Competition Law in M&A: A Comprehensive Guide for Vietnam

Vietnam’s competition law governs mergers and acquisitions (M&A) to prevent monopolistic practices and foster a fair market environment. Businesses must grasp the legal framework, evaluation processes, and potential risks to ensure compliant and seamless M&A transactions. This guide provides a clear, expert-driven overview optimized for clarity and relevance.

1. Overview of Competition Law

1.1 What is Competition Law?

Competition law, often termed antitrust law, establishes rules to maintain a level playing field in the market. It prohibits anti-competitive behaviors, safeguards consumer interests through fair pricing, enhanced product quality, and diverse choices, while promoting a healthy competitive landscape for businesses.

In Vietnam, the Competition Law 2018 (Law No. 23/2018/QH14), enacted on June 12, 2018, and effective from July 1, 2019, serves as the primary legal framework, superseding the 2004 law. As of July 2025, it remains the governing statute, enforced by the Vietnam Competition Commission (VCC), established on April 1, 2023, to strengthen oversight. The law addresses monopolistic abuses, restrictive agreements, and economic concentrations, balancing competition with public interest through exemptions and leniency mechanisms.

1.2 Role of Competition Law in M&A

Competition law ensures M&A activities do not harm market dynamics or consumer welfare. Its key roles include:

Regulating Restrictive Agreements: The law prohibits agreements that significantly limit competition, such as deals restricting third-party transactions, market access, or supply chains. Evaluations consider market share, entry barriers, and consumer impacts.
Preventing Abuse of Dominance: It curbs dominant firms from engaging in unfair practices, such as predatory pricing, supply refusals, or imposing restrictive conditions. Dominance is assessed via market share, financial strength, and control over critical infrastructure.
Controlling Economic Concentrations: M&A transactions like mergers, acquisitions, or joint ventures must be notified if they may significantly restrict competition. Notification thresholds, outlined in Decree 35/2020/NĐ-CP, hinge on total assets, revenue, transaction value, or combined market share.
Exemptions and Leniency: Exemptions apply to agreements or M&As that substantially benefit consumers, advance technology, or enhance Vietnamese firms’ global competitiveness. The leniency policy offers penalty reductions (40%–100%) for entities voluntarily reporting violations, incentivizing cooperation.

2. Purpose and Scope of Competition Law in M&A

2.1 Purpose of Competition Law

Vietnam’s Competition Law 2018 (No. 23/2018/QH14) governs mergers and acquisitions (M&A) to ensure a fair, transparent, and competitive market environment. Its primary objective is to prevent monopolistic practices or significant restrictions on competition that could harm market dynamics. The law safeguards consumer interests by promoting reasonable pricing, improving product and service quality, and ensuring diverse choices for customers.

Additionally, it supports M&A transactions that enhance economic efficiency—such as optimizing resources, fostering technological innovation, or strengthening the global competitiveness of Vietnamese enterprises—provided they do not disrupt market structure or suppress competition. The National Competition Commission (NCC) oversees M&A evaluations, assessing their impact on market competition. The NCC may impose remedies, such as asset divestitures, partial business sales, or post-M&A price controls, to protect public interest and maintain market balance.

Source: Luật cạnh tranh năm 2018 số 23/2018/QH14

2.2 Scope of Competition Law

The scope of Vietnam’s Competition Law 2018 encompasses all economic concentration activities, including mergers, acquisitions, consolidations, and joint ventures, that may impact the Vietnamese market. This applies to both domestic and foreign enterprises involved in transactions affecting Vietnam’s market dynamics. The law ensures that such activities align with fair competition principles, regardless of the entities’ origin.

3. Prohibited Acts in Mergers and Acquisitions under Vietnam's Competition Law

Vietnam's Competition Law 2018 outlines four primary categories of prohibited acts in mergers and acquisitions (M&A), designed to safeguard fair market competition and protect consumer interests. These restrictions target anti-competitive behaviors, ensuring market integrity and economic fairness. Below is a clear, concise, and expert-driven explanation of these prohibitions, optimized for clarity and semantic relevance.

