Understanding Vietnam’s Merger Control Laws and Regulations

1. Relevant Authorities and Legislation

1.1 Merger Authorities

The Vietnam Competition Commission (VCC) serves as the principal merger authority in Vietnam, having been formally established on April 1, 2023, under Decree 03/2023/ND-CP. Operating under the Ministry of Industry and Trade, the VCC is crucial in overseeing the nation’s merger control regime. Its Chairperson, Mr. Trinh Anh Tuan, has held the position since March 2025, while Vice Chair Ms. Nguyen Thi Quynh Nga manages merger control functionalities. Both leaders have robust backgrounds in international trade and commerce.

1.2 Merger Legislation

The primary legislation governing mergers is the Competition Law 2018, enacted on July 1, 2019. This comprehensive law outlines the definition of concentrations, notification thresholds, dossier requirements, and procedures for appraising potential mergers. A significant shift is the introduction of an effects-based approach, whereby mergers are evaluated based on the potential for “substantial lessening of competition.”

1.3 Relevant Legislation for Foreign Mergers

The Law on Investment 2020, effective January 1, 2021, serves as the principal framework for foreign investments. It demands clearance for transactions that alter the direct foreign ownership of a Vietnamese company, independent of the merger filing process.

1.4 Sector-Specific Legislation

Distinct provisions exist in sectors like banking and insurance. The Law on Insurance Business 2022 mandates that specific share transfers or restructurings receive written approval from the Ministry of Finance. Similarly, the Law on Credit Institutions 2024 requires State Bank of Vietnam approval for significant structural changes.

1.5 Non-National Interest Transactions

There is no separate merger control regime for transactions that may not align with national interests. Instead, the Competition Law 2018 applies uniformly across all sectors.

2. Transactions Caught by Merger Control Legislation

2.1 Types of Transactions

The Vietnamese merger control regime encompasses statutory economic concentrations, such as mergers, consolidations, acquisitions, and joint ventures. A merger involves transferring all assets to another undertaking, while acquisitions require controlling a significant portion of another’s capital. Control is generally defined by ownership of more than 50% of shares or assets.

2.2 Minority Shareholding

Acquiring a minority stake may constitute a statutory concentration if the minority holder can influence key business decisions. The VCC’s current perspective does not extend control interpretations to mere veto rights.

2.3 Joint Ventures

Merger control extends to joint ventures, requiring notification regardless of whether they will engage in broader market activities or exist only to serve their parent companies.

2.4 Jurisdictional Thresholds

The Guiding Decree sets distinct jurisdictional thresholds to determine required notifications, particularly differentiating between financial institutions and other sectors. For general sectors, significant thresholds include VND 3 trillion in assets or total sales, while sector-specific thresholds apply in banking, securities, and insurance.

2.5 Absence of Overlap

Merger filings remain obligatory even if no significant overlap exists between the parties involved—there are no exemptions based on potential competition concerns or relevance.

2.6 Foreign-to-Foreign Transactions

Foreign-to-foreign transactions may become subject to merger control if they meet jurisdictional thresholds based on local revenues and assets. The VCC typically mandates filings even if the transaction does not impact the domestic market.

2.7 Mechanisms for Overriding Jurisdictional Thresholds

Current regulations do not allow overriding jurisdictional thresholds, enforcing strict adherence to filing protocols when necessary thresholds are met.

2.8 Stage Considerations in Multi-Stage Mergers

While no explicit principles exist for multi-stage mergers, regulators assess whether transactions should be treated as a single instance based on structural and documentation considerations.

3. Notification and Its Impact on the Transaction Timetable

3.1 Notification Requirements

Notification is mandatory for any transaction that meets the relevant jurisdictional thresholds. Although regulations suggest filing before implementation, practical interpretations allow for submissions following contract signing.

3.2 Exceptions to Notification

Currently, there are no exemptions; all reportable transactions require submission to the authority, regardless of significance.

3.3 Authority Investigations

The VCC can investigate transactions not meeting thresholds if evidence suggests a potential competition violation. The authority actively monitors compliance with merger regulations.

3.4 Risks of Non-Compliance

Failing to file can lead to fines amounting up to 5% of the violator’s turnover in the year prior. The VCC has started enforcing higher scrutiny over transactions, resulting in actual penalties in some cases.

3.5 Carving Out Local Completion

While statutory guidance is unclear, some practice indicates it might be possible to delay local clearance to allow global transaction completion, provided it does not alter local market structures.

3.6 Timeline for Notification

Parties are encouraged to file notifications as soon as transaction details are clear to avoid delays. A draft of the transactional document is typically required.

3.7 Scrutiny Timeframe

The appraisal process is divided into two phases, commencing with a seven-day review of the notification’s validity. Phase I generally concludes within 30 days unless extended into Phase II, which can last up to 150 days for complex reviews.

