VIETNAM

Get in contact or get a price estimation from our partner in Vietnam Get in contact
Due to the COVID-19 pandemic, certain merger control processes may be affected. We suggest to contact our local partners for more information.
Content last updated: 21-03-2020

Choose the type of information you seek

  • Merger Control Regime
  • Merger Screening

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Mandatory.

2.2 Suspensory effect

2.2.1 Must completion of the transaction await clearance by the relevant authorities?

Transactions must be notified to the Vietnamese competition authority (the National Competition Commission) and approved prior to the implementation/completion.

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

Any concentration that has an actual or potential restrictive impact on competition in a Vietnamese market.

A concentration is defined as follows:

  • Mergers: One or more undertakings transfer all of their assets, rights, obligations and interests to another business, terminate their business activities and cease to exist.
  • Acquisitions: An undertaking acquires control over another undertaking by acquisition of all or part of the shares or assets of the other undertaking.
  • Consolidations: Two or more undertakings consolidate all of their assets, rights, obligations and interests to establish a new entity, terminate their business activities and cease to exist.
  • Joint ventures: Two or more undertakings jointly establish a new entity by contributing a portion of their lawful assets, rights, obligations and interests.

1.3 Definition of "control"

1.3.1 How are the concepts of "control" and "change of control" defined?

Control is defined as the ownership of 50% of more of the share capital or voting rights in another undertaking, or any other percentage prescribed by law or that undertaking’s articles of association, or any other agreement that confers any of the following rights to:

  • directly or indirectly appoint or dismiss all or the majority of the executive management or senior officers;
  • alter the constitutional documents;
  • make crucial business decisions, or
  • own or use all or the majority of the assets in all or one of target’s lines of business.

2. Establishing jurisdiction for notification of mergers

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

The new competition law in Vietnam came into force on 1 July 2019 but was awaiting promulgation of jurisdictional thresholds before the merger control regime took effect. That final decree has now been promulgated and is to take effect on 15 May 2020.

Merger filing is needed if:

  • the turnover or the asset value of one of the undertakings concerned was at least VND 3,000,000,000,000 in Vietnam in the last financial year; or
  • the combined market share of the undertakings concerned was at least 20% in Vietnam in the last financial year; or
  • the transaction value was at least VND 1,000,000,000,000.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

Certain sectors are subject to a 49% foreign shareholding restriction.

Sector-specific thresholds apply to the following sectors: credit institutions, insurance companies or securities companies. See immediately below:

Merger filing is needed if:

  • the asset value of one of the undertakings concerned in the last financial year was at least (for insurance companies or securities companies) VND 15,000,000,000,000 in Vietnam, or (for credit institutions) at least 20% of the total asset value as computed in Vietnam for credit institutions; or
  • the turnover of one of the undertakings concerned in the last financial year was at least (for insurance companies) VND 10,000,000,000,000 in Vietnam, (for securities companies) VND 3,000,000,000,000 in Vietnam, or (for credit institutions) 20% or more of the total turnover as computed in Vietnam for credit institutions; or
  • the combined market share of the undertakings concerned was at least 20% in Vietnam in the last financial year; or
  • the transaction value was at least (for insurance companies or securities companies) VND 3,000,000,000,000 or (for credit institutions) 20% or more of the total share capital as computed in Vietnam for credit institutions.

The following sector specific rules apply:

  • Insurance:Transactions require prior approval if an insurer:
    • transfers shares or contributes capital amounting to at least 10% its share capital; or
    • restructures by way of a merger, division, consolidation, dissolution, or conversion of legal form;
    • makes an overseas investment.
  • Financial institutions: A transaction is subject to prior approval if a financial institution is restructured in one of the following ways.
    • Merger, demerger, division, consolidation, merger, acquisition or conversion of form.
  • Telecommunications: A transaction is subject to prior approval if:
    • As a consequence of the proposed transaction, a telecommunications business will have a market share of 30% or 50%.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

Foreign-to-foreign transactions are caught by the Vietnamese merger control regime if they have an actual or potential impact on a market in Vietnam. However, the transaction value threshold does not apply.

Generally, transactions are subject to Vietnamese merger control if the undertakings concerned have subsidiaries in or generate turnover in Vietnam.

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.1 Relevant turnover

3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?

Turnover is the sales in and into Vietnam of goods and services, exclusive of intra-group sales.

3.3 Relevant undertakings for the calculation of turnover

3.3.2 The undertakings whose turnover is taken into account?

Turnover is calculated for the acquirer and the target including group companies. A group company is one which is under the control or governance of one or more undertakings within the group. For the definition of “control”, please see Section 1.3.1 above.

3.5 Valuation and allocation of assets

3.5.1 The principles for valuation and allocation of assets?

Asset value is calculated as the assets in Vietnam. There is no definition of “assets”.

Asset value is measured on group level. A group company is one which is under the control or governance of one or more undertakings within the group. For the definition of “control”, please see Section 1.3.1 above.

3.6 Calculation of other thresholds

3.6.1 The principles for calculation of metrics for other thresholds (e.g. transaction value, market share, share of supply etc.)?

Market share

Market share is measured on group level. A group company is one which is under the control or governance of one or more undertakings within the group. For the definition of “control”, please see Section 1.3.1 above.

Market share is determined by reference to the “relevant product market” and “relevant geographic market”.

Relevant product market is the market of goods and services that are interchangeable in terms of characteristics, purpose of use and price. These factors are relevant for the assessment of interchangeability of the goods and/or services in question. Additional factors may be considered, e.g. costs of switching product, consumption habits, the difference in selling and purchase price for different customer groups.

Relevant geographical market is the geographical area in which interchangeable goods and services are supplied on similar competitive conditions and that area is substantially different from neighbouring areas. The boundaries of the geographical areas are identified on the basis of the costs and time of transportation of goods and supply of services, market barriers and consumption habits.

Transaction value

Transaction value does not apply to transactions overseas.

This content was delivered
and last updated on 21-03-2020 by

Legal Cross Border has itself provided all input about merger control in Vietnam. This information has been gathered and validated by our in-house lawyers to guarantee the highest quality outcome. This said, we are currently looking for a local partner to cover Merger Control Vietnam - please contact us if you would like to be our new partner.