What Is Conditional Economic Concentration? Penalties for Non-Compliance

Conditional economic concentration is an economic concentration permitted to proceed but required to satisfy one or more conditions under Article 42 of the Law on Competition 2018 (splitting, dividing or reselling part of the contributed capital or assets; controlling prices and transaction terms; measures remedying competition-restricting effects; measures enhancing positive effects). An enterprise that fails to implement or incompletely implements the conditions in the decision may be fined from 01% to 03% of total revenue on the relevant market.

1. What is conditional economic concentration?

Article 42 of the Law on Competition 2018 provides:

“Article 42. Conditional economic concentration

Conditional economic concentration is an economic concentration that may proceed but must satisfy one or more of the following conditions:

1. Splitting, dividing or reselling part of the contributed capital or assets of the enterprises participating in the economic concentration;

2. Controlling matters related to purchase and sale prices of goods and services or other transaction terms in contracts of the enterprise formed after the economic concentration;

3. Other measures to remedy the potential competition-restricting effects on the market;

4. Other measures to enhance the positive effects of the economic concentration.”

This results from the official appraisal process: where an economic concentration has competition-restricting effects but still brings superior positive effects, the competent authority permits it with conditions, protecting competition without hindering transactions beneficial to the economy.

2. What penalties apply for incomplete implementation of the conditions?

Point a, Clause 2, Article 15 of Decree 75/2019/ND-CP provides:

Fines from 01% to 03% of total revenue on the relevant market in the fiscal year immediately preceding the year of the violation, for each enterprise participating in the economic concentration, for: failing to implement or incompletely implementing the conditions stated in the economic concentration decision.

Where total revenue on the relevant market is determined as 0, fines from VND 100,000,000 to VND 200,000,000 apply (Clause 3, Article 4 of Decree 75/2019/ND-CP). The maximum fine for violations of economic concentration rules is 05% of total revenue on the relevant market.

3. Statute of limitations for administrative penalties

The statute of limitations for administrative penalties in the competition sector is 02 years from the time the violation ceases (under the general rules of the law on handling of administrative violations). Once the limitation expires, no penalty is imposed, but remedial measures may still be applied if conditions remain.

Notes on applying current legal provisions

Conditions in an economic concentration decision are mandatory and usually accompanied by an implementation monitoring mechanism. Post-merger or acquisition enterprises should build a condition-compliance plan from the outset to avoid penalties and the risk of the decision being reconsidered. To assess the conditions applicable to your transaction, please contact an ANT Legal lawyer at 0966.475.966.

How can ANT Legal help?

ANT Legal assists with advising on M&A transaction structures, preparing economic concentration notification dossiers, negotiating conditions during appraisal, and building post-decision condition compliance plans.

For quick advice, you may contact a lawyer at 0966.475.966.

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