OECD kpcdb

1. Scope 

 

Section 3 of the VCL regulates economic concentration which includes mergers, consolidation, acquisitions and joint ventures between enterprises.

 

2. Notification

 

Under Article 20 of the VCL, enterprises participating in economic concentration activities where a combined market share in the relevant market will be from 30% to 50% should notify the VCA before implementing the transaction.

 

When the resulting combined share in the relevant market of enterprises participating in the economic concentration is less than 30%, or it results in an SME, the parties are not required to notify an economic concentration activity.

 

Economic concentration activity may be implemented only after having received a written reply from the VCA confirming that such economic concentration does not fall within the prohibited category. 

 

Participating in a prohibited economic concentration prior to an exemption being granted is subject to a fine of VND100-200 million.

 

3. Assessment

 

Under Article 18, any economic concentration where the combined market share in the relevant market exceeds 50% is prohibited unless the economic concentration results in a small and medium-sized enterprise (SME) or an exemption is granted.

 

Exclusions and exemptions: An economic concentration that results in an SME is excluded from the prohibition. The definition of SMEs is specified in Decree 56/2009/ND-CP and varies depending on the sector.

 

Where the combined market share of enterprises participating in economic concentration exceeds the 50% threshold, enterprises can file for a request of exemption under Article 19 of the VCL. Exemption may be granted where parties are at risk of dissolution or bankruptcy or the economic concentration has the effect of extending export or contributing to socio-economic development or technological progress.

 

As per Article 30 VCL, the VCA reviews the exemption request and forwards its opinion to the Minister of Industry and Trade (MoIT) or the Prime Minister for decision.

 

According to Article 34, in cases of dissolution or bankruptcy, the decision for exemption is made by the MoIT within 60 days from the date of receipt of the exemption application. In complex cases, the time-limit may be extended twice, each extension not exceeding 30 days.

 

Where the exemption request is submitted on grounds of socio-economic or technological contribution, the decision is made by the Prime Minister. The decision is made within 90 days (MoIT) from the date of receipt of the exemption application and 180 days in complex cases.

 

4. Procedural rules

 

Once the VCA receives a notification of an economic concentration, it provides a written reply to the enterprise within a time limit of 45 days (Article 23 VCL) on whether the economic concentration falls within the prohibited category. The examination may be extended twice at most, each extension not exceeding 30 days.

 

Procedural fairness: The VCA provides information and consultation for domestic and foreign enterprises on whether an economic concentration falls under the regulation scope of prohibited acts under the VCL.

 

5. Remedies and sanctions

 

Under Article 22 of the Decree No. 71/2014 / ND -CP in addition to sanctions (see below) the merged entity may be subject to compulsory demerger or split of the merged enterprise. 

 

Under Article 117, administrative sanctions such as a warning or a fine may be imposed.

 

According to Section 3 of Chapter II of the Decree No. 71/2014 / ND -CP Prohibited Economic Concentrations will be penalised with a fine of up to 10 per cent of total revenues.

 

Failure to notify

 

Under Article 118 of the VCL, where enterprises fail to notify an economic concentration activity, the VCC may impose a fine up to 10% of the total revenue in the financial year prior to the year in which a breach was committed of each enterprise participating in the transaction. There haven’t been any cases of either failure to notify or implementation before clearance so far.