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):