On 13 September 2021, the MOIT issued a report looking back on the M&A activity and the merger control filings during this two-year period (“Report”). MOIT also published an English translation of the Report.
The first part of the Report engages in a relatively general survey of M&A activity in Vietnam, looking at the industry focus of transactions, and the M&A projects involving Vietnamese enterprises, including the names of the largest Vietnamese companies involved in M&A deals, the transaction amounts, the nationality of foreign investors in Vietnam, etc.A
From an antitrust perspective, the second part of the Report is most relevant, as it discusses the MOIT/VCCA’s experience under the new merger control regime.
According to the Report, 125 merger filings were submitted to the Vietnamese antitrust regulators from July 2019 through end of June 2021. Among these 125 transactions, 39 were carried out “offshore” (i.e., outside Vietnam), accounting for approximately 30% of all notified transactions.
In that regard, the Report notes that the transactions were notifiable because the parties to the transactions either had a commercial presence (through subsidiaries, branches or authorized agents) in Vietnam or simply imported goods or services into the country. Unfortunately, the Report does not specify whether at least two parties to a transaction had sales into Vietnam (either though presence or imports) in the notified transactions, ensuring a sufficient “local nexus” of impact on competition, as the filing thresholds seemingly reference aggregate values for all transaction parties (in terms of sales revenues, assets, market shares and size of transaction).
Among the 125 notified transactions, there were 258 companies involved in total, 131 of which were foreign and 127 of which were domestic companies. Interestingly, the Report also states that the “transactions with foreign elements tend to increase.”
In terms of types of transactions, 100 transactions (80% of all notified transactions) were acquisitions, 14 transactions (around 11%) were mergers, and 11 transactions (around 9%) were joint ventures. Compared to other jurisdictions, the percentage of joint ventures filed with the Vietnamese antitrust authorities seems relatively low.
The Report further classifies the 125 notified transactions according to the type of antitrust issue at stake: horizontal (56, or around 45% of all, transactions), vertical (24 transactions, around 19%) or conglomerate (45 transactions, around 36%).
The Report also lists the principal industry sectors of the notified transactions, and points out that the highest number of merger filings were related to the real estate sector.
Perhaps the most interesting statistic in the Report is that 112 of the 125 notified transactions (around 90%) were cleared after the preliminary assessment (that is, “phase 1” of the procedure), while only 13 transactions were subject to the official assessment (that is, “phase 2” of the procedure.)
Unfortunately, the Report does not disclose some key details: how many transactions were cleared subject to remedies, and whether any transactions were prohibited (or abandoned by the parties due to the MOIT/VCCA’s opposition). However, the VCCA website reveals that remedies were imposed in at least one transaction involving Elanco and Bayer Animal Health.
In conclusion, the Report recognizes that foreign transactions can be complex, with many steps and stages. As a result, transactions need to be assessed “on a broader scale, including the overall steps, stages and forms in a particular transaction, not merely considering at one step or stage or a single form in such transactions.” This is a noteworthy comment, suggesting that the MOIT/VCCA will review substance as well as form and that there are limits to engineering transactions to avoid Vietnamese merger filing obligations.
In a way, this shows that the Report may also be a missed opportunity at communicating regulator intent to the market. Indeed, with the benefit of two years of experience, the MOIT could have provided more guidance to market players about the many open issues in Vietnamese merger control law and practice. In the absence of such advance guidance, market players will need to follow along and learn case-by-case as the MOIT/VCCA and, in the future, the National Competition Commission issue their decisions for individual transactions.
Authored by Gaston Fernandez, Giang Nguyen, and Adrian Emch.