COMPETITION LAW 2018 : Partner LNT & PARTNERS KEY CHANGES, - PowerPoint PPT Presentation

Spea eake ker Round ndtable table Discuss ssion ion Dr. Dr . NGUYE YEN N ANH TUAN COMPETITION LAW 2018 : Partner LNT & PARTNERS KEY CHANGES, IMPACT ON ENTERPRISES AND RECOMMENDATIONS 18 June 2019

NOTABLE CHANGES CHANGE OF APPROACH MERGER FILING Shift from form-based to OTHER CHANGES effect-based approach Notifying thresholds: determined ▪ Off-shore cartels and ▪ based on, among other criteria, transactions will be caught. combined market share Time-limit for lodging a ▪ 2-phased procedures for ▪ complaint is 3 years evaluation of concentration LENIENCY POLICY For the first time introduce a way out for whistle-blowers www.LNTpartners.com

SCOPE OF GOVERNANCE WIDENED SCOPE Economic Enterprises conducting business in State-controlled ▪ Concentration industries and sectors, public professional entities, Anti- Industry and professional associations, and ▪ Unfair competitive Competitive Foreign enterprises, even without presence in Vietnam , ▪ Practices Practices are all covered by the Competition Law 2018 when engaging in cartels or economic concentrations which (may) SCOPE OF cause a competition-restraining impact in Vietnam. GOVERNANCE ➜ An investigation into antitrust violations launched in State Competition one jurisdiction may lead to an investigation into Administration Legal relevant firms in Vietnam. of Competition Proceedings ➜ Prior to conducting cross-border M&A transactions, Dealing with MNCs should carefully check whether they are required Antitrust by law to notify the proposed transactions. Violations www.LNTpartners.com

CARTELS DEFINITION An act of agreement between parties in any form which causes an actual or potential competition-restraining impact. Vertical Cartels Horizontal Cartels IMPACT Agreements among Agreements among HORIZONT AL Vertical cartels : prohibited when such agreements (potentially) firms operating at ▪ firms in the same &VERTICAL cause a competition-restraining impact different stages in the relevant market Hardcore cartels : prohibited per se without assessment of ▪ supply chain market share Non-hardcore cartels : permitted when such agreements are ▪ Hardcore Cartels proven to have a pro-competition impact ▪ Bid-rigging ▪ Business restriction Non-hardcore Cartels EXEMPTION HARDCOREvs. ▪ Exclusion Remaining cartels other NON-HARDCORE ▪ Horizontal cartels: price- Not applicable to (i) bid-rigging, (ii) business restriction, and ▪ than 04 hardcore ones fixing, markets/customers (iii) exclusion cartels division, quota restriction Exempted ( 05 years max) if beneficial to consumers AND (i) ▪ improves the quality of goods/services, OR (ii) enhances the competitiveness of Vietnamese businesses, OR (iii) unifies the applicability of quality standards, or (non-price) conditions for contract performance www.LNTpartners.com

LENIENCY POLICY Having partaken or currently ▪ Incentivising co-conspirators to ▪ partaking in a cartel terminate and abandon cartels Coming forward before an ▪ investigation is launched Increasing the number of cartels ▪ discovered and sanctioned Providing significantly valuable ▪ evidence & fully cooperating with Offering a “lifeline” for cartel ▪ competition watchdog members Not being ring-leaders or coercers ▪ IMPACT MECHANISM CONDITIONS LENIENCY LEVELS The 2 nd whistle-blower The 3 rd whistle-blower The 1 st whistle-blower ` Full Immunity 60% fine reduction 40% fine reduction www.LNTpartners.com

ABUSE OF MARKET POWER An enterprise has 30% or more of the market share or DEFINITION significant market force Conducts by a firm holding a dominant market position, or a Exploitative Imposing unreasonable prices, RPM ▪ monopoly position, which cause an actual or potential ➜ Potentially cause Restraining production, limiting the ▪ competition-restraining impact. loss to customers market, hindering R&D Hạn chế SX/PP; Imposing conditions to the ▪ Giới hạn thị trường disadvantage of customers Thị phần kết hợp IMPACT ≥ 30% Unilaterally change or rescind ▪ B contracts without justifiable reasons Focusing on the assessment of competition-restraining HOẶC Exclusionary Sức mạnh thị trường Predatory pricing impact or ability to cause such impact. ▪ đáng kể ➜ Potentially result in Discriminatory practices ▪ Ngăn cản DN khác ➜ Widened scope: change from form-based to effect- hindering or excluding Phân biệt đối xử Imposing unreasonable commercial tham gia/mở rộng ▪ based approach competitors thị trường conditions ➜ Conducts by an enterprise/a group of enterprises having Hindering or excluding other ▪ Áp đặt đ/k không market power may be permitted if it is proven that such enterprises l.quan đến đối tượng conducts do not (potentially) cause a competition- HĐ; Bán kèm Prohibited acts under ??? restraining impact. other laws www.LNTpartners.com

