Competition Review in M&A Transactions in Vietnam

What is economic concentration and when does M&A fall into it

Under the Competition Law 2018, “economic concentration” is conduct of enterprises including mergers, consolidations, acquisitions, joint ventures, and other forms as prescribed by law. In practice, most common M&A structures can constitute economic concentration:

Acquisition: an enterprise acquires all or part of another enterprise’s capital contributions or assets sufficient to control or dominate the acquired enterprise — the most common M&A structure and also the case most likely to trigger notification obligations.

Merger/consolidation: two or more enterprises merge or consolidate into a new or existing enterprise.

Joint venture: two or more enterprises jointly establish a new enterprise or jointly control an enterprise — including joint ventures where the parties continue to operate independently in the market.

The key point: competition law does not care what the deal is called in the contract, but about the nature of control. Buying 51% of shares and buying all of a factory’s assets can both be economic concentration if they change control. Conversely, acquiring a minority stake without control rights usually does not constitute economic concentration.

The law also lists prohibited economic concentrations (Article 30) — where they have or may have the effect of significantly restricting competition in the Vietnamese market. In practice, however, most ordinary M&A deals are not prohibited; they merely trigger the notification obligation for the competition authority to appraise.

Notification thresholds — the four criteria of Decree 35/2020

Clause 1, Article 33 of the Competition Law 2018 requires enterprises participating in economic concentration to file a notification dossier with the National Competition Commission before carrying out the concentration, if meeting the notification thresholds. The specific thresholds are in Article 13 of Decree 35/2020/ND-CP, with four independent criteria — meeting just one of the four triggers the obligation (for ordinary enterprises, not credit institutions, insurers, or securities companies):

Criterion 1 — Total assets: total assets in the Vietnamese market of the enterprise or its affiliated group reaching VND 3,000 billion or more in the fiscal year immediately preceding the year of the planned concentration.

Criterion 2 — Total revenue: total sales revenue or purchase turnover in the Vietnamese market of the enterprise or its affiliated group reaching VND 3,000 billion or more in the immediately preceding fiscal year.

Criterion 3 — Transaction value: the value of the concentration transaction itself from VND 1,000 billion.

Criterion 4 — Market share: combined market share of the enterprises planning to participate reaching 20% or more in the relevant market in the immediately preceding fiscal year.

Three practical notes on application:

First, the asset and revenue criteria are calculated on the affiliated group (the entire corporate group), not just the entity directly participating. A tiny subsidiary of a large group can easily “pull” the whole deal into notification territory.

Second, the 20% market share criterion requires determining the “relevant market” — a technical competition law concept often needing in-depth analysis and prone to dispute. When market share nears 20%, consult a competition lawyer early.

Third, for credit institutions, insurers, and securities companies, separate higher thresholds apply (e.g., VND 15,000 billion in total assets for insurers and securities companies).

Notification and appraisal procedures at the National Competition Commission

The notification dossier is filed with the National Competition Commission. Upon receiving a complete dossier, the Commission conducts a preliminary appraisal within 30 days and announces the result. Three scenarios:

Scenario 1 — Proceed immediately: if the preliminary appraisal shows the concentration is not prohibited and needs no official appraisal, the parties may proceed.

Scenario 2 — Official appraisal: if deeper assessment of competition-restricting effects is needed, the Commission issues an official appraisal decision. The official appraisal takes 90 days, extendable by up to 60 days for complex cases. At the end, the Commission decides: permit, permit with conditions, or prohibit.

Scenario 3 — Incomplete dossier: the Commission requests supplements, and the appraisal clock restarts upon receiving the complete dossier. In practice, preparing a compliant dossier from the start — especially the relevant market and market share analysis — largely determines the timeline.

For deal timelines, add up: dossier preparation (typically 2–4 weeks) + 30 days of preliminary appraisal + (if any) 90–150 days of official appraisal. A deal above thresholds that fails to budget this time risks breaking the closing timeline committed to financing banks or partners.

Sanctions for failure to notify or gun-jumping

Decree 75/2019/ND-CP sets fairly strict sanctions, and the scariest point is that fines are calculated as a percentage of revenue, not a fixed amount:

Failure to notify (Article 14): fines from 01% to 05% of total revenue in the relevant market in the fiscal year immediately preceding the year of the violation, for each enterprise participating in the concentration that failed the notification obligation. Where total revenue in the relevant market is zero, a fine of VND 100–200 million applies.

Closing before appraisal results (Article 15): carrying out economic concentration without the Commission’s preliminary appraisal result notice — fined 0.5% to 01% of total revenue in the relevant market. Carrying out economic concentration while the Commission has not yet decided after official appraisal, or failing to fully implement conditions in a conditional permit — fined 01% to 03%.

In other words, “sign first, notify later” is not a time-saving strategy — it is an independent violation with its own fine, not to mention the risk of the deal being prohibited or conditioned after closing, forcing the whole deal structure to be redone.

Building competition review into the deal structure

From a deal practice perspective, competition review should be treated as an independent workstream from the LOI/term sheet stage:

Step 1 — Early threshold assessment: as soon as preliminary financial data of the parties is available, check the four criteria of Article 13 of Decree 35/2020. If any criterion nears the threshold, build the notification obligation into the deal assumptions.

Step 2 — Condition precedent: in the SPA, make closing conditional on National Competition Commission approval (or expiry of the appraisal period without prohibition). At the same time allocate dossier preparation duties and costs between the parties.

Step 3 — “Hell or high water” or effort limits: the parties agree the maximum effort to obtain approval (e.g., whether to accept asset divestitures to satisfy Commission conditions, and to what extent).

Step 4 — Reverse break fee: in large deals, the buyer often commits a fee if the deal collapses for competition reasons — also how the seller prices the deal’s legal risk.

See also the M&A in Vietnam overview for foreign investors and corporate legal due diligence — where competition review is an indispensable item.

How FLAT LAW FIRM can help

FLAT LAW FIRM supports parties in M&A transactions: assessing economic concentration notification obligations under the four criteria of Decree 35/2020/ND-CP; preparing notification dossiers and working with the National Competition Commission; drafting condition precedent clauses, competition risk allocation, and reverse break fees in the SPA; advising when transactions undergo official appraisal. We work in Vietnamese, Chinese, and English. To discuss a specific deal, contact FLAT LAW FIRM.

Frequently asked questions