Decree 35/2020 – The concept of “control” in merger control rules in Vietnam

The concept of control is important under the new merger control rules under the Competition Law 2018 and Decree 35/2020. In particular, economic concentration in the form of acquisition will arise if the acquiring entity acquires control over the target. Besides, the concept of control is also used to determine whether a company is an affiliate of another company when applying the size-of-person test under merger filing requirements.

Decree 35/2020, the acquiring enterprise establishes control over the target or a business line of the target in any of the following circumstances:

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Written by Nguyen Quang Vu On In ,

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):

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Written by Nguyen Quang Vu On In ,

Exemptions Of Tender Offer Under The Securities Law 2019

Under the Securities Law 2019, regarding a public joint stock company (the target company), those entities who fall into tender offer triggering circumstances do not have to conduct a tender offer in some specific circumstances. In particular:

· Circumstance 1: Purchasing of newly issued shares, which results in the ownership reaching the tender offer triggering limits, in accordance with the issuance plan approved by the target company’s General Shareholder Meeting.

· Circumstance 2: Receiving the transfer of the outstanding voting shares, which results in the ownership reaching the tender offer triggering limits, as approved by the target company’s General Shareholder Meeting. In such circumstances, the General Shareholder Meeting must clearly identify the transferor and the transferee.

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Written by Nguyen Quang Vu On In , ,