Competition Law passed by the 14th National Assembly at the 5th session on June 12, 2018, which took effect from July 1st 2019 created many sweeping reforms and was hoped to create a great push to promote business and create free and equal competition in the market.
In order to control the formation of enterprises with significant market power and undue influence thus and decrease the risk of collusion and coordination among competitors, Competition Law has regulations allowing state management agencies to control economic concentration or monopolies. Any business entity that has transactions within the thresholds of Competition Law must notify their Economic Concentration (EC) to the Vietnam Competition Commission.
In order to support business entities that fall within the jurisdiction of Economic Concentration thresholds, PTVN provides the following:
- Study and review of all records of transactions falling within the EC threshold.
- Consultation on drafting and submitting the dossier of EC Notice to the Vietnam Competition Commission.
- Consulting and resolving cases of transactions requiring official appraisal.
Forms of economic concentration:
Merger, Unification, Acquisition of Enterprises, Venture and other fairs as prescribed by law.
Economic Concentration Notification Threshold
- For businesses in common fields: Total assets in the preceding financial year of the company or group of associated companies reaches or exceeds 3,000 billion VND. The value of an economic concentration transaction reaches or exceeds 1,000 billion VND. The combined market share of the enterprises participating reaches or exceeds 20%.
- For Credit, insurance and Securities Business: If the total assets of the enterprise or group of affiliated insurance companies of which that the enterprise is a member exceeds 15,000 billion VND in the or reaches or exceeds a market share of 20% of the total assets of credit institutions in the preceding fiscal year then the enterprise must implement economic concentration.
If in the preceding fiscal year, total sales or purchases on the Vietnamese market of the enterprise or group of affiliated insurance enterprises reaches or exceeds 10,000 billion VND or total sales or purchases of the enterprise or group of associated securities companies reaches or exceeds 3,000 billion VND or in either case the enterprise or group of affiliated enterprises accounts for more than 20 % of the total revenue of the system to which it belongs, then the enterprise or group of affiliated enterprises must implement economic concentration.
Violations
- The enterprise reaches or exceeds the thresholds and fails to report economic concentration.
- The enterprise conducts economic concentration without notifying the results of the preliminary assessment to the Vietnam Competition Commission.
- Failure to fulfil or fully fulfil the conditions indicated in a decision on economic concentration.
- Enterprise implements an economic concentration where the Law prohibits or causes or has the potential to cause significant anti-competitive effects on the Vietnamese market.
Punishment
For each act violating the competition, the violating individual or enterprise shall be subject to either warning or monetary fine.
Depending on the nature and severity of any violations, the organization or individual may be subject to one or more of the following sanctions:
- Loss of the enterprise registration certificate or equivalent document and the loss of the right to use or practice with the certificate.
- Confiscation of material evidences and the means used to violate competition law.
- Confiscation of profits from the violations.
Additionally, any organization or individual found to violate the competition law may be subject to remedial measures, such as:
- Restructuring of the enterprise.
- Removing any illegal clause from a business contract, agreement or transaction.
- Divide, split or resell part or all of the contributed capital or assets or the enterprise formed after economic concentration.
- Be placed under the control of a competent state agency with respect to the sale, purchase and transaction conditions.
- Public rectification.
- Other necessary measures as deemed fit by a competent state agency
Fines
- The maximum fine for an economic transgression violation is 5 percent of the total relevant turnover based on the fiscal year preceding the year in which the violation is committed.
- The maximum fine for violations against the regulations on unfair competition is 2 billion VND.
Procedures
- Submitting dossiers to the Vietnam Competition Commission normally takes around 30 working days excluding time spent modifying and providing any supplementary information.
- Within 30 days from the date of receiving a valid dossier, the Vietnam Competition Commission conducts a preliminary examination and notices either, Approval of Economic Concentration or Official Appraisal. If the notification is not issued within 30 days the economic concentration can take effect.
- Official Appraisal: within 90 days of the date of the official appraisal notice (which can be extended by no more than 60 days), the Vietnam Competition Commission will conduct the official appraisal and issue one of three decisions.
- Approval of Economic Concentration
- Economic concentration is conditionally implemented
- Economic concentration is prohibited.