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MERGER CONTROL IN THE u s AND POINTERS FOR VIETNAM

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MINISTRY OF EDUCATION AND TRAINING
HCMC UNIVERSITY OF LAW
-----------***-----------MANAGING BOARD OF SPECIAL TRAINING PROGRAM

VÕ THỊ MINH THƯ

MERGER CONTROL IN THE U.S AND
POINTERS FOR VIETNAM
BACHELOR OF LAW – GRADUATION THESIS
Commercial Law Deputy
Academic Year: 2013 - 2017

HO CHI MINH CITY
YEAR 2017


MINISTRY OF EDUCATION AND TRAINING
HCMC UNIVERSITY OF LAW
-----------***-----------MANAGING BOARD OF SPECIAL TRAINING PROGRAM

VÕ THỊ MINH THƯ

MERGER CONTROL IN THE U.S AND
POINTERS FOR VIETNAM
BACHELOR OF LAW – GRADUATION THESIS
Commercial Law Deputy
Academic Year: 2013 – 2017

SUPERVISOR: DR. HA THI THANH BINH
STUDENT: VO THI MINH THU
ID NO.: 1353801011233


CLASS: CLC38B

HO CHI MINH CITY
YEAR 2017


ACKNOWLEDGMENT
Firstly, I would like to express my sincere gratitude for Dr. Ha Thi Thanh Binh for the
continuous support towards my thesis work. Her dedication, patience and immense
knowledge helped me complete this thesis in the best way possible.
Besides my supervisor, I would like to thank Lecturer Pham Hoai Huan for his
insightful comments and encouragement. Without his initial guidance when I first took
the thesis, I would not have found the topic so compelling and make an incredible work
till now.
My last respectful thanks goes to my family and my beloved ones who provided me
though moral and emotional support in my life. This has been a great journey for me
and I am gratefully indebted to your support.


DECLARATION
I hereby declare that this thesis is my own research under the supervisory guidance of
Dr. Ha Thi Thanh Binh. All of the information other than my opinions to be used or
quoted has been acknowledged by means of complete references. I would take full
accountability for my protest.
Ho Chi Minh City, 18th July, 2017.
Võ Thị Minh Thư.


LIST OF ABBREVIATIONS
Decree 116


Decree No. 116/2005/ND-CP detailing the implementation of a
number of articles of the Competition law

DOJ

Department Of Justice

Draft Law

The preliminary Vietnam Competition law draft (2nd draft)

FTC

Federal Trade Commission

HHI

The Herfindahl-Hirschman Index

HMT

Hypothetical Monopolist Test

HSR Act

Hart-Scott-Rodino Antitrust Improvements Act

OECD


The Organization for Economic Co-operation and Development

SSNIP

Small but Significant and Non-transitory Increase in Price

The
Guidelines

1984 The 1984 Merger Guidelines

The Agencies

The DOJ and FTC

The Guidelines

The 2010 Horizontal Merger Guidelines

The ICN

The International Competition Network

U.S

United States

UPP

Upward pricing pressure


VCA

Vietnam Competition Authority

VCL

The 2004 Vietnam Competition Law No. 27/2004/QH11


TABLE OF CONTENTS
LIST OF ABBREVIATIONS.............................................................................................
INTRODUCTION ............................................................................................................. 1
CHAPTER 1: TYPES OF MERGER UNDER U.S ANTITRUST LAW AND
POINTERS FOR VIETNAM........................................................................................... 6
1.1 Types of merger under the regime antitrust law in the U.S and Vietnam ............ 6
1.1.1 Types of merger under U.S Antitrust law .......................................................... 6
1.1.2 Types of economic concentration under Vietnam Competition Law ............. 11
1.2 Shortcomings of Vietnam economic concentration regime ................................ 12
1.3 Experiences from U.S Antitrust law and pointers for Vietnam ........................ 14
CHAPTER 2: MERGER CONTROL MECHANISM UNDER U.S ANTITRUST
LAW AND POINTERS FOR VIETNAM .................................................................... 18
2.1 Statutory notification thresholds .......................................................................... 18
2.1.1 Pre-merger notification thresholds under U.S Antitrust law ......................... 19
2.1.2 Shortcoming of Vietnam economic concentration regime regarding
premerger notification thresholds ............................................................................. 19
2.1.3Pointers for Vietnam ...................................................................................... 20
2.2 Criteria for prohibition.......................................................................................... 23
2.2.1 Competitive effects analysis under U.S Antitrust law ..................................... 23
2.2.2 Shortcomings of Vietnam economic concentration regime regarding

criteria for prohibition ............................................................................................... 40
2.2.3 Pointers for Vietnam ........................................................................................ 43
CONCLUSION ................................................................................................................ 50
BIBLIOGRAPHY ...............................................................................................................


INTRODUCTION
1. The necessity of the research
In the current climate of globalization where the economy is in a constant state
of flux, businesses are seeking to stay competitive by means of expansion and trade.
One particularly effective way to do so is through merger - a transaction that brings
about change in control of different business entities1. Merger is a vital part of any
healthy economy and importantly, the primary way that companies are able to provide
returns to owners and investors2. In fact, worldwide mergers have been growing in
volume and value, hitting US$3.7 trillion in 2016 and third largest annual period for
deal makings since recorded in 19803. The United States (hereinafter “the U.S”)
dominated the top 100 deals, accounting for 54 in terms of target and 45 in terms of
bidder4, proving itself to be the most sought after location for merger deals. One
significant culprit to explain why investors favor the U.S is its long-standing antitrust
regime (started in the XIX-XX century) which is in an endeavour to support the flow of
transactions, keeping the environment highly competitive.
With regards to the U.S antitrust regime, the three main laws are the Sherman
Act and the Clayton Act, which outlaw monopolies, and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (hereinafter “HSR Act”). The HSR Act requires
the parties to a proposed acquisition transaction to furnish certain information about
themselves and the deal to the Antitrust Division of the Department of Justice
In a broad sense, mergers and acquisitions (or takeovers) are very similar corporate actions – they combine two
initially separate firms into a single legal entity. In a more specific sense, an acquisition is the generic term used
for describe a transfer of ownership (the process by which the stock or asset of a corporation come to be owned
by a buyer) whereas a merger is a narrow, technical term for a particular legal procedure that may or may not

