Decree 35/2020 – New merger filing thresholds in Vietnam

During the Covid-19 outbreak, the Vietnamese Government issued an important decree implementing the Competition Law 2018. Among other things, the Government has introduced a (mostly) complete new set of merger filing thresholds. Unfortunately, like social distancing measures applied during Covid-19, the new merger filing thresholds could potentially put more “legal distance” between parties to M&A deals in Vietnam especially those conducted by large corporations.

Under the old Competition Law 2004, the Government only applies the “market share” test to determine whether a merger filing should be made. Due to the vagueness and difficulty of determining market share numbers in practice, only a few M&A deals are subject to merger filing under the old Competition Law 2004. Now, it is no longer the case. In addition to the old market share test, Decree 35/2020 introduces two new “bright-line” tests (i.e., “size- of-person” test and “size-of-transaction” test) without any exception. Any M&A transaction triggering any of the three separate and independent tests will now need to be reported to the not-yet-established National Competition Committee (NCC). In short, the NCC now presumably has more testing tools for a merger filing than the competition authorities in EU(one), US (two), and China (one), which unfortunately is not a good sign for M&A lawyers in Vietnam.

Details of each test for each industry are set out in the table below (US$ numbers are approximates):

A Comparison Between Vietnam’s Trade In Service Commitments under WTO, CPTPP, and EVFTA

The full text of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Agreement (CPTPP) and the Free Trade Agreement between Vietnam and European Union (EVFTA) have been made available for public information. Please download here a table comparing the existing commitments of Vietnam under WTO Agreement, CPTPP and EVFTA Agreement for certain service sectors. The comparison is done by Tran Thuy Tien, Nguyen Thuc Anh and Le Minh Thuy.

Notes:

Vietnam’s specific commitments are contained in two Annexes (Annex I and Annex II) of Chapter 9 of the CPTPP and Chapter 8 and Annex 8-B of the EVFTA Agreement. The list below covers specific commitments in specific sectors or sub-sectors. But there are commitments which apply to all sectors and are not listed in here.

CPC codes are as used in the Provisional Central Product Classification.
No limitation means no limits on national treatments in terms of Foreign ownership, forms of investment or other restriction.
Branching is generally not allowed unless otherwise indicated.

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A Comparison Between Vietnam’s Trade In Service Commitments under WTO and EVFTA

The full text of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Agreement (CPTPP) and the Free Trade Agreement between Vietnam and European Union (EVFTA) have been made available for public information. A table comparing the existing commitments of Vietnam under WTO Agreement, and EVFTA Agreement for certain service sectors can be downloaded here. The comparison is done by Tran Thuy Tien and Le Minh Thuy.

Notes:

Vietnam’s specific commitments are contained in two Annexes (Annex I and Annex II) of Chapter 9 of the CPTPP and Chapter 8 and Annex 8-B of the EVFTA Agreement. The list below covers specific commitments in specific sectors or sub-sectors. But there are commitments which apply to all sectors and are not listed in here.
CPC codes are as used in the Provisional Central Product Classification.
No limitation means no limits on national treatments in terms of Foreign ownership, forms of investment or other restriction.
Branching is generally not allowed unless otherwise indicated.

Coronavirus Outbreak - The Effect of A Force Majeure Event Under Vietnamese Law

This is our final post relating the force majeure event in Vietnam. In this post, we will cover the effect of a force majeure event after the existence of a force majeure event is confirmed (see our earlier post here). This post is written by Nguyen Quang Vu and Tran Thuy Tien.

In summary,

A party affected by a force majeure event will be exempted from contractual liabilities. It is not necessary for a contract to have a separate force majeure clause for the affected party to claim force majeure.
The Commercial Law 2005 is not clear whether the default of an affected party must be caused by the force majeure event.
The law does not clearly allow a contract to be terminated on the basis of a prolonged force majeure. However, in case of a prolonged force majeure event, the Commercial Law 2005 allows the parties to refuse to perform the contract.

Vietnam Business Law