Anti-Competitive Agreements: Anti-competitive agreements involve arrangements that restrict market competition, such as price-fixing, market allocation, output limitation, or agreements preventing transactions with third parties. Some agreements are strictly prohibited (per se prohibitions), while others are banned only if they significantly impair competition. These restrictions prevent collusion that could harm consumers or competitors.
Abuse of Dominant Position: Enterprises with market dominance are prohibited from exploiting their position through actions like predatory pricing, refusing to supply goods or services, or imposing unfair contract terms. These measures ensure dominant firms do not undermine competitors or exploit consumers, maintaining a balanced market ecosystem.
Anti-Competitive Economic Concentration: M&A transactions, including mergers, acquisitions, or joint ventures, are prohibited if they substantially lessen competition or risk creating a monopoly. The National Competition Commission evaluates these deals based on combined market share, market concentration levels (e.g., Herfindahl-Hirschman Index), and post-transaction competitive advantages. Transactions exceeding certain thresholds (e.g., 20% combined market share) must be notified for review to prevent market distortions.
Unfair Competitive Practices: Unfair practices, such as defamation, business obstruction, or disseminating misleading information, are banned to protect competitors and consumers. These actions undermine trust and fairness in the marketplace, harming both market participants and end-users.
Enforcement and Penalties: The National Competition Commission, Vietnam’s regulatory authority, investigates and penalizes violations. Under Article 111 of the Competition Law 2018, penalties for anti-competitive agreements or abuse of dominance can reach up to 10% of a firm’s total revenue from the previous financial year. Violations related to economic concentration face fines up to 5% of annual revenue, while unfair competitive practices may incur fines up to VND 2 billion. These sanctions ensure compliance and deter anti-competitive behavior.

4. Competition Review Process for M&A Transactions

The competition review process for mergers and acquisitions (M&A) in Vietnam, governed by the 2018 Competition Law and Decree 35/2020/ND-CP, ensures that transactions do not harm market competition. Below is a clear, expert-driven outline of the process, optimized for clarity, semantic accuracy, and relevance to Vietnam’s regulatory landscape.

Step 1: Assessing Economic Concentration Thresholds

Enterprises must determine if their M&A transaction triggers mandatory notification under Article 33 of the 2018 Competition Law and Decree 35/2020/ND-CP. The thresholds include:

Asset or Revenue Threshold: At least one party has total assets or revenue in Vietnam of VND 3,000 billion or more in the preceding fiscal year.
Transaction Value: The M&A deal’s value is VND 1,000 billion or higher (applicable to domestic transactions).
Market Share: The combined market share of the parties reaches or exceeds 20% in the relevant market.For specialized sectors like banking, insurance, and securities, Decree 35/2020/ND-CP specifies distinct thresholds. If any threshold is met, notification to the Vietnam Competition Commission (VCC) is mandatory before proceeding with the merger, acquisition, or consolidation.

Step 2: Preparing Notification Documents

Parties must submit a comprehensive notification dossier to the VCC, as stipulated in Article 34. The dossier includes:

A VCC-provided notification form.
Detailed information on the parties, including financial statements, ownership structure, and business operations.
Transaction specifics, such as value, scope, and objectives.
Market data, including market share, competitors, and entry barriers.Submission must occur before executing the transaction. Failure to notify may result in administrative penalties under Decree 75/2019/ND-CP, ensuring compliance with Vietnam’s competition regulations.

Step 3: Preliminary or Formal Review

The VCC conducts a preliminary review within 30 days of receiving a valid dossier, per Article 35. This phase assesses whether the transaction significantly restricts competition, based on:

Combined Market Share: The proportion of the market controlled post-transaction.
Market Concentration: Measured using the Herfindahl-Hirschman Index (HHI).
Barriers to Entry: Factors like regulatory or economic hurdles for new competitors.If the transaction poses no significant competitive harm (e.g., combined market share below 20% or not among the top five firms holding 85% of the market), the VCC may approve it. Otherwise, a formal review, lasting up to 90 days (extendable by 60 days for complex cases), is initiated to scrutinize potential anti-competitive effects.

Step 4: Decision Outcomes

Following the review, the VCC issues one of three decisions under Article 36:

Approval: The transaction proceeds if it does not substantially lessen competition.
Conditional Approval: The VCC may impose remedies, such as asset divestiture, business unit sales, or price controls post-M&A, to mitigate anti-competitive impacts (Article 110).
Prohibition: The transaction is banned if it significantly restricts competition and remedies are infeasible.Non-compliance, such as executing a transaction without notification, incurs fines up to 5% of the parties’ total revenue in the relevant market for the prior fiscal year, per Article 111 and Decree 75/2019/ND-CP.