follow an acquisition. As distinct from a merger, an acquisition does not necessarily entail amalgamation or
consolidation of the firms.
In the U.S, mergers and acquisitions are regulated by both (i) federal statutory law and (ii) state statutory law.
According to such law, there is barely any different definition between “merger” and “acquisition”. Therefore, in
this thesis, the author will use the term “merger” in general for “mergers and acquisitions”. For detail see Stanley
Foster Reed, Alexandra Reed Lajoux, H. Peter Nesvold (2007), The Art of M&A A Merger/Acquisition/Buyout
Guide, 4th Edition, Mc-Graw-Hill, p. 4 and Simon Robison Editor, 2012, The Mergers and Acquisitions Review,
6th Edition, Law Business Research, p. 702.
Mergers regulated by Vietnam Competition law is otherwise under another definition as “economic
concentration” see Section 1.1.2 below.
2
Andrew J. Sherman and Milledge A. Hart, 2006, Mergers and Acquisitions from A to Z, 2th Edition, Amacom,
p.1.
3
Andrew Kelly, 2016, Mergers and Acquisition Review Full Year 2016, Financial Advisors, Thomson Reuters,
p.1.
4
KPMG, 2017, 2017 M&A Predictor, KPMG International, p.4.
1

1


(hereinafter “DOJ”) and to the Federal Trade Commission (hereinafter “FTC”)5. As
recorded during its 100 years’ time of antitrust history, the U.S had undoubtedly
experienced the toughest and most vigorous enforced antitrust law in the world, which
has thrown new light on the worldwide competition regime and that of Vietnam is no
exception.
Since the Doi Moi reforms in 1986, Vietnam has achieved enormous growth in
its pursue of the socialist-oriented market economy with in-depth global integration.

With the advantage of abundant and quality labor force with competitive costs;
favorable geographic location in trade with the world; and the stable security and
political situation, Vietnam has been attracting foreign investment since 2000, thus
making it a dynamic environment for merger activities. Moreover, the process of
globalization in Vietnam started in 2007 with its participation in WTO, followed by a
chain of 16 free trade agreements signed with countries6 has proven that Vietnam is
opening up the door for global integration. Therefore, Vietnam now faces a challenge
of building a strong legal framework to form and maintain a fair competition
environment for all businesses, especially in the context when the Competition law has
been enforced 12 years with many shortcomings to catch up with the current pace.
Ever since the promulgation of the Vietnam Competition Law (hereinafter
“VCL”) in 2004 till the end of 2016, the Vietnam Competition Authority (hereinafter
“VCA”) had processed 32 economic concentration notification dossiers and consulted
50 cases of economic concentrations7. The current VCL has shown inevitable
drawbacks with lack of updated regulations on practices in restraint of competition or
the position and model of the competition agency, which lead to the ineffective and
lengthy competition process. In particular, the regulations on economic concentration
control does not allow the VCA to exercise their authority towards the transaction by
evaluating the potential competitive effects; besides, the current criteria for mandatory
notifications thresholds and prohibition is out-of-date and needs further amendments
with the modern economy.
5

Alexandra Reed Lajoux, Charles M.Elso (2010), The Art of M&A Due Diligence Navigating Critical Steps and
Uncovering Crucial Data, 2nd Edition, Mc-Graw Hill, p. 238.
6
Tu Hoang, “Vietnam involved in 16 FTAs”, http://english.thesaigontimes.vn/51556/Vietnam-involved-in-16FTAs.html (last retrieved on 01/07/2017).
7
Vietnam Competition Authority (2017), “Explanatory report on some amendments and supplements in the Draft
Competition Law”, p. 2 [TRANS: Cục Quản lý cạnh tranh, “Báo cáo giải trình thuyết minh v/v một số nội dung

sửa đổi, bổ sung trong Dự thảo Luật Cạnh tranh (sửa đổi)”, tr.2].
2


In realization with the current situation, the Vietnamese government is drafting
amendments to the VCL (hereinafter “Draft Law”) and is expecting to adopt it in May
20188. It is fundamental for the Vietnamese lawmakers to learn from the experiences of
the U.S antitrust laws - world-leading competition regime – to create the most suitable
competition law for the Vietnamese socio-economic situation. Hence, a thorough
analysis and synthesis of the U.S Antitrust law highlights in comparison with the
current VCL shortcomings would give some hints to how the new VCL should be
adopted. On the aforementioned base, the author chooses “Merger control in the U.S
and pointers for Vietnam” as a bachelor of law thesis.
2. Literature review:
There are various books, researches and studies regarding mergers. The HCMC
University of Law’s library let alone has just over 20 materials about mergers,
however, these materials mostly cover information concerning legal corridor or the
economic perspective of mergers. When it comes to mergers under the regime of
competition law and, more specifically, the economic concentration regime under
Vietnamese law, there have been a few studies, thesis and books on these matters.
Hereby are the most remarkable works:
 Phạm Trí Hùng (2012), “Khung pháp lý điều tiết sáp nhập, mua lại doanh
nghiệp ở Việt Nam” (Legal framework governing M&A in Vietnam): this article
covers general competition regulations including a limited reference to the U.S merger
control regime.
 Cao Thị Hoàng Oanh (2012), “Kiểm soát tập trung kinh tế theo pháp luật
cạnh tranh Việt Nam và Hoa Kỳ” (Economic concentration regime under Vietnam and
U.S law): this thesis is outstanding with Ms. Oanh’s overall viewpoints on the
difference between the U.S and Vietnam competition regime, however the thesis
deemphasizes the competition effects analysis process which is a highlight in the U.S

antitrust system.
 Lê Hoàng Thanh Trường (2014), “Pháp luật cạnh tranh trong kiểm soát
mua lại và sát nhập (M&A) so sánh pháp luật Việt Nam và Hoa Kỳ” (Competition law
8

