COMPETITION LAW & POLICY IN VIETNAM - 公正取引委 … · 1 COMPETITION LAW & POLICY IN VIETNAM HANOI, MAY 2007 Prepared by: Cao Xuan Hien Investigation Division in charge of Competition

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COMPETITION LAW & POLICY

IN VIETNAM

HANOI, MAY 2007

Prepared by: Cao Xuan Hien Investigation Division in charge of Competition Restricting Cases Vietnam Competition Administration Dept. – MINISTRY OF TRADE

(Views expressed in this presentation do not necessarily reflect the view of the VCAD)

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Points of Discussion

• Overview of the Competition Law • Coverage of the Law • Law Enforcing mechanism • Recent cases

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Points of Discussion

• Overview of the Competition Law • Coverage of the Law • Law Enforcing mechanism • Recent cases

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Overview of the Competition law

• Being drafted as early as 2000 – References from other countries’ competition laws – Contributions from international experts – Contributions from businesses

• Promulgated on 3rd December 2004 – The

Law No 27/2004/QH11 on Competition • Took effect from 1st July 2005

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Overview of the Competition law

• Objectives – controls & regulates anti-competitive acts – creates and sustains a fair competitive environment.

• Including 6 chapters, 123 Art. regulating:

– Anti-competitive acts (restrictive & unfair competition acts) – Case handling procedures – Sanctions against violations

• Subjects of Application

– Business organizations and individuals – Professional associations operating in Vietnam

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Implementation guidelines

• Decree No. 05/2006/ND-CP

dated 09/01/2006

• Decree No. 06/2006/ND-CP

dated 09/01/2006

• Decree No. 116/2005/ND-CP

dated 15/09/2005 • Decree No. 120/2005/ND-CP

dated 30/9/2005

• Decree No. 110/2005/ND-CP

dated 24/08/2005

• Circular No. 19/2005/TT-BTM

dated 08/11/2005

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Points of Discussion

• Overview of the Competition Law • Coverage of the Law • Law Enforcing mechanism • Recent cases

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Coverage of the Law

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Restrictive Acts

• Definition “Acts performed by enterprises to reduce, distort and

prevent competition on the market” (Art. 3.3 of the CL)

• Typical acts – Restrictive agreements – Abuse of dominance/monopoly – Economic concentration

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Restrictive agreements

• Agreements prohibited when combined market share of participating enterprises makes up 30 percent or more (Art 9.2, CL) – Price Fixing – Market allocation – Restricting or controlling quantities or volumes – Restricting development/ investments – Imposing unfavorable conditions on the others

• Agreements prohibited in all cases (per se) – Preventing, restraining, or disallowing entrance or business

development of competitors

– Exclusion agreement – Bid rigging

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Abuse of dominance/monopoly

• Dominance? – A single enterprise

• market share of 30% or more or • being capable of restricting competition significantly

– A groups of enterprises • concerted actions, and:

– 2 enterprises: market share of 50% or more – 3 enterprises: market share 65% or more – 4 enterprises: market share 75% or more

• Monopoly? – no other enterprise competing to provide goods

or services on the relevant market

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Acts of abusing dominance/monopoly

• Abusing dominance – Predatory pricing – Unreasonable pricing/minimum price fixing – Imposing restrictions on production/ distribution; preventing

technological development – Discriminating customers of a kind – Imposing unfavorable conditions on others – Preventing market entrance

• Abusing monopoly – 6 acts of abusing dominance, and – Imposing unfavorable conditions on customers – Unilaterally modifying or canceling contracts without

plausible reasons

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Economic concentration

• Mergers – A merged into B – A disappears

• Amalgamations/Consolidations – A and B amalgamated to form C – Both A & B disappears

• Acquisitions – A acquired 51% share of B

• Joint-ventures – A and B jointly contribute capital to form C – A, B & C remain in existence

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Controlling economic concentrations

• 2 key elements – Market share threshold – Scale of enterprise formed

• Regulations – No requirement

• Market share < 30%, or • Enterprise formed remains SMEs

– Pre-notification • Market share from 30% to 50%

– Prohibited • Market share > 30% • May be exempted under Art. 19 of the Law

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Sanctions against restrictive acts

• Monetary fine • Up to10% of the total revenue of the violating enterprises in

the fiscal year proceeding the year of violation

• Additional sanctions • Revocation of the business registration certificates • Deprivation of licenses and practicing certificates • Confiscation of exhibits and means used for committing

violations

• Consequence remedying measures • Division, separation of merged/amalgamated enterprises • Compulsory resale of the acquired enterprise parts • Removal of illegal provisions from contracts, etc.

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Unfair competition acts

• Definition “Acts performed by enterprises in the course of business, which run

counter to common standards of business ethics and cause damage or can cause damage to the state’s interests, legitimate rights & interests of other enterprises or consumers” (Art 3.4 of the CL)

• Typical acts

- Illicit multi-level sale - Advertising for the purpose of unfair competition

-Sale promotion for the purpose of unfair competition

-Discrimination by associations

-Misleading indications

-Infringement upon business secrets, -Constraint in business, -Discrediting others

-Disturbing business activities of others

Group 3 Group 2 Group 1

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Sanctions against unfair competition acts

• Group 1 – fines of VND 5 mil. to VND 20 mil.

• Group 2 – fines of VND 15 mil. to VND 50 mil.

• Group 3

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Points of Discussion

• Overview of the Competition Law • Coverage of the Law • Law Enforcing mechanism • Recent cases

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Law Enforcing mechanism

• Law enforcing agencies – Vietnam competition Administration

Department (VCAD) • Established by Decree No. 06/2006/ND-CP • 34 persons in 2006

– Vietnam Competition Council (VCC) • Established by Decree No. 05/2006/ND-CP • 11 commissioners

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Law Enforcing mechanism

VCAD VCC Settlement of case

- not required - VCC Organizes hearings

VCAD VCAD Review of investigation result

VCAD VCAD Official investigation

VCAD VCAD Preliminary investigation

VCAD VCAD Dossiers evaluation

VCAD VCAD Receives complaint dossiers

Unfair competition

Restrictive competition

Case handling milestones

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Points of Discussion

• Overview of the Competition Law • Coverage of the Law • Law Enforcing mechanism • Recent cases

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Recent cases

• Competition restrictive cases – 2 cases concerning the abuse of dominance in beer & ice-

production – Both 2 cases are ongoing process: further evidences

requested • Unfair competition cases

– 1 case concerning the use of misleading indications in pharmaceutical industry

– VCAD findings • Concerned acts, which supported by evidences were committed

before the CL took effect • Insufficient evidence of violation

– Case has been closed • Consultations

– 2 consultations ( 1 ongoing): settled in cooperation with the Ministry of Industry

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VCAD – MINISTRY OF TRADE 21 Ngo Quyen, Hoan Kiem, Hanoi Tel: +84 4 8262538 Fax: +84 4 9360385 Email: [email protected] Website: www.vcad.gov.vn; www.qlct.gov.vn

For further information?

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THANK YOU!