Under the Competition Law 2018, an acquisition by purchase of assets sufficient to enable the acquiring company to gain control of either the acquired company or one business of such company is considered a form of economic concentration, and could be subject to merger filing requirement (if certain thresholds are met).

Article 2.1(b) of Decree 35/2020 further clarifies, among other thing, that “controlling or dominating a company or one business of a company” includes the case where “the acquiring company gains the ownership or the right to use more than 50% of the assets of the acquired company in all businesses or one business of such company”. It is unclear as to whether this provision should be interpreted as:

·        Interpretation 1: the acquiring company gains the ownership or the right to use more than 50% of the total assets of the acquired company which are used for all businesses or one business of such company; or

·        Interpretation 2: the acquiring company gains the ownership or the right to use more than 50% of the assets of either all businesses or one business of the acquired company.

Interpretation 1 tests all assets of the acquired company regardless of the business to be acquired by the acquiring company. Interpretation 2 only tests the assets of the business to be acquired by the acquiring company.

It appears that the Interpretation 2 is likely to be adopted. This is because:

·        if Interpretation 1 were the intention of the drafters, then (a) only providing in Decree 35/2020 the threshold being 50% of the assets of the acquired company would suffice, and (b) there would be no other guidance to the case of “controlling one business of a company” as provided under the Competition Law 2018; and

·        in the decision on Grab – Uber Vietnam case of Vietnam Competition Committee (VCC) (para 2 of page 19), which involves Grab acquiring contracts with drivers and customers from Uber, VCC considered Grab’s control ability over Uber’s ride hailing business to determine whether Grab’s acquisition was an economic concentration. This suggests that VCC also follows the Interpretation 2.

·        Interpretation 2 is consistent with the concept of control under the EC Merger Regulation, which provides that “control” can be constituted by “ownership or the right to use all or part of the assets of an undertaking”, among other things. However, to determine whether a gain of control occurs, the EC Merger Regulations require the assets in question to constitute a business to which a market turnover can be clearly attributed (see para 11, Item III in this Commission Notice).

However, if Interpretation 2 is adopted then the drafters of Decree 35/2022 appear to be inconsistent and excessive in the sense that the filing threshold under Decree 35/2020 adopts Interpretation 1 by referring to the total assets of the acquired entity (i.e., assets in all businesses of the acquired entity).

This post is written by Nguyen Thuc Anh and edited by Nguyen Quang Vu.