In the implementation of the National Assembly's Resolution No. 22/2016 / QH14 of July 29 2016 on the new
law drafting program, on 5 April 2017, the Ministry of Industry and Trade issued the second Draft Law on
Competition. For details see Baker Mckenzie, “Draft of New Competition Law in Vietnam”,
http://www.bakermckenzie.com/en/insight/publications/2017/04/draft-new-competition-law-of-vietnam/ (last
retrieved on 01/07/2017).
3


in controlling M&A – a comparative study between Vietnam and U.S law): this thesis
demonstrates the general relation between mergers and acquisitions and competition
regime with a focus on the U.S competition effects analysis process, thus suggesting
remarks for Vietnam.
However, researches and studies on U.S merger control in relation to Vietnam
economic concentration regime are still rare up till this time. Most works focus on the
overall differences between two systems with a considerable constraint of mention of
realistic, rational and applicable pointers for the new Vietnam competition law.
Therefore, the author, with reference to the available resources and the Draft Law, will
give a comprehensive look at the current situation thus giving practical suggestions for
the new Vietnam Competition law.
3. Research objective:
This thesis proposes to study and analyze specifically certain statutory
provisions that contribute to the success of the U.S Antitrust system, thus giving
hindsight and detailed remarks in order to amend the current Vietnam competition
regulations. With the newly updated law, Vietnam is expected to bring a level playing
field for businesses as well as facilitating economic development and effectively

allocating social resources.
4. Object and Scope of research
Firstly, with regards to the object of research, this thesis looks into two most
outstanding different blocks between the U.S Antitrust law and VCL, namely: (i) types
of merger and (ii) the merger control mechanism. The second chapter, in particular,
will address two other sub-objects, which are: (iii) the statutory notification thresholds
and (iv) criteria for prohibition.
Secondly, concerning the scope of research, as limited by the time span and
given the nature of the bachelor’s graduation thesis, this thesis mainly focuses on the
types of merger and the merger control mechanism of the two legal systems as these
are the most relevant and attention-needing matters relating to the current VCL. Other
sectors such as competition authority or the merger review process shall not be
mentioned in this thesis. The author wishes to come back one day to give a more
detailed and comprehensive analysis on this subject.
4


5. Research methodologies:
The author applies multiple methods in order to achieve the highest efficacy in
this research, including but not limited to:
(i) Explanatory and inductive method: this is mainly applied to gather, analyze
and clarify the theoretical, practical and legal issues.
(ii) Correlational method: this is used to precisely point out the correlation and
the relationship between the two legal systems, hence allowing the author to provide
proper comments.
(iii) Theoretical method: the author will refer immensely to the current available
material resources with special attention to some international experts’ works to
produce the most objective and in-depth thesis.
6. Research structure
In addition to the introduction and the conclusion, this thesis is laid out as

follows:
Chapter I: Types of merger under U.S Antitrust law and pointers for Vietnam.
Chapter II: Merger control mechanism under U.S Antitrust law and pointers for
Vietnam.
Each chapter shall have an overall similar structure with the idea flow goes as:
(1) the U.S Antitrust regulations; (2) the VCL and shortcomings in the implementation
of law and (3) experience from the U.S and pointers for Vietnam.

5


CHAPTER 1: TYPES OF MERGER UNDER U.S ANTITRUST LAW AND
POINTERS FOR VIETNAM
1.1 Types of merger under the regime antitrust law in the U.S and Vietnam
Under U.S Antitrust law, types of merger are quite different from that under
Vietnamese laws. The following study will analyzethe different approaches made by
the two legal systems, thus allowing the author to suggest relevant comments for the
forthcoming revised VCL.
1.1.1 Types of merger under U.S Antitrust law
Irrespective of their many benefits, mergers attract the attention of competition
law-makers since they normally have implications for the concentration of, and ability
to use, market power, which, in turn can pose harmful impact upon competition
environment and the consumers9. The principal statute governing mergers and
acquisitions in the U.S. is Section 7 of the Clayton Act, which prohibits such
transactions “where in any line of commerce or in any activity affecting commerce in
any section of the country, the effect of such acquisition may be substantially to lessen
competition, or to tend to create a monopoly”10. According to the FTC, three basic
kinds of mergers may have this effect are: horizontal mergers, vertical mergers, and
potential competition mergers11. The aforementioned types of merger can be
categorized into two sub-groups: horizontal mergers and non-horizontal mergers

(vertical and potential mergers) based on its essence.
1.1.1.1 Horizontal mergers
Horizontal mergers are mergers between firms that produce and sell the same
products, for example, between competing firms. Horizontal mergers, if significant in
size, can reduce competition in a market and are often reviewed by competition
authorities12. The U.S’s airline industry saw a merger between American Airlines and

NeerajTiwari, “Merger under the regime of Competition law: A comparative study of Indian legal framework
with EC and UK”, http://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1418&context=blr (last retrieved
on 08/06/2017).
10
Lee Van Voorhis, Vadim Brusser , “How Antitrust Agencies Analyze M&A”,
https://www.weil.com/~/media/files/pdfs/101810October2010PracticeNote.pdf (last retrieved on 08/06/2017).
11
U.S. Federal Trade Commission, Guide to Antitrust Laws, An FTC Guide to Mergers, Competitive Effects.
12
R. S. Khemani and D. M. Shapiro (1993), “Glossary of Industrial Organization Economics and Competition
Law”, http://www.oecd.org/regreform/sectors/2376087.pdf (last retrieved on 01/07/2017) .
9

