LEGAL UPDATE: Did you know that Government has issued a new decree guiding the implementation of the Competition Law of 2018?
On 24 March 2020, the Government issued Decree 35 to define what is considered an “economic concentration” in not only 100% M&A deals but also in the merger and consolidation and joint venture between enterprises.
If via these transactions, an economic concentration is created where the acquirer is deemed to ‘control and govern/influence” the target, then notification/approval will have to be obtained in advance for the transaction.
Notification/approval thresholds for enterprises entering into these deals are based on 4 benchmarks:
-value of assets;
-combined market share
for the year prior to the year the enterprises plan to enter into the transactions.
Note that failure to obtain approval or give notification to the National Competition Committee will mean that deals that fall within this Decree may have to be unwound.
The issue is the NCC has not yet been established.
To that extent, it is unclear how deals that are closed prior to the NCC’s establishment will be handled.
It is also unclear as to how deals that are closed prior to Decree 35 will be dealt with and what actions the parties will have to take.
Note also that the laws applies to economic concentrations formed outside of Vietnam but in such cases the transaction value would not be considered.
Please see details in our legal update in the link below
Decree 35/2020/ND-CP (valid as of 15 May 2020)
DN Legal, 8 April