3.8 Transaction Completion Risks

Completing transactions prior to clearance can lead to fines up to 1% of total local turnover. Therefore, precautionary measures should be taken to await regulatory approval.

3.9 Transaction Validity Post-Clearance

Transactions completed without prior clearance are not automatically rendered invalid. Monetary penalties may apply instead.

3.10 Notification Format

All notifications must be submitted online via the VCC’s portal, accompanied by various supporting documents, including draft transactional agreements and financial statements.

3.11 Accelerated Procedures

No fast-tracking mechanisms exist for mergers, although detailed and proactive preparation can help expedite the review process.

3.12 Notification Responsibility

All parties, including purchasers and sellers, bear the responsibility of making notifications, though joint notifications are required.

3.13 Fees

Currently, Vietnam does not impose any filing fees related to merger control.

3.14 Public Offers and Merger Control

Regulations governing public offers are separate from merger control but must be navigated carefully to ensure compliance with both frameworks.

3.15 Notification Publication

Notifications are generally not publicized unless under examination in Phase II, where public comments may be invited.

4. Substantive Assessment of the Merger

4.1 Substantive Test

The primary benchmark for merger assessment is the “substantial lessening of competition” standard. The VCC analyzes market share and concentration patterns both pre-and post-merger.

4.2 Efficiency Considerations

Efficiency gains are assessed positively, particularly pertaining to technological advancements and economic benefits.

4.3 Non-Competition Issues

Factors such as employment and economic policy are considered in the broader assessment of a merger’s impact but do not directly influence the competition-focused evaluation.

4.4 Third-Party Involvement

Consultation with third parties is discretionary for the VCC; however, their insights may influence the overall appraisal process indirectly.

4.5 Information Gathering Powers

The VCC has expansive powers to gather information during the review process from a variety of sources, although sanctions for non-compliance from these parties are not stipulated.

4.6 Confidentiality of Sensitive Information

The VCC maintains confidentiality for submitted information upon request, especially when proprietary data is involved.

5. The End of the Process: Remedies, Appeals, and Enforcement

5.1 Regulatory Process Completion

The process concludes with either clearance or implications for additional conditions based on the VCC’s findings during the review stages.

5.2 Negotiating Remedies

While formal processes for remedy negotiations are not established, ongoing communication can minimize stringent conditions that enforcement may impose.

5.3 Policies on Acceptable Remedies

Currently, no established policies guide the types of remedies acceptable to the VCC, leading to ad-hoc assessments per case.

5.4 Remedies in Foreign-to-Foreign Mergers

While foreign-to-foreign mergers are generally approved easily, the VCC has imposed conditions in select cases, typically of a behavioral nature.

5.5 Timing of Remedy Negotiations

The lack of formal procedures notwithstanding, proactive communication during Phase II is critical for addressing concerns and influencing any remedy conditions.

5.6 Terms for Divestment Remedies

There are currently no standard guidelines provided for divestment terms, leaving room for negotiation or VCC oversight on a case-by-case basis.

5.7 Completing Mergers before Remedy Compliance

While structural remedies must often be fulfilled pre-completion, behavioral measures can typically be met following merger close, depending on the situation.

5.8 Enforcing Negotiated Remedies

The VCC is empowered to monitor and enforce compliance with remedies, imposing fines for non-conformance as necessary.

5.9 Ancillary Restrictions

These restrictions are generally not covered under clearance, but they may be scrutinized if they become relevant during the review process.

5.10 Appeal Processes

Parties can formally appeal VCC decisions within specified timelines, every level of appeal allowing for further scrutiny by regulatory authorities.

5.11 Appeal Time Limits

Various timelines apply to appeals, ensuring stakeholders have clear windows within which to raise grievances or seek reviews of decisions.

5.12 Enforcement Time Limits

Investigations into potential violations must commence within three years of the alleged incident, maintaining a reasonable structure for accountability.

6. Miscellaneous Considerations

6.1 International Cooperation

The VCC engages with international regulatory bodies to promote cooperative competition enforcement practices and share insights across jurisdictions.

6.2 Recent Enforcement Records

With an observable uptick in merger filings year-on-year, the VCC has ramped up scrutiny, evidenced by numerous inquiries into potential violations since its formation.

6.3 Proposed Reform of the Regime

The VCC is currently reviewing the competition law and sanctions framework, seeking to bolster deterring measures in line with regulatory needs.

7. Suitability for Digital Services and Products

7.1 Current Tools for Digital Mergers

The VCC’s broad jurisdictional thresholds facilitate the scrutiny of digital mergers, positioning it well to address emerging technology transactions.

7.2 Changes in Law or Guidance

No specific adjustments targeting the digital landscape have emerged; however, the evolving nature of technology may prompt future scrutiny.

7.3 Highlighted Difficulties and Responses

Limited published cases hinder comprehensive evaluations of digital mergers. Nonetheless, regulators are increasingly attentive to evolving industry practices, suggesting an adaptive approach to traditional merger rules.