6


US Airways in 2013 which created the world’s largest carrier 13. This is a typical
example of a horizontal merger when two head-to-head competitors combined into one
company.
To provide the analytical framework for merger analysis, FTC and DOJ (here
inafter “the Agencies”) jointly issued Horizontal Merger Guidelines (hereinafter the
“2010 Guidelines”)14.In general, the government’s investigation seeks to determine
whether a proposed merger will result in a substantial lessening of competition in the

markets where the merging firms compete. According to the FTC, there are two types
of potential competitive effects: (i) by permitting the merged firm to raise prices
profitably on its own (unilateral effect), or (ii) by creating or enhancing the ability of
the remaining firms to act in a coordinated way on some competitive dimension
(coordinated interaction)15.
Unilateral effects
A merger can create this harm especially in the case of a merger to monopoly –
when the merging firms are the only competitors in a market. Normally, the result
would serve as a raise in price or reduce output to harm the customers. “But a merger
may also allow a unilateral price increase in markets where the merging firms sell
products that customers believe are particularly close substitutes. After the merger, the
merged firm may be able to raise prices profitably without losing many sales” 16. This
happens in post-merger stage when a majority of customers chooses to switch products
between merging firms instead of switching to products of other competitors which,
consequently, puts them under an unfavored situation. Some common types of
unilateral effects are: (i) pricing of differentiated products; (ii) bargaining and auctions;

Hugo Martin, “A key step in the merger between American Airlines and US Airways is scheduled for
Saturday”, http://www.latimes.com/business/la-fi-travel-briefcase-merger-20161001-snap-story.html(last
retrieved on 01/07/2017).
14
Horizontal Merger Guidelines was first introduced in 1992 by DOJ and FTC. They revised the 1992 Guidelines
slightly in 1997 and finallyin 2010 the Agencies introduced the 2010 Guidelines, which made substantial changes
to the 1992 Guidelines. For details see U.S Department of Justice and Federal Trade Commission (2010),
Horizontal Merger Guideline.
Besides, the Agencies also promulgated the “Commentary on the Horizontal Merger Guidelines (2006)” which is
still effective till now. For details see U.S. Department of Justice & Federal Trade Commission, Commentary on
the Horizontal Merger Guidelines (2006), https://www.ftc.gov/sites/default/files/attachments/mergerreview/commentaryonthehorizontalmergerguidelinesmarch2006.pdf (last retrieved on 01/07/2017).
15
U.S Federal Trade Commission, Ibid (11).

16
US Federal Trade Commission, Ibid (11).
13

7


(iii) capacity and output for homogeneous products; and (iv) innovation and product
variety.17
Coordinated interaction
“A horizontal merger eliminates a competitor, and may change the competitive
environment so that the remaining firms could or could more easily coordinate on price
output, capacity, or other dimension of competition”18. Coordinated interaction is
comprised of actions by a group of firms that are profitable for each of them only as a
result of the accommodating reactions of the others. “This behavior includes tacit or
express collusion, and may or may not be lawful in and of itself”.19
It can be inferred that horizontal mergers have always been attracting more of
the attention from the Agencies since the parties were initially rivals, therefore they are
more capable of lessening the competition and creating monopoly for the newly
merged firm20.
1.1.1.2 Non-horizontal mergers
Non-horizontal merger was first introduced as part of “U.S Department of
Justice Merger Guideline” in 1984. By definition, non-horizontal mergers involve
firms that do not operate in the same market. Although non-horizontal mergers are less
likely than horizontal mergers to create competitive concerns, they are not invariably
innocuous21. Generally, there are two types of non-horizontal mergers that can harm
competition: (i) Mergers involving firms that operate at different levels of an industry
(vertical mergers); or (ii) Mergers involving potential competitors (potential
competition mergers).22
Vertical mergers

Vertical mergers combine firms at different levels of production or distribution,
such as a manufacturer merging with a supplier of an input product, or a manufacturer
17

Lee Van Voorhis, Vadim Brusser (2010), Ibid (10).
US Federal Trade Commission, Ibid (11).
19
Alexandra Reed Lajoux, Charles M.Elso, Ibid (5), p.266.
20
Robert J. Carbaugh (2011), Contemporary Economics – An applications approach, 6th Edition, M.E. Sharpe
Inc, p. 144.
21
U.S Department of Justice, “Non-horizontal Merger Guidelines”, https://www.justice.gov/atr/non-horizontalmerger-guidelines (last retrieved on 01/07/2017).
22
Lee VanVoorhis, VadimBrusser, Ibid (10).
18

8


merging with a distributor of its finished products23. An example of this type is the
proposed deal between AT&T and Time Warner, in which AT&T (the acquiring firm)
provides wireless and broadband Internet service while Time Warner (the target firm)
creates movies, TV shows and other content that AT&T and other distributors transmit
to consumers24. Advocates of abandoning the merger argued that this deal will limit
consumer choice and lead to increased prices, including the President-elect Donald
Trump who pledged to block the merger because: “it’s too much concentration of
power will be put in the hands of too few.”25 Such mergers will be anticompetitive if
the distributor (AT&T) gives special treatment to its newly acquired content provider
(Time Warner), allowing free mobile video (zero-rated) for AT&T’s subscribers via its

network. This will surely put pressures on other competitors to pay AT&T (and other
carriers) to also be zero-rated, lest they fall behind Time Warner in mobile popularity.26
Although vertical mergers are mostly perceived as raising fewer competitive
concerns than horizontal ones, there is much less agreement about the analytical
standards that should apply to the competitive analysis27. The Non-horizontal
Guidelines listed some of the competitive problems, namely:
• Increased barriers to entry: a merger can elevate barriers to entry if, as a
result of a merger, new entrants would have to enter the primary market and also the
secondary market simultaneously to compete with the merged firm28;
• Facilitating collusion: a merger can make it difficult for competitors to
gain access to an important component product/channel of distribution. This happens

