The economic concentration notification procedure is a statutory obligation under Law No. 23/2018/QH14 of the National Assembly dated 12 June 2018 (“Competition Law”) and Decree No. 35/2020/ND-CP of the Government dated 24 March 2020 detailing several provisions of the Competition Law (“Decree 35”). This obligation applies to enterprises participating in certain M&A transactions (as listed in Section 1 below) and meeting specific financial thresholds such as total assets, total revenue, transaction value, or market share (as listed in Section 2 below). 

Transactions falling within these categories must be reviewed and approved by the Vietnam Competition Commission (“VCC”) prior to official implementation. These requirements form the legal basis for merger control to ensure that such transactions do not negatively affect market competition.

1. Definition Of Economic Concentration

Under the Competition Law, economic concentration (“EC”) comprises the following four principal forms[1]:

a. Merger of enterprises: One or several enterprises transfer all of their assets, rights, obligations, and lawful interests to another enterprise, and simultaneously cease business operations or terminate their legal existence;

b. Consolidation of enterprises: Two or more enterprises transfer all of their assets, rights, obligations, and lawful interests to form a new enterprise, and simultaneously cease business operations or terminate the legal existence of the consolidated enterprises;

Acquisition of enterprises: An enterprise directly or indirectly acquires (the acquiring enterprise) all or part of the contributed capital or assets of another enterprise to the extent that it controls or governs the acquired enterprise or a business line of that enterprise. This acquisition results in the acquiring enterprise obtaining one of the following rights^[2]:

• Ownership of more than 50% of the charter capital or 50% of the voting shares of the acquired enterprise
• Ownership or the right to use more than 50% of the assets of the acquired enterprise in its entirety or within a specific business line
• Any of the following controlling rights:
• irectly or indirectly deciding on the appointment, removal, or dismissal of the majority or all members of the board of directors, members’ council chairman, director, or general director of the acquired enterprise;
• Deciding on amendments or supplements to the charter of the acquired enterprise;
• Deciding on key business matters of the acquired enterprise, including business model, business lines, geographical scope, scale adjustments, and methods of raising, allocating, or using its capital.

d. Joint venture between enterprises: Two or more enterprises jointly contribute a portion of their assets, rights, obligations, and lawful interests to establish a new enterprise.

2. Thresholds For EC Notification

Not all EC transactions require the participating enterprises to submit a notification prior to implementation. The obligation to notify an EC only arises when at least one of the statutory thresholds relating to the participating enterprises or the transaction is met[3]:

Notes:

• The notification obligation applies to EC transactions conducted both within and outside the territory of Vietnam. For EC transactions carried out outside Vietnam, the obligation to notify arises when the participating enterprises meet the notification thresholds set out in Section 3 (excluding the “transaction value” criterion)[4];
• The values of total assets and total sales/purchase turnover are determined based on the financial figures of the enterprise or the group of affiliated enterprises to which such enterprise belongs, rather than only the enterprise participating in the transaction;
• The values of total assets and total sales/purchase turnover are determined based on the figures for the financial year immediately preceding the year in which the EC transaction is expected to be implemented.

3. Dossier And Procedure For EC Notification

If an EC transaction meets the notification thresholds set out in Section 3, the participating enterprises must submit an EC notification dossier to the VCC before proceeding with the transaction. The EC notification dossier includes[5]:

• The EC notification form issued by the VCC;
• A draft agreement on the EC transaction or a draft contract, memorandum of understanding, or other document reflecting the EC arrangement between the enterprises;
• Certified copies of the Enterprise Registration Certificate or equivalent documents of each enterprise participating in the EC;
• The financial statements of each enterprise participating in the EC for the two consecutive financial years immediately preceding the year of EC notification, or financial statements from the time of establishment to the time of EC notification for newly established enterprises, certified by an auditing organization in accordance with the law;
• A list of parent companies, subsidiaries, member companies, branches, representative offices, and other dependent units of each enterprise participating in the EC (if any);
• A list of goods and services currently traded by each enterprise participating in the EC;
• Information on market shares in the sector relevant to the proposed EC transaction for each participating enterprise for the two consecutive financial years immediately preceding the year of EC notification;
• A plan for remedies to address any potential anti-competitive effects arising from the EC transaction;
• A report assessing the positive impacts of the EC transaction and proposed measures to enhance such positive impacts.

b. For ease of reference, the EC notification procedure is illustrated in the diagram below^[6]:

Note: Enterprises may submit the dossier either directly or via postal services. For foreign documents, enterprises must complete consular legalization and provide a Vietnamese translation prior to submission.^[7]

4. Sanctions For Violations Of The EC Notification Obligation

When an EC transaction falls within the scope requiring notification but the participating enterprises fail to comply with the EC notification obligation, they may be subject to administrative penalties and may also face supplementary sanctions (“SC”) and remedial measures (“RM”) for such violations. It should be noted that even after the enterprise has submitted the EC notification dossier, it may still be subject to administrative penalties if the implementation of the transaction is not carried out in accordance with the law. The violations and corresponding sanctions relating to non-compliance with the EC notification obligation are as follows^[8]:

(*) Note: In cases where the total revenue of the violating enterprise in the relevant market for the financial year immediately preceding the year in which the violation was committed is determined to be zero (0), a monetary penalty ranging from VND 100,000,000 to VND 200,000,000 shall apply.^[9]

Disclaimer: This article has been prepared by PTN Legal LLC (“PTN Legal”) for informational purposes only. PTN Legal makes no representations or warranties as to the accuracy or completeness of the information contained herein. The contents of this article may be modified, amended, or updated without prior notice. PTN Legal shall not be liable for any errors or omissions in this article, nor for any damages arising from the use of this article under any circumstances.

[1]    Article 29 of Competition Law.

[2]    Article 2.1 of Decree 35.

[3]    Article 13 of Decree 35.

[4]     Article 13.3 of Decree 35.

[5]    Article 34.1 of Competition Law.

[6]    Articles 35–43 of Competition Law.

[7]    https://dichvucong.gov.vn/p/home/dvc-chi-tiet-thu-tuc-hanh-chinh.html?ma_thu_tuc=2.000262

[8]    Articles 10–15 of Decree No. 75/2019/ND-CP of the Government dated 26 September 2019 on administrative penalties in the field of competition.

[9]    Articles 4.3 of Decree No. 75/2019/ND-CP of the Government dated 26 September 2019 on administrative penalties in the field of competition.