At the end of 2019, impacts of the COVID-19 pandemic began to heavily affect the global economic activity and transactions. Along with temporary shutdowns and social distancing around the world, economies have also suffered enormous damage. However, there are still many merger and acquisition (“M&A”) transactions and this is a prominent highlight. Recently, the Vietnam Competition and Consumer Authority(“VCCA”) under the Ministry of Industry and Trade (“MOIT”) has released a report on economic concentration (“EC”) activities over the past two years (“Report”), which presents some notable comments as follows.

1. EC activities in Vietnam and the global context
On a global scale and in general, EC activities through M&A transactions have positively grown during the period of 2019 – 2021. Transactions only slightly decreased at the time of the first outbreak of the COVID-19 pandemic at the end of 2019. The transaction values have quickly recovered and risen from more than USD 970 billion in the first half of 2020 to about USD 260 billion in mid-2021. Technology has become the most emerging sector in large M&A deals since the second half of 2019, accounting for more than a third of all transactions in value.
M&A activities in Vietnam were fairly active in 2019 and 2020 with large deals such as the merger and share swap between VinCommerce – VinEco and Masan Consumer in the field of retail and consumer goods; charter capital transfer between KEB Hana Bank (Korea) and BIDV in the banking field with a value of US$878 million; share purchase between KKR & Temasek and Vinhomes with US$652 million. However, the total value from EC activities in 2020 decreased sharply with only USD 3.5 billion (only 48.6% compared to 2019).
A number of large Vietnamese corporate groups have carried out successful deals, leading to a significant increase in the proportion of EC transactions with the buyer being Vietnamese enterprises, accounting for one-third of total value of EC transactions performed in Vietnam. Many EC activities are being planned and expected to be conducted by Vietnamese enterprises in the coming time. According to the Report, economists forecast that Vietnam’s EC value will exceed USD 4.5 billion in 2021 and will reach USD 7 billion in 2022. Areas of interest expected in the near future include retail, industry, agriculture, energy, telecommunications, infrastructure, pharmaceutics, education, and so on. Also, the forecast expects large investors will mainly come from Asia, including Korea, Japan, Thailand and Singapore.

2. EC control under the Law on Competition in Vietnam
Since the Competition Law 2018 took effect on July 1, 2019, MOIT has received 125 EC notification dossiers. Simultaneously, VCCA has conducted preliminary and official assessments of the above EC transactions, 13 of which (accounting for about 10%) have been determined to be cases of official assessment. These cases are such EC activities that have potential causes of substantial anti-competitive effect or which potentially raise competition concerns in the relevant market.
Out of 125 EC transactions notified to the MOIT, about 30% were conducted outside of Vietnam. The reason for which these abroad transactions still have to submit their notification dossiers to the MOIT is that the enterprises participating in the EC fall into the following situations: (i) having a commercial presence in Vietnam (have subsidiaries, branches, authorized agents in Vietnam); (ii) having business operations in Vietnam (without any commercial presence in Vietnam) through the export of goods or the provision of cross-border services into Vietnam.
The main form of EC dossiers are acquisitions, accounting for 80%, while the rest are merger or joint venture transactions. Considering the characteristics of enterprises in the relevant market, EC activities can take place horizontally or vertically. Horizontal transactions occurred most commonly with 56 transactions (accounting for 45%), followed by conglometate (mixed) transactions (EC transactions between enterprises operating in different relevant markets) with 45 deals (accounting for 36%).

3. Some evaluations
The Report summarises the following comments:
According to the Competition Law 2018, not all EC transactions are subject to control. The legal provisions on EC control regulate the subjects that have the possibility to significantly restrict competition on the market, especially focus on the risk of abusing the position of dominant and monopoly to cause harm to the competitive environment in Vietnam market.
In the past two years, most of the EC transactions under the threshold notification and control in Vietnam were conducted by large corporations. The most notifications of EC transactions have included both residential and non-residential real estate. EC transactions with foreign elements seemed to increase.
It is noteworthy that EC transactions performed outside Vietnam that did not fall under the Competition Law 2004 have now been adjusted and practically applied under the Competition Law 2018. It can be seen that EC transactions performed abroad are complex and need to be considered and assessed on a broader scale, including overall steps, stages, and multiple forms in a particular transaction.


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