23

U.S. Federal Trade Commission, Ibid (11).
Senator Orrin G. Hatch, “A Dose Of Reality On The AT&T-Time Warner Merger”,
https://www.forbes.com/sites/realspin/2016/12/06/a-dose-of-reality-on-the-att-time-warner-merger/(last retrieved
on 01/07/2017).
25
Brian Stelter, “Donald Trump rips into possible AT&T-Time Warner deal”,
http://money.cnn.com/2016/10/22/media/donald-trump-att-time-warner/(last retrieved on 01/07/2017).
26
Walt Mossberg, “Mossberg: Why the AT&T-Time Warner merger is dangerous”,
https://www.theverge.com/2016/12/14/13941266/walt-mossberg-att-time-warner-merger-deal-danger(last
retrieved on 01/07/2017).
27
Leon B. Greenfield & Jeffrey Ayer WilmerHale, “Vertical Mergers in the United States”,
http://www.wilmerhale.com/uploadedFiles/WilmerHale_Shared_Content/Files/PDFs/ICL%20Conference%20Pa
per_2000.pdf (last retrieved on 01/07/2017).
28

This competitive problem could 7esult from either upstream or downstream integration, and could affect
competition in either markets. The term “primary market” refers to the market in which the competitive concerns
are being considered, and the term “secondary market” refers to the adjacent market. For details see U.S
Department of Justice, Ibid (20).
24

9


when the merged firm gains the ability and incentive to limit its rivals’ access to key
inputs or outlets29;
• Avoidance of rate regulation: a price-regulated company’s acquisition of
an unregulated supplier could allow the regulated company to evade rate regulation by
artificially inflating the cost of its internal transactions.30
Potential competition mergers
A merger of this type involves one competitor buying a company that is
planning to enter its market to compete (or vice versa)31. If the merger effectively
removes the acquiring firm from the edge of the market, it could either: (i) harm the
“perceived potential competition”: by preventing the actual increased competition that
would result from the firm’s entry. If the acquiring firm had unique advantages in
entering the market, the firms in the market might be able to set a new and higher price
after the threat of entry by the acquiring firm was eliminated by the merger 32; or (ii)
harm the “actual potential competition”: by eliminating the procompetitive effect that
an outside firm can have on a market simply by being recognized as a possible
entrant33.
In 2015, FTC challenged the proposed US$1.9 billion merger of Steris
Corporation (“Steris”) and Synergy Health plc (“Synergy”) on the grounds that it
would impair potential future competition between the merging parties34. At that time
there were three primary methods of contract sterilization in the U.S, one of which is
gamma radiation. Synergy, besides providing the abovementioned methods, has been

operating an x-ray sterilization facility outside the U.S – a method that could provide a
competitive alternative to gamma radiation – and planned to bring it to the U.S in
201335. On that basis, FTC’s complaint alleged that Synergy abandoned its plans to
bring x-ray sterilization to the U.S because of the proposed merger with Steris, and that
Steris aimed to eliminate the competitive threat to its gamma sterilization services from
29

U.S. Federal Trade Commission, Ibid (11).
Lee VanVoorhis, Vadim Brusser, Ibid (10).
31
U.S. Federal Trade Commission, Ibid (11).
32
U.S Department of Justice, Ibid (21).
33
U.S. Federal Trade Commission, Ibid (11).
34
Sidley, “Back From the Future: FTC Stumbles in Challenging Merger’s Effect on Future Competition”,
https://www.sidley.com/en/insights/newsupdates/2015/09/back-from-the-future (last retrieved on 01/07/2017).
35
Bruce D. Sokler, Farrah Short, “FTC Merger Challenge Based on Harm to Potential Competition Rejected by
District Court”, http://www.natlawreview.com/article/ftc-merger-challenge-based-harm-to-potential-competitionrejected-district-court (last retrieved on 01/07/2017).
30

10


Synergy’s contemplated x-ray sterilization services36. The complaint, nonetheless, was
denied by the district court for FTC’s failure to carry its fact-based burden37. In this
case, the underlying theory of competitive harm that FTC applied was the actual
potential competition theory that the market would be more competitive if it had not

been for the merger.
1.1.2 Types of economic concentration under Vietnam Competition Law
According to economics and legal science, economic concentration is analyzed
at different aspects. There are three basic approaches that the VCL adopt to economic
concentration, namely:
Firstly, as a process associated with the formation and change of the market
structure, economic concentration is defined as a process in which the number of
independent competing enterprises is reduced by means of mergers (in broad sense) or
by internal growth on the basis of expanding the production capacity. Secondly, as
regarded the behaviour of an enterprise, economic concentration is the increase in
economic value by means of agglomeration between enterprises or by one enterprise
attracting another. This definition does not state specifically a type of economic
concentration but rather demonstrating the nature and method of it. 38 Thirdly, from a
legal perspective, VCL regulates behaviours regarded as economic concentration.
Accordingly, Article 3(3) states that economic concentration is considered a practice in
restraint of competition. Article 16, on the other hand, divides economic concentration
into 05 categories: (i) mergers; (ii) consolidations; (iii) acquisitions; (iv) joint-venture;
and (v) other forms.
As stipulated under Article 1, Article 18 and Article 20 of VCL 39, the VCL only
regulate horizontal economic concentrations conducted within the geographic area of
Vietnam since the criteria used for control of anticompetitive practice is combined
market shares40. In other words, only cases in which the enterprise participating in the
36

Sidley, Ibid (34).
Bruce D. Sokler, Farrah Short, Ibid (35).
38
Nguyen Ngoc Son, “Comments on the economic concentration regime in the Competition Draft Law – Second
Draft”, p.2 [TRANS: T.S NguyễnNgọcSơn, “Góp ý đối với chế định tập trung kinh tế trong Dự thảo Luật Cạnh
Tranh – Dự thảo 2”, tr.2].

