Economic Concentration Notification Required in M&A Transactions

Economic Concentration Notification Required in M&A Transactions ensures that mergers and acquisitions are conducted transparently, in accordance with regulations, and without negative impacts on the competitive environment. Correctly identifying the timing and notification thresholds helps parties avoid risks of transaction suspension, heavy fines, or forced divestment after completion. The following article by Long Phan Consulting Company will analyze in detail the conditions, processes, and consequences related to this procedure.

M&A transactions are cases of economic concentration

Accurately identifying the nature of a transaction is the first step in the process of controlling economic concentration. The Competition Law specifically stipulates the forms of M&A subject to regulation to prevent anti-competitive practices. According to Article 29 of the 2018 Competition Law, economic concentration includes the following forms:

• Business merger: One or more businesses transfer all their assets, rights, obligations, and legal interests to another business, while simultaneously ceasing the business operations or existence of the merged business.
• Business merger: Two or more businesses transfer all their assets, rights, obligations, and legal interests to form a new business, while simultaneously terminating the business operations or existence of the merged businesses.
• Business acquisition: A business directly or indirectly purchases all or part of the capital contributions or assets of another business, sufficient to gain control or dominance over the acquired business or a specific industry or profession of the acquired business.
• Joint venture between businesses: Two or more businesses jointly contribute assets, rights, obligations, and legal interests to form a new business.
• Other forms lead to control or dominance over the business.

>>> See more: The role of M&A consulting in mergers and acquisitions deals

When is economic concentration notification required in M&A transactions?

Cases of M&A Transactions Considered as Economic Concentration Correctly identifying the nature of the transaction is the first step in controlling economic concentration. Article 29 of the Competition Law 2018 defines economic concentration forms including:

• Merger: Transferring all assets/rights/obligations to another enterprise and terminating the merged enterprise.
• Consolidation: Forming a new enterprise from two or more existing ones.
• Acquisition: Buying capital/assets sufficient to control/govern another enterprise or a business line.
• Joint Venture: Contributing assets/rights/obligations to form a new enterprise.
• Other forms leading to control or governance of an enterprise.

Time of implementation and competent authority to receive notification

Enterprises must notify the National Competition Commission (NCC) before implementing economic concentration if they meet one of the thresholds in Article 33 Competition Law 2018 and Article 13 Decree 35/2020/ND-CP:

1. General Enterprises:

• Total assets in Vietnam: 3,000 billion VND or more.
• Total turnover in Vietnam: 3,000 billion VND or more.
• Transaction value: 1,000 billion VND or more.
• Combined market share: 20% or more on the relevant market.

2. Credit Institutions, Insurance Enterprises, Securities Companies:

• Total Assets: Insurance/Securities: 15,000 billion VND; Credit Institutions: 20% of total system assets.
• Total Turnover: Insurance: 10,000 billion VND; Securities: 3,000 billion VND; Credit Institutions: 20% of total system turnover.
• Transaction Value: Insurance/Securities: 3,000 billion VND; Credit Institutions: 20% of total system charter capital.
• Combined Market Share: 20% or more.

Post-notification review process for economic concentration

According to Article 33 Competition Law 2018, notification must be made before the transaction is implemented. Parties must not:

• Sign official M&A contracts (unless conditional on approval).
• Complete transfer of shares/capital.
• Perform actual acts to take control.

Competent Authority: National Competition Commission (Ministry of Industry and Trade).

>>> See more: Legal appraisal process in M&A transactions

Consequences of failing to notify about economic concentration in M&A transactions

Preliminary Appraisal (30 days): Result is either approval or moving to official appraisal. Official Appraisal (90 days, extendable by 60 days): Detailed assessment of competitive impacts (restrictive and positive) to decide on the concentration.

Long Phan Consulting Company provides consulting services for economic concentration notification procedures

M&A deals are not simply a matter of capital and market, but also a race to navigate legal procedures. Long Phan Consulting Company We provide comprehensive consulting services, accompanying businesses from the initial assessment stage to receiving the final approval decision.

Our services are designed with in-depth attention to each stage of the transaction:

• Review and assess notification thresholds to accurately determine notification obligations under the law.
• Consultation on the conditions and procedures for notifying economic concentration.
• Prepare the notification dossier for economic concentration in accordance with legal regulations.
• Assess the legality and validity of the relevant legal documents.
• Assess potential legal risks and propose remedial measures.
• Drafting and negotiating relevant contracts and agreements.

