YKVN có bài hay với tựa đề như trên. Dưới đây là một số điểm Ngữ lưu ý nhất. Có thể đọc thêm “Báo cáo thường niên 2020” ở đây. Hope that YKVN will find way to get their comments presented to VCCA.
The Competition Regulations introduce the effects-based approach (which focuses on a comprehensive assessment of potential anti-competitive effects of a merger if such merger meets the control test and any of the reportable thresholds based on the size-of-transaction, market share, asset and revenue) to merger review, replacing the previously adopted form-based approach under the old regime (which requires the competition authority to look no further than a quantitative combined market share). The immediate effect is rather obvious: 62 merger filings were made in 2020 alone as compared to more than 160 filings made during the 14-year period under the form-based regulations. The new regime has brought Vietnam’s merger control process closer to the established practice employed in more developed jurisdictions around the globe.
In the context of the Vietnamese antitrust regime, an outright exemption for intra-group transfers has not yet been provided under the Competition Regulations. However, a plain reading of the definition of “acquisition” under Decree 35 suggests that an acquisition may be considered an “economic concentration” that would trigger merger filing only if such acquisition results in a change of control over the acquired entity. Accordingly, while there is no express basis for an outright exemption for intra-group transfers available under the Competition Regulations, an intra-group transfer which typically would not result in a change of control should be exempted from the scope of merger control or granted with a fast-tracked, simplified review by the competition authority. [I couldn’t agree more on the “change of control” reasoning. There should be an outright exempton for intra-group transfers.]
Negative control, simply put, is a situation where a shareholder or a group of shareholders of a company can veto a proposed decision of such company. For instance, a 36% shareholder of a Vietnamese joint stock company may veto certain matters that are decided by the company’s general meeting of shareholders, or a minority financial investor is granted with certain shareholder’s rights that enable it to veto certain governance and operation matters in order to protect its financial investment in its investee company in the absence of its direct participation in the corporate governance of such company.
While the negative control issue had caused a little confusion in the early days of the implementation of Decree 35, a plain read of Article 2.1 of Decree 35 seems to suggest that negative control was not captured by the lawmakers when Decree 35 was being drafted. Indeed, the verb “to decide” is used in multiple places when it refers to the exercise of control by the acquirer over the acquired entity. [I made the same argument. See here on page 3 of the PDF file.] The view that the control test is generally based on positive control and negative control is not captured under the Competition Regulations has been broadly shared among competition law practitioners in Vietnam and, as far as we are aware, recently acknowledged by the VCCPA. [See my previous quick note on this point here.]
We note further that the approach to this control test differs from jurisdiction to jurisdiction but essentially from the jurisdictions we have researched, veto rights that constitute a control must be related to strategic decisions on the business policy of a company and that they must go beyond the veto rights normally accorded to minority shareholders in order to protect their financial interests as investors in an investee company. This position is, for example, articulated under the EU competition law. In the Vietnam context where many deals are minority financial investments in which financial investors take small positions (e.g., 5%-10%) coupled with a few standard minority protection veto rights, applying the merger control regime in those cases will be a barrier to M&A activity and waste limited resources at the competition authority. [That makes sense.]
It is also important to establish whether a merger filing is needed when an acquirer acquires more shares in a company over which it already has control, assuming a particular reportable threshold has been met? This could happen when a, says, 60% shareholder of a company acquires another 10% of shares in the same company and the transaction value of such acquisition crosses the size-of-transaction reportable threshold. The answer to this question is unfortunately not black and white under the Competition Regulations. Nevertheless, if we are to follow whatever approach that may be adopted for intra-group transfers as discussed above, additional acquisition of shares in a company by the controlling shareholder of such company should be treated as the same as that is applicable to intra-group transfers. This is because any such acquisition is effectively a transfer of shares in a subsidiary to its parent and would not result in any change of control over the subsidiary.
The infant Competition Regulations have understandably not specifically addressed conglomerate mergers [‘a conglomerate merger that involves companies producing complementary products might create the so-called “portfolio power” which has been subject to scrutinization by antitrust authorities in a number of jurisdictions’] although this type of merger is frequently implemented in practice.
Under the Competition Regulations, a reportable merger may proceed if it satisfies one of the safe habours provided for under Article 14.2 of Decree 35. Of these safe habours, a merger may be cleared if the combined market share of the merger companies is (i) less than 20% or, (ii) 20% or more in the relevant market but the total market share squares of the merger companies in the relevant market post-merger will be less than 1,800. In this regard, we believe that this safe habour should be available if one merger party has zero market share in the relevant market and the other party has less than 20% market share in such market. Nevertheless, there remain some doubts over this interpretation in the absence of a precedent ruling by the VCCPA and therefore, further clarification on this issue remains needed.