Source: Nghị định 35/2020/NĐ-CP

5. Legal Considerations for Vietnamese Enterprises in Mergers and Acquisitions

The Competition Law 2018 (No. 23/2018/QH14) of Vietnam establishes strict regulations to oversee mergers and acquisitions (M&A) to prevent significant restrictions on market competition. Small and medium-sized enterprises (SMEs) often face severe consequences—such as administrative fines, transaction cancellations, or financial losses—due to common errors stemming from inadequate understanding or preparation. These errors include failing to notify transactions meeting thresholds, misjudging competitive impacts, or neglecting post-M&A obligations. To mitigate risks, enterprises must proactively assess notification thresholds, engage expert competition lawyers, and fulfill post-transaction reporting duties. The Vietnam Competition Commission (VCC), the enforcing authority, may impose stringent penalties, including fines up to 5% of total revenue or transaction reversal, to ensure a fair competitive environment.

Early Assessment of Economic Concentration Notification Thresholds: Enterprises must determine if an M&A transaction meets the notification thresholds under Article 13 of Decree 35/2020/ND-CP. These include total assets or revenue in Vietnam of VND 3,000 billion or more, transaction values of VND 1,000 billion or higher (for domestic deals), or a combined market share of 20% or greater in the relevant market. Failure to evaluate or comply with Article 33 of the Competition Law 2018 risks penalties or transaction annulment.
Collaboration with Competition Law Experts: Partnering with legal specialists in competition law is critical to prepare accurate notification dossiers, assess competitive impacts (using metrics like market share, Herfindahl-Hirschman Index, or market entry barriers), and meet VCC requirements. This ensures compliance during the preliminary review (30 days) or formal appraisal (up to 90 days, extendable by 60 days).
Post-M&A Reporting Obligations: If the VCC approves a transaction with conditions, enterprises must adhere to remedies under Article 110, such as periodic reporting on pricing, business structure, or asset divestiture. Non-compliance may lead to additional penalties or revocation of approval, disrupting business operations.
Severe Penalties for Non-Compliance: Violations, such as failing to notify or executing prohibited transactions, may incur fines up to 5% of the prior fiscal year’s revenue in the relevant market (Article 111). The VCC may also enforce remedies like transaction cancellation, asset divestiture, or price controls, causing significant financial, temporal, and reputational damage.

6. Exemptions from Competition Law in Vietnam’s M&A Context

Vietnam’s Competition Law 2018 provides exemptions for specific cases to promote public welfare, technological progress, or support vulnerable entities like small businesses and niche industries. Governed by Article 10, these exemptions apply to restrictive agreements and economic concentrations, such as mergers and acquisitions (M&A), when certain conditions are met. Exemptions are categorized into two types: conditional exemptions (requiring approval from the National Competition Commission, or NCC, based on submitted documentation) and unconditional exemptions (automatically applied to cases involving public interest or specialized sectors). Exemptions must not significantly harm consumers and are subject to strict oversight by the NCC, with clear time limits.

Advancing Technology and Enhancing Product Quality: M&A transactions or agreements may qualify for exemptions if they drive technological innovation, improve production techniques, or enhance product/service quality, delivering tangible consumer benefits like lower prices or better user experiences.
Supporting Small Businesses and Specialized Sectors: Exemptions may apply to industries like agriculture, handicrafts, or small and medium enterprises (SMEs) to foster growth and competitiveness, particularly in emerging or vulnerable markets.
Mandatory Registration and Approval Process: For conditional exemptions, enterprises must submit a detailed application to the NCC, demonstrating that the M&A or agreement does not substantially restrict competition and provides public benefits. The NCC evaluates and issues a decision to approve or reject.
Duration of Exemptions: Exemptions are time-bound, typically lasting up to five years per Decree 35/2020/ND-CP, with potential extensions if enterprises prove ongoing necessity and compliance with exemption criteria.

7. FAQ

7.1 How does Vietnam’s Competition Law define “economic concentration” in M&A transactions?

Definition: Under Article 29 of Vietnam’s Competition Law 2018, “economic concentration” (also termed market consolidation or business integration) encompasses:

Merger: One or more enterprises transfer all assets, rights, obligations, and legal interests to another, ceasing independent existence.
Consolidation: Multiple enterprises combine to form a new entity, with the original entities dissolving.
Acquisition: An enterprise purchases all or part of another’s assets, shares, or control rights, resulting in dominance or influence over the target.
Joint Venture: Multiple enterprises pool capital or assets to establish a new entity under shared control.