With experience in handling complex M&A transactions,Long Phan Consulting Comapny We are committed to helping our clients optimize appraisal time, ensuring absolute confidentiality and legal security for transactions.

Frequently Asked Questions about economic concentration notification required in M&A transactions

Below are some questions related to the notification of economic concentration in M&A transactions:

At what percentage of equity ownership is acquiring considered controlling interest in the business? 

A business is considered to control or dominate another business or a particular industry or profession when the acquiring business acquires ownership of more than 50% of the charter capital or more than 50% of the voting shares of the acquired business.

(Legal basis: Clause 1, Article 2 of Decree 35/2020/ND-CP.)

What is the minimum total asset value required to notify authorities of an economic concentration? 

For businesses that are insurance companies or securities companies intending to participate in economic concentration, the total assets in the Vietnamese market of the insurance company or group of affiliated insurance companies of which it is a member, or of the securities company or group of affiliated securities companies of which it is a member, must reach VND 15,000 billion or more in the fiscal year immediately preceding the year of planned economic concentration.

For businesses that are credit institutions intending to participate in economic concentration, the total assets in the Vietnamese market of the credit institution or group of affiliated credit institutions of which it is a member must reach 20% or more of the total assets of the entire credit institution system in the Vietnamese market in the fiscal year immediately preceding the year of planned economic concentration.

(Legal basis: Point a, Clause 1, Point a, Clause 2, Article 13 of Decree 35/2020/ND-CP.)

What combined market share requires notification of an economic concentration? 

According to Clause d, Point 1 and Clause d, Point 2 of Article 13 of Decree 35/2020/ND-CP, the combined market share of enterprises intending to participate in economic concentration must be 20% or more in the relevant market in the fiscal year immediately preceding the year in which the economic concentration is planned to be implemented.

Do M&A transactions conducted abroad need to be notified in Vietnam? 

Yes, according to Clause 3, Article 13 of Decree 35/2020/ND-CP, in the case of economic concentration conducted outside the territory of Vietnam, the notification threshold for economic concentration applies if the transaction reaches the thresholds for total assets, revenue, or market share in Vietnam as prescribed; notification to the National Competition Commission is still required.

What is the timeframe for preliminary assessment of notification documents? 

Within 30 days of receiving a complete and valid notification dossier on economic concentration, the National Competition Commission must issue a notice of the preliminary assessment results regarding one of the economic concentration contents to be implemented or the economic concentration requiring formal assessment.

(Legal basis: Clause 2, Article 36 of the 2018 Competition Law.)

How long does the official review process take? 

The National Competition Commission shall formally assess the economic concentration within 90 days from the date of the preliminary assessment notification, with the content as stipulated in point b, clause 2, Article 36 of the 2018 Competition Law. For complex cases, the National Competition Commission may extend the formal assessment period, but not exceeding 60 days, and notify the enterprise that submitted the economic concentration notification in writing.

(Legal basis: Clause 1, Article 37 of the 2018 Competition Law.)

What is the maximum number of times a business can be asked to provide additional information? 

During the formal assessment of economic concentration, the National Competition Commission may request the enterprise submitting the notification of economic concentration to provide additional information and documents, but no more than twice. The enterprise submitting the notification is responsible for supplementing the information and documents related to the economic concentration and is responsible for the completeness and accuracy of the supplementary information and documents as requested by the National Competition Commission. If the requested party fails to supplement or provides incomplete information and documents as requested, the National Competition Commission will consider and decide based on the available information and documents.

(Legal basis: Article 38 of the 2018 Competition Law.)

What transaction value requires notification of economic concentration? 

For typical businesses, the threshold for transaction value that must be reported is VND 1,000 billion or more.

For businesses that are credit institutions, insurance companies, and securities companies, the transaction value of the economic concentration of the insurance company or securities company must be VND 3,000 billion or more; the transaction value of the economic concentration of the credit institution must be 20% or more of the total charter capital of the system of credit institutions in the fiscal year immediately preceding the year in which the economic concentration is planned to be implemented.

(Legal basis: Point c, Clause 1, Point c, Clause 2, Article 13 of Decree 35/2020/ND-CP.)

Conclusion

Determining when to notify economic concentration in M&A transactions requires accurate financial and market analysis. Long Phan Consulting Company is ready to support file review and procedure implementation.

Please contact Hotline 1900636389 for in-depth advice.