of an existing cooperation agreement between the target business and the seller.
The third group of violations consists of the two following conducts:
- first, the implementation of a concentration despite being blocked by the authority after a full review (ie, Phase II), which may be fined up to 3 per cent of the total turnover; and
- second, the implementation of concentrations prohibited by article 30 of the Competition Law 2018, which outlaws any concentration that has an actual or potential significant restrictive impact on the domestic market. The highest fine level for this conduct is 5 per cent of the violator’s total turnover.
Given that a merger can only be blocked on the basis of prohibited concentrations, these violations may seem similar on the surface, as they concern the unlawful completion of mergers. The key difference lies in whether a merger has been notified. If the parties fail to notify a reportable transaction and the transaction is later found to be a prohibited concentration, they will be held liable for two violations under Vietnam’s ex ante merger control regime: conducting an unnotified and unlawful merger.
Merger parties who are granted a conditional clearance but fail to satisfy any of the entailing conditions will face a fine as high as 3 per cent of total turnover.
In addition to pecuniary penalties, the Competition Law 2018 also provides for supplementary sanction, such as revocation of certificate of incorporation and remedies, in the form of either clearance conditions or remedial measures for illegal mergers.
Essentially, like many other regimes, there are two types of remedies: structural and behavioural. The former includes mandatory demerger or divestiture while the latter is available in the form of subjection to the state’s control in terms of price or other commercial terms. The NCC may, if necessary, propose other remedies aimed at alleviating the restrictive impact or enhancing the positive effects brought by the merger, or both.
Although the Competition Law 2018 does not explicitly provide for a framework for remedy negotiation, the merger parties may nonetheless discuss with the NCC on the matter at virtually any time during the regulatory process, given the authority’s openness to consultation requests. Any meaningful discussion rounds will most likely take place during Phase II, particularly once the NCC has gathered all necessary data and the authority’s information requests are addressed.
In addition to proposed remedies, merger parties may also, and are recommended to, bring forward ancillary restraints (eg, non-competition agreement in discussion) so as to avoid being challenged by the NCC in the future. Ancillary restraints are not covered by the merger clearance decision (ie, only the merger itself is green-lit) but may nonetheless be included therein as part of clearance conditions. Accordingly, as competition issues are one of the NCC’s main focuses in Phase II, the authority may require the merger undertaking to remove or revise ancillary restraints if they give rise to competition concern.
Given the absence of provisions on a negotiation process for proposed remedies and ancillary restraints, whether these remedies and restrictions will be accepted in whole or in part is entirely at the discretion of the NCC, which has considerable leeway to review and approve them. In general, the authority will more likely accept proposed remedies than not if they are offered in good faith and adequately address all competition concerns.
Insofar as conditional clearances are concerned, the authors understand that the regulator has not specifically required any party to divest or restructure as a condition to green-light a transaction.
Expediting the review process
In many circumstances, the review process was prolonged due to the parties’ lack of experience in preparing the filing and liaising with the case team. There are a number of measures the parties should consider to expedite the review process:
- engage in pre-filing consultation with the competition regulator to seek guidance on the specific information that is relevant or of interest to the authority;
- as regards the formality documents, begin the legalisation process as soon as possible to minimise logistical delays; and
- maintain an active communication channel with the authority throughout the review process to timely address any concern that the case team may have pertaining to the transaction.
Pre-filing consultation is particularly important where the parties are under time pressure to obtain clearance by a specific deadline. With insight into the regulator’s concerns, the parties would be in a better position to draw up a proper filing strategy to meet the deadline.
With the introduction of the Competition Law 2018 and new statutory guiding instruments, the competition landscape in Vietnam will constantly evolve in the coming years. The newly adopted effects-based approach is arguably the most welcome reform as it reflects the shift in how the NCC would analyse and appraise each merger on the merit of its impact on the domestic market, rather than the sole market share of the post-merger undertaking as was the case under the former regime.
Given the VCCA’s constantly evolving practice, it is crucial to keep up with the regulator to ensure accurate assessment of the notifiability issue and, if the transaction is indeed reportable, swift obtainment of clearance. Engaging experienced local counsel with an established working relationship with the regulator would help the parties navigate this nascent merger control regime and ensure the global transaction timetable, particularly during these challenging times.
 OECD Competition Committee, Suspensory Effects of Merger Notifications and Gun Jumping – Background Note by the Secretariat, DAF/COMP(2018)11, 20 February 2019, p. 5, https://one.oecd.org/document/DAF/COMP(2018)11/en/pdf; OECD Competition Committee, Executive Summary of the Roundtable on Investigations of Consummated and Non-Notifiable Mergers, DAF/COMP/WP3/M(2014)1/ANN3/FINAL, 11 March 2015, p. 2, www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WP3/ M(2014)1/ANN3/FINAL&doclanguage=en.
 Law on Insurance Business 2000 (as amended), articles 69(1)(e),(h).
 Law on Credit Institutions 2010 (as amended), article 153(1).
 Telecommunications Law 2009 (as amended), article 19(5).
 Guiding Decree, article 13(3).
 Guiding Decree, article 10(1)(b).
 Even the omission of act by the NCC at the end of Phase I (ie, not issuing any Phase I findings at all) can be appealed as well.
 The total turnover used in this section refers to that in the relevant market of each respective violator in the fiscal year prior to the violation.