Vietnam competition law: real protection against anti-competitive practices
Vietnam competition law is governed by a law that came into force in 2005. This law recognises freedom of trade and prohibits anti-competitive practices. These rules have been strengthened since the accession of Vietnam to the WTO in 2007.
Vietnam’s competition laws create two competition authorities: the Vietnam Competition Administration Department (VCAD) and the Vietnam Competition Council (VCC) to administer the competition laws. The Competition Authority (VCAD and VCC) is established by the Government. The head of VCAD and members of VCC are appointed and dismissed by the Prime Minister on the proposal of the Minister of Ministry of Industry and Trade.
There are two broad categories of prohibited practice:
1 / Anti-competitive practices in competition law in Vietnam
The prohibitions related to anti-competitive practices are very similar to those in place in many other countries. Vietnam’s competition law prohibits all agreements which may restrict competition, abuse a dominant position and economic concentration:
Prohibited anti-competitive agreements include:
- agreements fixing the price of goods and services;
- the agreements on the distribution of outlets and sources of supply of goods;
- agreements restricting technical progress or investment;
- agreements that impose on other enterprises conditions of purchase or sale
Other anti-competitive agreements are prohibited by the competition law of Vietnam, but only if the parties to such agreements have over a 30% share of the market:
- agreements preventing other companies from entering the market or expanding their activities;
- agreements eliminating from the market companies other than the parties to the agreement;
- agreements allowing one or all parties to the agreement to win a contract to provide goods or services.
Abuse of dominant position
A company in a dominant position or monopoly cannot abuse its position in specific sectors. It cannot for example sell goods or services below their true value in order to exclude competitors or prevent the market entry of other competitors. To determine whether a company is dominant, we establish the market share it holds. If an individual company holds over 30% market share or two companies acting together hold more than 50% market share, they will be considered dominant.
Economic concentration (merger, acquisition, joint venture, consolidation, etc.) is in principle prohibited by Vietnam’s competition laws when the parties involved in concentration have more than 50% market share. However, exceptions exist. If following the merger, the companies are SMEs (small and medium enterprises); one or more participants may be dissolved or be insolvent without this operation; or economic concentration contributes to socioeconomic development, technical progress or to increased exports, then the concentration is allowed.
The economic concentration of projects must be notified before their implementation if the combined market shares of the project participants are between 30 and 50% of the relevant market unless, after the implementation of the project, companies remain SMEs. The parties may only complete the concentration after receiving the approval of the competent Vietnam Competition Authority.
2 / Unfair business practices in competition laws in Vietnam
For example it is considered unfair to provide misleading information to violate trade secrets, to compel someone in commercial dealings, defame other companies or disrupt business activities of other companies. The Vietnamese law on the right of competition provides exhaustively all acts of unfair competition prohibited.
3 / Procedure for breach of Vietnam competition law
The mission of the Vietnam Competition Authority is to receive complaints of cases of anti-competitive behaviour. The competent Vietnam Competition Authority is then charged to investigate and determine whether the evidence of infringement are met. If it finds that there is sufficient evidence, it may open a formal investigation.
After the survey, a report is submitted to the VCC, which establishes a tribunal. It would be competent to rule on the case in question. 3 choices open to it:
- refer the matter to the VCAD;
- hold a public hearing;
- suspend the settlement of the case.
If the court decides to hold a public hearing, the decision may be challenged before the Vietnam Competition Council within 30 days. The decisions of the Vietnam Competition Authority may, in turn, be appealed to the Ministry of Industry and Trade.
The enforcement of the decision is monitored by provincial agencies responsible for the enforcement of civil judgements of the province or city where the headquarters or residence of the party against which the decision was taken. However, Vietnam’s competition laws have yet to be fully implemented and the EU is aiding Vietnam to improve the effectiveness of this law.
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