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Freshfields Transactions

| 5 minutes read

Vietnam's merger control process – finding the right balance

It has been more than two years since Vietnam’s merger control regime became operational. A number of practices by the Vietnam Competition and Consumer Authority (VCCA) have since developed, some of which been found to pose challenges from an overall multi-jurisdictional coordination perspective. This blog post sets out the basic rules of the Vietnamese merger control regime, the VCCA’s working practices as these have developed over the past years, and how notifying parties should approach a potential merger review process with the VCCA in view of these.

Recap on Vietnam’s merger control regime

Vietnam’s merger control regime is meant to be overseen by the Vietnam Competition Commission (VCC), an agency that sits under the Ministry of Industry and Trade.  The VCC has become fully operational since 1 April 2023. Before that, the merger control regime was administered by the VCCA, which sits under the Ministry of Industry and Trade.

Vietnam’s merger control regime is mandatory in nature, meaning that meeting any of the four jurisdictional criteria triggers a legal obligation to notify a transaction.  The four different criteria (applicable to all sectors other than banking, insurance and securities) are:

  1. the total turnover in Vietnam of one of the transaction parties is VND 3,000 billion (approx. USD 128 million) or more;
  2.  the total assets in Vietnam of one of the transaction parties is VND 3,000 billion (approx. USD 128 million) or more;
  3. the transaction value is VND 1,000 billion (approx. USD 43 million) or more (note: this threshold applies to onshore transactions only); or
  4. the total market share in any relevant market in Vietnam of the transaction parties is 20% or more.

There is currently very little formal guidance on how these thresholds are to be interpreted. For example, it isn’t clear whether a transaction must produce an “effect” on one or more Vietnamese markets for the regime to be engaged. 

It is therefore not always straightforward to ascertain whether a transaction should be notified pursuant to these rules or not.  In that regard, since the regime’s entry into force, we have observed an increasing number of transaction parties making notifications to the VCCA only when, in addition to one of the thresholds being exceeded, the transaction has a clear nexus to one or more markets in Vietnam – for example, where the target business has assets, turnover and/or activities in Vietnam and not where only the acquirer has such a local presence. 

Notable practices by the VCCA

Ever since the amendments to Vietnam’s merger control regime in 2020, a number of noteworthy practices by the VCCA have emerged.  These include:

  • High proportion of ‘Phase 2’ reviews, even in absence of prima facie competition concerns: there is a real risk that a transaction gets referred to a so-called “official appraisal stage” (the equivalent of an in-depth or Phase 2 investigation in Vietnam) even when a transaction does not lead to prima facie competition issues.  This is because the VCCA has been taking the view that it must investigate any transaction in depth where parties (a) overlap horizontally on any market in Vietnam and their combined market share is 20% or more; or (b) overlap vertically in Vietnam where any of the parties has a market share of 20% or more on either the upstream or downstream market. Such referrals have occurred even where the market share increment caused by the notified transaction was de minimis.
  • Reviews can be longer than anticipated: while the preliminary review stage (the Phase 1 equivalent in Vietnam) is 30 days, the official appraisal stage can take up to 150 days, consisting of an initial period of 90 days, extendable at the VCCA’s discretion by 60 days for more complex cases. These periods are also exclusive of RFIs, which can sometimes result in the clock being stopped. In cases where it is easier for the VCCA to establish that there are no competition concerns, the VCCA may issue its clearance before the end of the 90-day official appraisal stage, although this is contingent on transaction parties having an effective engagement strategy with the VCCA’s case team throughout the review process.
  • Most ‘Phase 2’ cases have (to our knowledge) been cleared subject to conditions. The VCCA’s clearance decisions, however, do not set out any grounds of reasoning which clarify why conditions have been imposed. Such conditions typically comprise a requirement for the transaction parties to comply with Vietnamese competition law and therefore impose limited or no additional burden to the parties in practice. In certain cases, however, the conditions have also included behavioural requirements on the parties, such as ongoing reporting requirements following clearance of the transaction.
  • The VCCA may also consult with other regulators in Vietnam who may have an interest in the transaction or launch a public consultation, seeking opinions from stakeholders that it considers relevant.  This is a practice common to a number of regulators in the wider Asia-Pacific region.

Practical tips & takeaways

As an interim agency responsible for Vietnam’s merger regime, the VCCA’s current review practices may not necessarily end up being retained by the VCC.

Nevertheless, the above observations have resulted in sometimes lengthy review processes even where no material competition issues were ultimately identified.  Transaction parties should therefore anticipate potentially longer review timelines which are not commensurate with those of other jurisdictions, and a potential clearance decision subject to conditions.  Such an outcome could be out of synch with outcomes elsewhere especially if contemplating a transaction that seems straightforward from a competition law perspective.  Transaction parties should therefore take the following into account when faced with a filing requirement in Vietnam:

  • Market share levels are very important to the duration of the review process.  As such, where there is a horizontal overlap or vertical link between transaction parties, it is critical to obtain data relating to defined relevant markets. Market shares of 20% or more could lead to a potentially lengthy official appraisal by the VCCA. It is therefore important to develop a good body of advocacy on market definition if parties consider relevant markets to encompass a broader set of products or services, as a result of which market shares fall below the 20% threshold.  Note that the VCCA will likely want to obtain market share data relating to Vietnam irrespective of whether the geographic market may be broader (i.e. regional or global) in scope.
  • Depending on market share levels, if an official appraisal is likely, the underlying transaction agreements should foresee a sufficiently long window for regulatory review to take place in Vietnam.
  • Engaging with local stakeholders may facilitate the review process if the VCCA / VCC can be convinced that third parties do not oppose the transaction.  This includes the use of third party consultants in appropriate circumstances. 

It is important to bear in mind that Vietnam’s merger control regime is still evolving, and the practices surrounding the merger review process are likely to be in flux as the VCC takes charge of the merger control regime. To get the latest insights in Vietnamese competition law, please reach out to our authors.

It is important to bear in mind that Vietnam’s merger control regime is still evolving, and the practices surrounding the merger review process are likely to be in flux as the VCC takes charge of the merger control regime.


vietnam, merger control, mergers and acquisitions, asia-pacific