M&A Context: Economic concentration in M&A (synonyms: corporate restructuring, business amalgamation) involves gaining control via ownership, assets, or voting rights, potentially impacting market competition. Transactions exceeding market share or revenue thresholds (Article 33) must be notified to the National Competition Authority (NCA) under Vietnam’s Ministry of Industry and Trade.

7.2 Is it true that Vietnam’s Competition Law completely prohibits M&A transactions leading to market monopolies?

False. Vietnam’s Competition Law (Article 30) does not outright ban M&A transactions resulting in market dominance or monopolies but imposes strict conditions.

- Regulations: M&A deals significantly restricting competition, such as creating monopolies or strengthening dominant positions, may be prohibited. Exceptions include:

Transactions promoting technical or technological advancements or enhancing consumer benefits (e.g., improved services or pricing).
Deals enabling a distressed party to avoid insolvency or dissolution, sustaining business operations.

- Practical Application: The NCA evaluates impacts on competition, balancing risks and benefits. For instance, an M&A in telecommunications (e.g., a merger between mobile providers) may gain approval if it demonstrably enhances consumer services, such as network coverage or data affordability.

7.3 How does the application of Vietnam’s Competition Law in M&A differ between state-owned enterprises (SOEs) and private enterprises?

- Key Differences:

State-Owned Enterprises (SOEs):

Special Regulations: SOEs face heightened scrutiny due to their role in strategic sectors and public interest considerations. M&A involving SOEs must comply with the Law on Management and Use of State Capital (2014), alongside Competition Law.
Competition Review: The NCA assesses market impacts but may prioritize national interests or government restructuring policies.
Example: An M&A involving Petrovietnam may receive expedited approval if aligned with state-driven restructuring goals, such as consolidating energy assets.

Private Enterprises:

Regulatory Flexibility: Private firms are primarily subject to Competition Law 2018, with focus on market share and competitive effects.
Review Process: Assessments emphasize economic factors, with minimal influence from public policy.
Example: An M&A between private tech firms like Tiki and Sendo is evaluated based on combined market share and consumer impact, such as pricing or service quality.

- Commonalities: Both SOEs and private firms must notify the NCA for economic concentrations exceeding thresholds (e.g., combined market share ≥ 20% or revenue per Article 33). However, SOEs face additional policy-driven constraints.

7.4 What factors does Vietnam’s National Competition Authority prioritize when assessing the impact of an M&A on Vietnamese consumers?

Priority Factors (per Article 31 and practical application):

Price Effects: The NCA examines whether an M&A may increase prices due to reduced competition. For example, a retail sector M&A could face scrutiny if it risks raising consumer goods prices.
Product/Service Quality: The authority assesses whether the transaction enhances or diminishes quality and variety. For instance, a tech sector M&A may be approved if it improves user experience or service reliability.
Consumer Choice: The NCA evaluates if the M&A reduces market suppliers, limiting options for consumers.
Technological Advancement: Transactions introducing new technologies or service improvements are favored. For example, a fintech M&A enhancing transaction security may receive priority approval.
Impact on Vulnerable Consumers: Special attention is given to protecting groups like rural or low-income consumers, ensuring their access to affordable, quality goods and services.

Process: The NCA analyzes relevant markets, combined market share, and long-term consumer impacts. Enterprises may need to submit data or commitments to safeguard consumer welfare before approval.

Conclusion

Vietnam’s Competition Law serves as a robust legal framework for M&A, preventing monopolies, price manipulation, or market distortions. With increasingly stringent regulations, enterprises—especially large or multi-sector conglomerates—must proactively assess market impacts before pursuing M&A deals.

Neglecting competition compliance risks severe consequences, from deal rejection to substantial penalties. Legal due diligence, alongside financial and operational reviews, is critical.

With extensive experience in domestic and cross-border transactions, INMERGERS offers expert support in evaluating, strategizing, and ensuring compliance with Vietnam’s Competition Law, enabling sustainable and lawful M&A outcomes.

Link: https://inmergers.com/en/competition-law-in-ma-a-comprehensive-guide-for-vietnam

#thaonguyen #CEOinmergers #chuyengiam_a #muabansapnhapdoanhnghiep #muabandoanhnghiepm_a #muabanvasapnhapdoanhnghiep

Tìm kiếm Blog này

Thảo Nguyễn