New law a boon for Vietnam M&A

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Vietnam’s new competition law took effect on 1 July 2019, and one expert expects it to have a big impact on merger activity in the country.

The National Assembly of Vietnam updated its primary competition legislation through the passage of the 2018 Competition Law on 12 June 2018, replacing an earlier version of the law that had been active since 2004. A draft decree is expected to be released in the next few months to provide further guidance on the law.

Dilinh Legal’s founding partner based in Ho Chi Minh City, Diep Hoang, said that with its extraterritorial reach, expanded grounds for mandatory notification, and multi-pronged subjective test for what constitutes a prohibited economic concentration, the new law would result in increased voluntary merger notifications and requests for informal opinions from the Vietnam Competition Authority (VCA).

In 2017 and 2018, Hoang said the VCA received a total of eight merger notifications. “Given the size of the Vietnamese economy, the VCA should have invariably received many more merger notifications than it did,” she said in a statement from the firm.

“One of the primary reasons for low compliance with Vietnam’s merger rules is the ambiguous concepts of ‘market share’ and ‘relevant market’ under the old competition law. Another reason is the perceived lack of enforcement of the merger rules by the VCA. It appears to us the situation has changed, and merger counsel should take note.”