The global and Vietnamese merger – acquisition (“M&A”) market is experiencing a slowdown in 2023. However, amidst this backdrop, many experts believe that the M&A market in Vietnam still holds promising prospects and is expected to break through in the coming year.
In preparation for participation in the M&A market with numerous impending high-value transactions, this article will discuss economic concentration and the transactions that shall be notified of economic concentration before proceeding.
What is economic concentration?
The applicable Vietnamese laws does not specifically define the concept of economic concentration. However, according to Article 29 of the 2018 Law on Competition, economic concentration includes the following forms (“Economic Concentration“):
Merger: one or more business(es) transfer all of their lawful assets, rights, obligations and interests to another business and, concurrently, terminate their business activities or cease to exist.
Consolidation: two or more businesses transfer all of their lawful assets, rights, obligations and interests to establish a new entity and, concurrently, terminate their business activities or cease to exist altogether.
Acquisition: a business directly or indirectly acquires all or part of the capital contribution or assets of another business sufficient to control the acquiree or any of its business lines.
Joint venture: two or more businesses jointly establish a new entity by contributing a portion of their lawful assets, rights, obligations and interests.
Other forms: other forms of economic concentration as regulated by the law.
Which M&A transactions are notifiable economic concentrations?
Before participating in a proposed Economic Concentration, parties participating in the Economic Concentration shall submit an economic concentration notification dossier if one of the following economic concentration notification thresholds is met:
The economic concentration threshold applies to M&A transactions INVOLVING insurers, securities companies, and credit institutions
| Scenario | Criteria |
Economic concentration notification thresholds |
||
|
For insurers |
For securities companies | For credit institutions | ||
|
Scenario 1 |
Total assets in the Vietnamese market for the fiscal year immediately preceding the anticipated year of implementing Economic Concentration (“Preceding Year“) of: (i) the enterprise to the Economic Concentration; or (ii) group of affiliated enterprises, of which the enterprise to the Economic Concentration is a member. |
reach VND 15,000 billion or more |
reach 20% or more of the total assets of all credit institutions in theVietnamese market |
|
| Scenario 2 |
Total sales turnover or input purchase turnover in the Vietnamese market for the Preceding Year of: (i) the enterprise to the Economic Concentration; or (ii) group of affiliated enterprises, of which the enterprise to the Economic Concentration is a member. |
reach VND 10,000 billion or more | reach VND 3,000 billion or more | -/- |
| Scenario 3 |
Total revenue in the Vietnamese market for the Preceding Year of: (i) the enterprise to the Economic Concentration; or (ii) group of affiliated enterprises, of which the enterprise to the Economic Concentration is a member. |
-/- | -/- |
reach 20% or more of the total revenue of all credit institutions in theVietnamese market
|
| Scenario 4 |
Economic Concentrationtransaction value |
from VND 3,000 billion or more |
from 20% or more of total charter capital of all credit institutions in theVietnamese market for the Preceding Year |
|
| Scenario 5 |
Combined market share for the Preceding Year of allenterprises expected to participate in Economic Concentration |
from 20% or more of relevant market | ||
| Scenario 6 | Economic Concentration is expected to perform outsideVietnam | thresholds under scenario 1, 2, 3, 5 above shall be applied | ||
The economic concentration threshold applies to M&A transactions NOT INVOLVING insurers, securities companies, and credit institutions
| Criteria | Economic concentration notification thresholds | |
| Scenario 1 | Total assets in the Vietnamese market for the Preceding Year of:
(i) the enterprise to the Economic Concentration; or (ii) group of affiliated enterprises, of which the enterprise to the Economic Concentration is a member. |
reach VND 3,000 billion or more |
| Scenario 2 | Total sales turnover or input purchase turnover in the Vietnamese market for the Preceding Year of:
(i) the enterprise to the Economic Concentration; or (ii) group of affiliated enterprises, of which the enterprise to the Economic Concentration is a member. |
|
| Scenario 3 | Economic Concentration transaction value | from VND 1,000 billion or more |
| Scenario 4 | Combined market share for the Preceding Year of allenterprises expected to participate in Economic Concentration | from 20% or more of relevant market |
| Scenario 5 |
Economic Concentration is expected to performoutside Vietnam |
thresholds under scenario 1, 2, 3, 5 above shall be applied |