39
Article 1 (Scope of governance), Article 18 (prohibited cases of economic concentration) and Article 20
(notification of economic concentration).
40
Article 3(6)VCL: “Combined market share means the total market share in the relevant market of the
enterprises participating in an agreement in restraint of competition or in an economic concentration”.
37

11


economic concentration has the same level of business in the relevant market in
Vietnam is within control of competition law.41
1.2 Shortcomings of Vietnam economic concentration regime
It can be deemed from Sector 1.1.2 that the current VCL do not regulate (i) nonhorizontal economic concentration and (ii) economic concentrations conducted
overseas that may have adverse competitive effects on the Vietnamese market.
As regard to non-horizontal economic concentrations, they normally do not raise
anticompetitive concerns and likely bring procompetitive effects to the market. Vertical
economic concentrations may increase the efficiency of the production process by
improving communication and harmonizing the incentives of the merging firms42 while
the other type can lead to cost savings derived from some forms of economy of scope
(either on the production of the consumption side), or value enhancements resulting
from better compatibility and quality assurance of complementary components43.
Notwithstanding the benefits, these non-horizontal economic concentrations impose
certain potential harms to the competition. In 2015, Masan Group announced its
acquisition of 52% stake in Vietnam French Cattle Feed JSC (Proconco) and 70% stake
in Argo Nutrition Company JSC (Anco), both of which are premium feed brands. The
acquisition would make the group the number one external pig feed market, and rank
second in the overall animal feed market in Vietnam44. Masan Nutri-Science (MNS) –
a member of Masan Group – also acquired an additional 10.9% stake in the Vietnam

Meat Industries Limited Company (Vissan), which reflects MNS’s strategic premium
paid to partner with the leading meat consumer brand in the market. “MNS’s aim is to
deploy a unique business model, directly operating and integrating the entire animal
protein value chain, spanning animal feed, farming, slaughter and producing branded

41

Nguyen Ngoc Son, Ibid (38).
Steven C.Salop, Daniel P.Culley (2014), “Potential Competitive Effects of Vertical Mergers: A How-To Guide
for Practitioners”, http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=2404&context=facpub(last
retrieved on 01/07/2017).
43
Miguel de la Mano, “Vertical and Conglomerate Effects”,
http://ec.europa.eu/dgs/competition/economist/delamano1.pdf(last retrieved on 01/07/2017).
44
Vietnam News, “Masan Group acquires Proconco and Anco”, http://bizhub.vn/markets/masan-group-acquiresproconco-and-anco_10900.html(last retrieved on 01/07/2017).
42

12


meat products.”45 This shall be a typical case of vertical economic concentration in
Vietnam where an enterprise acquires others to complete its business chain.
With regards to potential competition mergers, 2016 also witnessed an
outstanding deal when Vietnam’s second largest mobile network operator MobiFone
acquired 95% stake in Audio Visual Global JSC (AVG) – a player on the pay
television market46. “By purchasing the subscription TV unit, in addition to deploying
4G data service, MobiFone said the efforts were aimed at increasing its valuation and
making its upcoming Initial Public Offering more attractive.”47 TV services will be
combined with telecommunication services using advanced technologies and

customers will likely be exempted from some TV services charges as MobiFone has
revenue from subscription.48 However, several months after the acquisition, the
government decided to scrutinise the deal as “MobiFone is one of Vietnam’s leading
mobile operators, and, more importantly, the first carrier to implement privatization.
Thus, any large investment by the firm needs a thorough look”, said Mai Tien Dung,
the head of the Government Office.49As stipulated by the DOJ: “Although nonhorizontal mergers are less likely than horizontal mergers to create competitive
concerns, they are not invariably innocuous”50, it is essential for the VCL to have
regulations towards non-horizontal economic concentrations to strengthen the
authority’s control over the constantly changing environment.
When it comes to the lack of governmental control over overseas transactions,
this is a noticeable threat to Vietnamese economy as there is a great number of
presence of multinational enterprises, some of which already hold a significant market
share in the domestic market. One typical case of this is the acquisition of Big C by
Thailand’s Central Group. Big C Vietnam is ranked second after the Co.opmart chain
in terms of store number, so the acquisition of Big C Vietnam will have a significant
Vietnam News, “Masan Nutri-Science owns ANCO, increases Vissan stake”,
http://vietnamnews.vn/economy/299062/masan-nutri-science-owns-anco-increases-vissan-stake.html (last
retrieved on 01/07/2017).
46
“Mobifone acquires 95% of AVG”, http://english.vietnamnet.vn/fms/business/149747/mobifone-acquires-95-of-avg.html (last retrieved on 01/07/2017).
47
Nguyen Thi Bich Ngoc (2016), “Vietnam: MobiFone says TV operator AVG deal cost $400m”,
https://www.dealstreetasia.com/stories/vietnam-mobifone-spent-400m-to-acquire-premium-tv-operator-avg58348/ (last retrieved on 01/07/2017).
48
Nguyen Thi Bich Ngoc (2016), Ibid (47).
49
Nguyen Thi Bich Ngoc (2016), “Vietnam: MobiFone’s opaque AVG deal under review by government
agencies”, https://www.dealstreetasia.com/stories/vietnam-mobifones-acquisition-of-pay-tv-unit-heralds-opaquevaluation-49707/ (last retrieved on 01/07/2017).
50
U.S Department of Justice, Ibid (21).

