What forms of economic concentration are there? In what cases must an enterprise notify economic concentration?

What forms of economic concentration are there?

According to the provisions of Article 29 of the Competition Law 2018, there are the following forms of economic concentration:

(1) Enterprise merger: is the transfer of all of its assets, rights, obligations and legal interests to another enterprise, and at the same time terminating the business operations or existence of the merged enterprise.

(2) Business consolidation: is the act of two or more businesses transferring all of their assets, rights, obligations and legal interests to form a new business, and at the same time terminating the business operations or existence of the merged businesses.

(3) Business acquisition: is the direct or indirect purchase by an enterprise of all or part of the capital contribution and assets of another enterprise, sufficient to control and dominate the enterprise or an industry or profession of the acquired enterprise.

(4 Joint venture between businesses: is when two or more businesses contribute part of their assets, rights, obligations and legal interests to form a new business.

(5) Other forms of economic concentration as prescribed by law.

What are the factors to evaluate the positive impact of economic concentration?

The assessment of the positive impact of economic concentration is stipulated in Article 32 of the 2018 Competition Law as follows:

Evaluating the positive impact of economic concentration

1. The National Competition Commission evaluates the positive impact of economic concentration based on one of the following factors or a combination of the following factors:

a) Positive impact on the development of industries, fields and science and technology according to the strategy and planning of the State;

b) Positive impact on the development of small businesses and medium;

c) Enhance the competitiveness of Vietnamese enterprises in the international market.

2. The Government regulates in detail Clause 1 of this Article.

Accordingly, the assessment of the positive impact of economic concentration is based on one of the following factors or a combination of the following factors:

– Positive impact on the development of industries, fields and science and technology according to the State’s strategies and planning.

– Positive impact on the development of small and medium enterprises.

– Enhance the competitiveness of Vietnamese enterprises in the international market.

In what cases must an enterprise notify economic concentration?

Pursuant to Clause 1, Article 33 of the Competition Law 2018, enterprises participating in economic concentration must submit economic concentration notification documents to the National Competition Commission according to regulations before conducting economic concentration if they fall within the economic concentration notification threshold.

According to Article 13 of Decree 35/2020/ND-CP, the threshold for notification of economic concentration is determined as follows:

(1) For businesses other than credit institutions, insurance businesses, and securities companies:

– Total assets in the Vietnamese market of an enterprise or group of affiliated enterprises of which that enterprise is a member reaches VND 3,000 billion or more in the fiscal year immediately preceding the year of expected implementation of economic concentration.

– Total sales revenue or purchase revenue in the Vietnamese market of an enterprise or a group of affiliated enterprises of which that enterprise is a member reaches VND 3,000 billion or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.

– Transaction value of economic concentration is VND 1,000 billion or more.

– The combined market share of enterprises intending to participate in economic concentration is 20% or more in the relevant market in the fiscal year immediately preceding the year in which the economic concentration is expected to be implemented.

(2) For businesses that are credit institutions, insurance businesses, and securities companies:

– Total assets in the Vietnamese market of an enterprise or a group of affiliated insurance enterprises of which that enterprise is a member, of a company or a group of affiliated securities companies of which that company is a member reaches VND 15,000 billion or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented; The total assets in the Vietnamese market of a credit institution or group of affiliated credit institutions of which that credit institution is a member reaches 20% or more of the total assets of the system of credit institutions in the Vietnamese market in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.

– Total sales revenue or purchase revenue in the Vietnamese market of an enterprise or a group of affiliated insurance enterprises of which that enterprise is a member reaches 10,000 billion VND or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented; Total sales revenue or purchase revenue on the Vietnamese market of the company or group of affiliated securities companies of which that company is a member reaches VND 3,000 billion or more in the fiscal year immediately preceding the year of expected implementation of economic concentration; The total revenue in the Vietnamese market of a credit institution or group of affiliated credit institutions of which that credit institution is a member reaches 20% or more of the total revenue of the system of credit institutions in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.

– Transaction value of economic concentration of insurance enterprises and securities companies is VND 3,000 billion or more; The transaction value of the economic concentration of the credit institution is 20% or more of the total charter capital of the system of credit institutions in the fiscal year immediately preceding the year in which the economic concentration is expected to be implemented;

– The combined market share of enterprises planning to participate in economic concentration is 20% or more in the relevant market in the fiscal year immediately preceding the year in which the economic concentration is expected to be implemented.

(3) In case the economic concentration is carried out outside the territory of Vietnam, the threshold for notification of economic concentration is determined as follows:

– Total assets in the Vietnamese market of an enterprise or group of affiliated enterprises of which that enterprise is a member reaches VND 3,000 billion or more in the fiscal year immediately preceding the year of expected implementation of economic concentration.

– Total sales revenue or purchase revenue in the Vietnamese market of an enterprise or a group of affiliated enterprises of which that enterprise is a member reaches VND 3,000 billion or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.

– The combined market share of enterprises intending to participate in economic concentration is 20% or more in the relevant market in the fiscal year immediately preceding the year in which the economic concentration is expected to be implemented.

– Total assets in the Vietnamese market of an enterprise or a group of affiliated insurance enterprises of which that enterprise is a member, of a company or a group of affiliated securities companies of which that company is a member reaches VND 15,000 billion or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented; The total assets in the Vietnamese market of a credit institution or group of affiliated credit institutions of which that credit institution is a member reaches 20% or more of the total assets of the system of credit institutions in the Vietnamese market in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.

– Total sales revenue or purchase revenue in the Vietnamese market of an enterprise or a group of affiliated insurance enterprises of which that enterprise is a member reaches 10,000 billion VND or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented; Total sales revenue or purchase revenue on the Vietnamese market of the company or group of affiliated securities companies of which that company is a member reaches VND 3,000 billion or more in the fiscal year immediately preceding the year of expected implementation of economic concentration; The total revenue in the Vietnamese market of a credit institution or group of affiliated credit institutions of which that credit institution is a member reaches 20% or more of the total revenue of the system of credit institutions in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.

– The combined market share of enterprises planning to participate in economic concentration is 20% or more in the relevant market in the fiscal year immediately preceding the year in which the economic concentration is expected to be implemented.