How Is an Enterprise’s Market Share Determined? Methods & Principles

The market share of an enterprise on the relevant market is determined by one of the four methods in Clause 1, Article 10 of the Competition Law 2018: (1) the ratio of sales revenue; (2) the ratio of purchase turnover; (3) the ratio of units of goods/services sold; (4) the ratio of units of goods/services purchased — calculated monthly, quarterly, or annually, depending on the characteristics of the relevant market.

1. Four methods of determining market share under the Competition Law 2018

Clause 1, Article 10 of the Competition Law 2018:

“Article 10. Determination of market share and combined market share
1. Based on the characteristics and nature of the relevant market, the market share of an enterprise on the relevant market shall be determined by one of the following methods:
a) The percentage of the enterprise’s sales revenue against the total sales revenue of all enterprises on the relevant market by month, quarter, or year;
b) The percentage of the enterprise’s purchase turnover against the total purchase turnover of all enterprises on the relevant market by month, quarter, or year;
c) The percentage of units of goods/services sold by the enterprise against the total units of goods/services sold by all enterprises on the relevant market by month, quarter, or year;
d) The percentage of units of goods/services purchased by the enterprise against the total units of goods/services purchased by all enterprises on the relevant market by month, quarter, or year.”

Accordingly, the appropriate method is applied depending on the characteristics and nature of each relevant market — for example, the retail market usually uses sales revenue, while raw-material procurement markets use purchase turnover.

2. Principles for determining market share

Article 9 of Decree 35/2020/ND-CP provides two principles:

Principle 1. The market share of an enterprise on the relevant market is determined by one of the methods provided in Article 10 of the Competition Law 2018.

Principle 2. In the process of determining market share, the National Competition Commission consults sectoral management agencies, enterprises, organizations, and knowledgeable individuals.

3. Determining the market share of an affiliated group of enterprises

Clause 1, Article 10 of Decree 35/2020/ND-CP provides:

• The sales revenue, purchase turnover, and units sold/purchased of an affiliated group of enterprises are calculated as the total of all enterprises in the group, excluding amounts arising from sales of goods or provision of services among the enterprises in the group;
• The market share of an enterprise belonging to an affiliated group is the market share of that affiliated group.

In addition, combined market share is the total market share on the relevant market of the enterprises participating in anti-competitive conduct or an economic concentration (Clause 2, Article 10 of the Competition Law 2018). Revenue used to determine market share is determined under Vietnamese accounting standards.

Notes on applying current legal provisions

Determining the relevant market (product market and geographic market) is the prerequisite step that decides the accuracy of the calculated market share. Enterprises should note that a combined market share of 20% or more is one of the grounds requiring notification of an economic concentration. If you need to assess your position on the market, please contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding with the transaction.

How can ANT Legal help?

ANT Legal assists in reviewing and assessing market share and the relevant market, advises on economic concentration notification obligations, prepares dossiers for working with the National Competition Commission, and advises enterprises on competition law compliance.

For quick advice, you may contact a lawyer at 0966.475.966.

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