I. Legal basis

– Competition Law 2018.

– Decree 35/2020/ND-CP.

II. What is economic concentration announcement?

Notification of economic concentration is a legal procedure carried out when businesses participate in economic transactions that have the potential to change the competitive structure in the market. This is a legal requirement to ensure that economic concentration activities such as mergers, consolidations, acquisitions, or joint ventures do not negatively affect a healthy competitive environment.

III. Forms of economic concentration

Economic concentration is an enterprise’s behavior that includes:

• Merging businesses:

Enterprise merger is when one or several enterprises transfer all of their assets, rights, obligations and legal interests to another enterprise, and at the same time terminate the business operations or existence of the merged enterprise.

According to competition law, business mergers are a form of economic concentration that should be controlled to prevent the possibility of forming businesses with market power that could lead to acts that hinder competition.

• Business consolidation:

Business consolidation is when two or more businesses transfer all of their assets, rights, obligations and legal interests to form a new business, and at the same time terminate the business operations or existence of the merged businesses.

Thus, after business registration, the consolidated enterprises cease to exist, the consolidated enterprises enjoy legal rights and benefits, and are responsible for unpaid debts, labor contracts and other property obligations of the merged enterprises.

• Buying a business:

Business acquisition is when an enterprise directly or indirectly purchases 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.

There are some opinions that buying an entire business is a form of business merger because when buying an entire business, the buyer becomes the owner of the business as well as the assets of the business, enjoying the rights, obligations and legality of that business. In essence, an acquisition is not an organizational unification process between the acquiring enterprise and the acquired enterprise.

• Joint venture between businesses:

A 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.

The act of joint venture has a fundamental difference compared to the act of business consolidation, which is that after the enterprises contribute part of their assets, rights, obligations, and legal interests to form a new enterprise, the legal status of those enterprises still exists.

IV. The purpose of economic concentration

Economic concentration is becoming more frequent and larger in scale. This reality comes from many different reasons, but mainly because economic concentration always brings benefits to businesses. The main purposes of economic concentration are:

• Economic concentration helps businesses create large business models to increase economic advantages thanks to scale
• Protect yourself against the risk of financial control by another corporation that the business does not want
• Bringing distribution businesses or customers together to better ensure supply or product consumption
• Implement strategies that focus on certain activities or diversify activities
• Meet the needs of foreign corporations gaining a foothold in the market
• Create opportunities to enter new markets.

V. Threshold for notification of economic concentration

Enterprises participating in economic concentration must submit economic concentration notification documents to the National Competition Commission before conducting economic concentration if they fall within the economic concentration notification threshold:

• For businesses that are not credit institutions, insurance businesses, or securities companies:
  • Total assets on the Vietnamese market of the enterprise or group of affiliated enterprises to which that enterprise belongs members reach 3,000 billion VND or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented;
  • – Total revenue sales or purchases on the Vietnamese market of an enterprise or group of affiliated enterprises to which that enterprise belongs members reach 3,000 billion VND or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented;
  • Transaction value of economic concentration from 1,000 billion VND or more;
  • Combined market share of businesses planning to participate in economic concentration from 20% or more in the relevant market in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.
• For businesses that are credit institutions, insurance businesses, and securities companies:

• Total assets on the Vietnamese market of an enterprise or group of affiliated insurance enterprises of which that enterprise is a member, of a company or group of affiliated securities companies of which that company is a member. members reach 15,000 billion VND or more in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented;
• Total assets on the Vietnamese market by a credit institution or a group of affiliated credit institutions of which that credit institution is a member. 20% or more on 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 revenue sales or purchases in the Vietnamese market of an enterprise or a group of affiliated insurance enterprises of which that enterprise is a member reaching 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 from 3,000 billion VND 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;
• Combined market share of enterprises planning to participate in economic concentration 20% or more in the relevant market in the fiscal year immediately preceding the year in which economic concentration is expected to be implemented.

VI. When must businesses announce economic concentration?

Enterprises must notify economic concentration when carrying out transactions in the form of economic concentration and meet the value thresholds prescribed in the law as presented above.

VII. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

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To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

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