UNFAIR COMPETITIVE PRACTICES DEFINITION Infringing business secrets Conducts by a firm which are contrary to the principles of goodwill, honesty, commercial practices and other Coercing in business business standards and which cause actual or potential loss and damage to the legitimate rights and interests of Providing untruthful information other firms. Nghiêm trọng ▪ Thông thầu ▪ Hạn chế kinh doanh IMPACT Causing disruption to the business activities of ▪ Loại bỏ DN ▪ T.thuận ngang: ấn định other enterprises giá, p.chia TT/KH, hạn chế Whether a conduct is a violation is determined on ▪ đầu vào/đầu ra. the basis of its form rather than impact. C ên Improperly inducing customers “ Misleading indication ” is no longer a separate ▪ offense under Competition Law ➜ more difficult for a firm to protect its legitimate rights and interests Predatory pricing since Intellectual Property Law sets out more onerous burden of proof. www.LNTpartners.com

MERGER CONTROL FORMS OF ECONOMIC CONCENTRATION ECONOMIC CONCENTRATION NOTIFICATION THRESHOLDS NOTIFYING DETERMINATION CRITERIA THRESHOLD VALUE Joint Total assets in the market of Vietnam Merger ≥ VND 2,000bn venture ( ~ USD 90m) T otal sales or purchase turnover in the market of Vietnam Transaction value ≥ VND 1,000bn ( NOT applicable to off-shore transactions) ( ~ USD 45m) Consolidation Acquisition Combined market share of the enterprises intending to ≥ 20% partake in the economic concentration How is “ control ” defined when A purchases Market share of the relevant the capital contribution/assets of B? parties before and after the Competitive advantages economic concentration Appoint or dismiss B ’s corporate Charter capital/ managers ASSESSMENT OF Voting right of B ECONOMIC CONCENTRATION Alter B’s Charter A Ability of a firm to increase HAS THE Other factors Make decisions with regard to B ’s prices/ limit the RIGHT TO business activities competitiveness of others Owership of/The right to use all or the majority of B ’s assets www.LNTpartners.com

MERGER CONTROL IMPACT CONCENTRATION ASSESSMENT PROCEDURE Notifying thresholds: more apparent but still ▪ MERGER FILING low ➜ Increasing the number of merger filings, AMEND OR 07 which may overburden the NCC’s workload. SUPPLEMENT business Two-tier notification process ➜ shortening the THE FILE ▪ days IS THE FILE timeline for concetration assessment VALID? Yes No Assessing concentration on the basis of ▪ competition-restraining impact ➜ Economic PRELIMINARY OFFICIAL concentration carried out by enterprises APPRAISAL APPRAISAL having combined market share of 50% or more is not prohibited per se . Request to supplement info (if any) 30 days Official appraisal (02 times at maximum) 90 days is not required (+60 days at maximum) SUBJECT TO GREENLIT PROHIBITED CONDITIONS www.LNTpartners.com

SANCTIONS CRIMINAL Time-limit for lodging a PUNISHMENTS complaint is 3 years from the date on which the ADMINISTRATIVE breach was committed PENAL TIES INDIVIDUALS ORGANIZATIONS ▪ Fine btw. VND 200 m ▪ Fine btw. VND 1 bn and VND 3 bn; OR and VND 5 bn; OR CARTELS & ABUSE OF MARKET POWER ▪ Imprisonment for ▪ Suspension for up to 10% of the violator’s total turnover* up to 05 years 02 years MERGER CONTROL VIOLATIONS WARNING 5% of the violator’s total turnover Remedial measures UNFAIR COMPETITIVE PRATICES Max fine VND 2 bil. (~USD 86,000) Restructuring Compulsory divesture ▪ ▪ Removal of Subject to State control ▪ ▪ DAMAGE COMPENSATION OTHER BREACHES illegal T&Cs on sale/purchase prices … Max fine VND 200 mil. (~USD 8,600) Consumer Class Actions * Not exceeding the minimum fine stipulated in the Penal Code www.LNTpartners.com

INTERNATIONAL CO-OPERATION CONSULTATION INFORMATION OTHER ACTIVITIES EXCHANGE www.LNTpartners.com