Microsoft Word thesisfinalprint docx 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[.]
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 BACHELOR THESIS 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 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 Development UEL University of Economics and Law UK United Kingdom UNCTAD United Nations Development Economic Conference Cooperation and on and Trade TABLE OF CONTENTS INTRODUCTION Chapter Overview of economic concentration and its control mechanisms 1.1 Definition and nature of economic concentration 1.2 Impacts of economic concentration on healthy competition 12 1.2.1 Positive impacts 12 1.2.2 Negative impacts 13 1.3 The concept of economic concentration control 15 1.4 Purposes of economic concentration control 17 1.5 Overview of economic concentration control criteria 20 1.5.1 Quantitative criteria 21 1.5.2 Qualitative criteria 23 Conclusion of Chapter 26 Chapter Criteria for economic concentration control under the Vietnamese Law on Competition and recommendations for improvement 27 2.1 Criteria for economic concentration control under the Vietnamese Law on Competition 27 2.1.1 Notification threshold 27 2.1.2 Assessment of substantial anti-competitive effects caused or potentially caused 34 2.1.3 Assessment of positive effects 42 2.2 Recommendations for improvement 43 Conclusion of Chapter 51 Thesis Conclusion 52 INTRODUCTION 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 Andrew Andrew J Sherman and Milledge A Hart (2006), Mergers & Acquisition From A to Z, Amacom, pg.6 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 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 Organization for Economic Cooperation and Development (OECD) (2018), OECD Peer Reviews of Competition Law and Policy: Viet Nam, Viet Nam, pg 11 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 OECD (2018), supra note 4, pg 11 OECD (2018), supra note 4, pg 15 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 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 vấn đề 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 pháp luật Việt Nam” (Economic concentration control under provisions of Vietnamese law)9; Vũ Thị Ngọc Hà, “Pháp luật kiểm soát tập trung kinh tế Việt Nam 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 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 tập trung kinh tế” (The Benchmarks for Assessment of Competition Limitations of Economic Concentration on Markets)13: the author analyzes the regulation of the Nguyễn Ngọc Sơn (2006), “Kiểm soát tập trung kinh tế theo pháp luật cạnh tranh vấn đề Việt Nam” (Economic concentration control under competition law and issues of Vietnam), The Journal of Legislative Studies, No 79/2006 Phạm Thị Ngoan (2011), Kiểm soát tập trung kinh tế theo quy định 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 kiểm soát tập trung kinh tế Việt Nam (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 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 tập trung kinh tế” (The Benchmarks for Assessment of Competition Limitations of Economic Concentration on Markets), The Journal of Legislative Studies, No 15/2017 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 quy định luật cạnh tranh năm 2018 kiểm soát tập trung kinh tế” (New points in the provisions regulating economic concentration control under the Law on Competition 2018)14; Hồng Minh Chiến, “Kiểm sốt 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 - Hà Thị Thanh Bình, “Thơng báo tập trung kinh tế pháp luật cạnh tranh” (Merger notification under competition law)16; Lê Khanh, “Các tiêu chí kiểm sốt tập trung kinh tế theo luật cạnh tranh năm 2018” (Criteria for economic concentration control under the Law on Competition 2018)17: Besides addressing the improvements of the LOC 2018, these studies have presented the issues of the current economic control regime Moreover, recommendations for improvement have also been proposed based on experiences adopted from some other selected countries However, while the thesis of Lê Khanh has provided the evaluation on other criteria, including assessment of positive effects, preliminary assessment, and official assessment The other study only covers the part of the merger notification threshold and criteria to determine the anti-competitive effects of merger undertakings Additionally, both researchers have simultaneously analyzed the provisions of the Draft Decree guiding the LOC 2018 Therefore, the official document has not been reviewed yet Purposes of the study The thesis aims at evaluating the effectiveness of the criteria for economic concentration control under the Competition law 2018 of Vietnam and provide 14 Trần Linh Huân (2019), “Những điểm quy định luật cạnh tranh năm 2018 kiểm soát tập trung kinh tế” (New points in the provisions regulating economic concentration control under the Law on Competition 2018), State and Law Journal, No 5(373)/2019 15 Hồng Minh Chiến (2019), “Kiểm sốt tập trung kinh tế theo Luật Cạnh tranh năm 2018” (Economic concentration control under the Law on Competition 2018), Journal of Democracy and Law, No 3(324)/2019 16 Hà Thị Thanh Bình (2019), “Thơng báo tập trung kinh tế pháp luật cạnh tranh” (Merger notification under competition law), Vietnamese Journal of Legal Sciences, No 01(122)/2019 17 Lê Khanh (2019), Các tiêu chí kiểm sốt tập trung kinh tế theo luật cạnh tranh năm 2018 (Criteria for economic concentration control under the Law on Competition 2018), Bachelor of Law thesis, Ho Chi Minh City University of Law suggestions for improvement based on this evaluation To be able to achieve this target, the following sub-purposes of the thesis will be developed: - Clarify theoretical issues on economic concentration and its control mechanism; - Analyze and evaluate the provisions concerning criteria for economic concentration control under the LOC 2018, the Decree 35/2020 and the application of their provisions in reality; - Offer recommendations for improvement based on the lessons learnt from other countries’ competition law Objectives and Scope of the study 4.1 Objectives of the study - The provisions concerning criteria for economic concentration control under the LOC 2018 and the Decree 35/2020 and the application of their provisions in reality - The provisions concerning criteria for economic concentration control under the competition law of the US, Canada, Japan, China, the European Union (EU), the United Kingdom (UK), Germany, Austria, Spain, Australia 4.2 Scope of the study The thesis concentrates on the provisions regarding economic concentration under the LOC 2018 and the Decree 35/2020 of Vietnam, other relevant specialized laws are not to be considered in the scope of the thesis Additionally, the thesis will examine the merger control regime of the countries mentioned in section 4.1 In regard to the limitation of the study, the thesis will focus on the criteria for economic concentration control, including notification threshold, assessment of substantial anti-competitive effects caused or potentially caused, assessment of positive effects, preliminary assessment, and official assessment Therefore, the thesis will not mention issues concerning procedure or other aspects of economic concentration control such as merger control authority, leniency, and sanctions Research methodologies The author will use a combination of three major research methods, namely the comparative, the analytical, and the synthesis methods - The comparative: making comparisons between the LOC 2018 and the LOC 2004 to emphasize the improvements of the former, indicating the similarities and differences between Vietnamese and some other selected countries’ competition law to provide foreign experiences for Vietnam