45

13


effect on the domestic retail market51. Another example is the proposed economic
concentration between international Prudential and AIA whose combined market share
in Vietnam is about 50% in life insurance market. If the deal succeeded, the two firms
combined would hold a significant market power thus being feasible to conduct
anticompetitive effects to Vietnam’s market.52
1.3 Experiences from U.S Antitrust law and pointers for Vietnam
Regarding non-horizontal merger control, the U.S Antitrust law has clear
guidelines of how mergers will likely be challenged by the Agencies, which is a
contrasting picture regarding economic concentration regime in Vietnam that only uses
CMS as the criteria. Mainly the question is whether the merger (i) is prohibited or (ii)
needs to be informed to the authority. In (i), the U.S Agencies will look into a set of
objective factors designed to identify cases in which harmful effects are plausible 53.
For instance, the factors that the Agencies will consider are: (1) market concentration
using the Herfindahl-Hirschman Index (hereinafter “HHI”), calculated by summing the
squares of the individual firms’ market shares (a case where a number higher than 1800
HHI of an overall concentration of the acquired firm’s market will likely trigger an
investigation); (2) the acquiring firm’s entry advantage; (3) the market share of the
acquired firm (a case where the acquired firm has a market share of 20% or more will
likely trigger an investigation); (4) efficiencies; (5) structure and performance of
primary market using HHI (for potential competition mergers); 54 etc. In (ii), the HSR
Act requires the parties to certain mergers must notify the enforcement Agencies of the
contemplated transaction. Generally the premerger notification is required if the merger
meets the three tests: (a) the commerce test; (b) the size of transaction test; and (c) the
size of person test55.
According to the Draft law, one of the major changes to the type of economic

concentration was Article 25, in which it said: “enterprises will be required to report to
the National Competition Committee before conducting economic concentration if one
Quoc Hung, “Central Group wins bid for Big C Vietnam”, http://english.thesaigontimes.vn/47135/CentralGroup-wins-bid-for-Big-C-Vietnam.html (last retrieved on 11/06/2017).
52
Vietnam Competition Authority (2012), Economic Concentration Report, Ministry of Industry and Trade, p.56.
53
U.S Department of Justice, Ibid (14).
54
U.S Department of Justice, Ibid (14).
55
U.S Federal Trade Commission, “Steps for determining whether an HSR Filing is required”,
https://www.ftc.gov/enforcement/premerger-notification-program/hsr-resources/steps-determining-whether-hsrfiling(last retrieved on 01/07/2017). Further analysis on this matter will be discussed in Section 2.1 below.
51

14


of them holds a market share of at least 20%, or has its economic concentration
transactions valued at VND 300 billion or more, or has the total turnover of at least
VND 500 billion in the Vietnamese market in the fiscal year prior to the year of
conducting economic concentration”. It can be deemed from the Draft Law that the
Vietnamese lawmakers made relatively similar approach to the control of economic
concentration as that of the U.S one for merger control. The author, to the extent of her
knowledge, agrees with the Draft Law that different approach towards regulated types
of economic concentration will result in better authority of the VCA. However, the
suggested criteria also shows certain foreseeable shortcomings in their implementation,
thus will be further discussed in Section 2.1 concerning the quatitive criteria.
As regards the cross-border transactions, the U.S. law does not provide for
consideration of a merger’s competitive effects that do not affect U.S. commerce.
Nonetheless, in a merger where the U.S. parties with assets located abroad, relevant

evidence located abroad, and/or parallel review in other jurisdictions, the U.S Agencies
often work with their international counterparts – through formal and informal
agreements - to investigate and remedy potentially anticompetitive mergers. Under
these formal agreements, as well as through informal cooperation under the auspices of
the Organization for Economic Co-operation and Development (hereinafter “OECD”)
Cooperation Recommendation56, the U.S Agencies may notify other nations of their
enforcement actions that relate to other nations’ main interests, coordinate parallel
investigations, or provide assistance. This type of cooperation allows the Agencies to
identify issues of common interest, share their competitive analyses, and seek to avoid
inconsistent outcomes.57 For instance, in 2009, the FTC set conditions for the
Panasonic Corporation (Panasonic)’s acquisition of Sanyo Electric Co., Ltd (Sanyo)58.
Panasonic and Sanyo at that time were the world’s two largest manufacturers and
sellers of the portable nickel metal hydride (NiMH) battery, whose merger would
reduce competition in the worldwide market for portable NiMH batteries. Therefore,
the FTC consent order required the portable NiMH battery assets will be sold to FDK
Corporation, a subsidiary of Fujitsu Ltd. The sale of the assets would resolve
56

Recommendation of the Council concerning Co-operation between Member Countries on Anticompetitive
Practices affecting International Trade, available at https://www.justice.gov/atr/1995-recommendation-council
(last retrieved on 01/07/2017). The Recommendation was first adopted in 1967, and has been revised several
times since.
57
The OECD Global Forum on Competition, “Cross-Border Merger Control: Challenges for Developing and
Emerging Economies”, http://www.oecd.org/competition/mergers/50114086.pdf, (last retrieved on 01/07/2017).
58
Both are Japanese firms.
15



competitive concerns that were raised by the transaction. During the investigation, FTC
staffs communicated and cooperated with their enforcement counterparts in Canada,
the European Commission (EC), and Japan that also reviewed this proposed
transaction. This cooperation was conducted pursuant to the respective bilateral
cooperation agreements with these jurisdictions.59
In relation to the cross-border transactions under the Vietnamese competition
regime, Article 1 of the Draft Law suggested: “This Law regulates: 1. Acts in restraint
of competition (…) and economic concentration which are implemented in Vietnam or
outside the territory of Vietnam but is likely to have an impact or potential impact to
restrict the competitionof the Vietnamese market”. This approach is in consistent with
the ongoing global merger control theory that had also been adopted by the U.S
Antitrust system. In particular, the new regulation allows the competition authority to
scrutinize the transactions outside the territory of Vietnam that can pose harm to the
Vietnamese market, which is crucial in the context where transactions reviewed by the
VCA increasingly involve non-Vietnamese parties. Moreover, the revised law also
allows the competition authority to coordinate with other counterparts, including the
sharing of information, permits more complete communication among the reviewing
agencies, with the aim of improving the analysis and achieving consistent results,
where appropriate60. The author, with reference to the recommendations of the
OECD61, suggests that co-operation is more efficient (i) if the merging parties allow
the authority to engage in effective communication early on in the review process by
granting confidentiality waivers in appropriate cases, and (ii) if the timing of the
different national merger reviews is aligned as much as possible. Besides, the
Vietnamese competition authority should put more emphasis on enhancing
international cooperation with foreign competition authorities by means of contributing
to activities of the OECD and the International Competition Network (hereinafter
“ICN”)62, and developing bilateral cooperative relationship.
U.S Federal Trade Commission, “FTC order sets conditions for Panasonic’s acquisition of Sanyo”,
https://www.ftc.gov/news-events/press-releases/2009/11/ftc-order-sets-conditions-panasonics-acquisition-sanyo,
(last retrieved on 01/07/2017).

60
The OECD Global Forum on Competition, Ibid (57).
61
The OECD Competition Committee, “Remedies in cross-border merger case”,
http://www.oecd.org/daf/competition/Remedies_Merger_Cases_2013.pdf (last retrieved on 01/07/2017).
62
The ICN is the only international body devoted exclusively to competition law enforcement and its member
represent national and multinational competition authorities. For details see
http://www.internationalcompetitionnetwork.org/ (last retrieved on 01/07/2017).
59

16


Conclusion
Despite its numerous benefits, non-horizontal economic concentrations are
indeed latent with threats to the competition market. It is fundamental for the VCL to
have greater control over the types of economic concentration in order to promptly
block the harmful transactions. As regards the experience of the U.S Antitrust regime,
Vietnam lawmakers can adopt some suitable tools and mechanism in reviewing the
economic concentration. This mechanism shall be discussed in Chapter 2.

17


CHAPTER 2: MERGER CONTROL MECHANISM UNDER U.S ANTITRUST
LAW AND POINTERS FOR VIETNAM
In general, most mergers help make the economy more efficient. Some mergers,
however, may harm competition by creating or enhancing the merged firm’s ability or
incentives to exercise market power – either unilaterally or through coordination with

rivals – resulting in price increases above competitive levels for a significant period of
time, reductions in quality or a slowing of innovation. There are two main blocks in the
U.S merger control mechanism, which are: (1) Pre-merger notification: prior to
closing, any merger that meets the statutory reporting requirement must file a
notification to the agencies (an HSR filing); and (2) Competitive effect analysis: After
receipt of an HSR filing, either the Agencies assesses the transaction to determine
whether it raises any substantial competition concerns. This chapter will point out
experiences that the U.S Antitrust system had with merger control regime, then
allowing the author to suggest pointers for Vietnam regarding economic control
regime.
2.1 Statutory notification thresholds
“The modern consensus among economists and antitrust practitioners is that
antitrust law should exist primarily to achieve allocative efficiency and to advance
consumer welfare”63. To achieve these goals of antitrust law, the antitrust enforcement
adopted the economic method of “deterrence” and “ex ante control” - which is a firmspecific control. Instead of punishing firms that have entered into uncompetitive
mergers or seeking to break them after the fact, the HSR requires firms that plan to
merge to file a notification with the agencies, enabling the agencies to scrutinize the
mergers before they occur64. The HSR Act sets out notification thresholds that certain
mergers must submit a file to the agencies if they meet the requirements. The HSR Act
also regulates the merger review process, however, due to the insufficient information
sources, it shall not be addressed in this thesis.

63

Keith N. Hylton (2010), Antitrust law and Economics Encyclopedia of law and economics, Edward Elgar
Publishing Inc, U.S., p.2.
64
Keith N. Hylton (2010), Ibid (63), p.3.
18



2.1.1 Pre-merger notification thresholds under U.S Antitrust law
According to the HSR Act, unless an exemption applies, pre-merger notification
is compulsory if transaction meets three tests: (i) the commerce test; (ii) the size of
transaction test; and (iii) the size of person test65.
(i) The commerce test: if either party is engaged in commerce or in any activity
affecting commerce, this test is met.
(ii) The size of transaction test: if the transaction is valued at more than $200
million (as adjusted)66, and no exemption applies, and HSR filing must be made. If the
transaction is valued in excess of $50 million (as adjusted) but is $200 million (as
adjusted) or less, only those transactions that meet the size of a person test require a
filing.67 The test is met, as a result of the transaction, when the acquiring person holds
an aggregate amount of voting securities non-corporate interests and assets of the
acquired person valued at more than $50 million (as adjusted)68.
(iii) The size of person test: this test addresses the magnitude of the sales or total
assets of the acquiring and acquired person and is carried out if the parties do not meet
up the (ii) requirements of transaction size. The test is met if one party has sales or
assets of at least $100 million (as adjusted) and the other party has sales or assets of at
least $10 million (as adjusted)69.
2.1.2 Shortcoming of Vietnam economic concentration regime regarding
premerger notification thresholds
The VCL uses “combined market share” as the criteria for compulsory premerger notification, in which an economic concentration that has a combined market
share from 30% to 50% in the relevant market must notify the administrative body
prior to their closing. Reality shows that although the number of mergers is quite high

65

See Chapter 1, Section 1.3.
The 2000 amendments to the Act require the Commission to revise certain thresholds annually based on the
change in the level of Gross National Product. A parenthetical “(as adjusted)” has been added where necessary

throughout this thesis to indicate where such a change in statutory threshold value occurs. For detail see FTC
Premerger Notification Office, “To file or not to file when you must file a premerger notification report form”,
https://www.ftc.gov/sites/default/files/attachments/premerger-introductory-guides/guide2.pdf (last retrieved on
01/07/2017).
67
FTC Premerger Notification Office, Ibid (66).
68
FTC Premerger Notification Office, Ibid (66), p.2.
69
FTC Premerger Notification Office, Ibid (66), p.3.
66

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