Competitive is one of basic rules of market economy and an important element for the development of the economy. In the light of international economic integration, competitive in Vietnam is taking place on a broader scale with a degree of severity in all areas. According to some recent statistics and reports of the Competitive Administration Department of Vietnam, competitive-related cases that had been investigated and settled mainly regards acts of anti-competitive practices and anti-competitive agreement. So, through this article, BLawyers Vietnam will provide you an overview of regulations of Vietnamese competitive law on which anti-competitive agreements are not allowed.
What are forms of anti-competitive agreement pursuant to the prevailing law of Vietnam?
Law on Competitive of 2018 (“LOC 2018”) defined anti-competitive agreements as arrangements made by parties in any forms, which cause or may cause anti-competitive effects. The LOC regulated 11 types of anti-competitive agreements, including:
1. Agreements on directly or indirectly fixing goods or service prices;
2. Agreements on distributing customers, consumption market, sources of supply of goods, provision of services;
3. Agreements on limiting or controlling the quantity, volume of produced/ purchased/ sold goods or provided services;
4. Agreements for one of more parties to the agreements to win tenders when participating in tenders for supply of goods or services;
5. Agreements on preventing, restraining, disallowing other enterprises from entering the market or develop business;
6. Agreements on abolishing from the market enterprises other than the parties to the agreements;
7. Agreements on restricting technical or technological development and investments
8. Agreement on imposing on other enterprises conditions for signing of goods or services purchase or sale contracts or forcing other enterprises to accept obligations which have no direct connection with the subject of such contracts;
9. Agreements on not trading with enterprises other than the parties to the agreements;
10. Agreements on restricting consumption market, sources of supply of goods and services from enterprises other than the parties to the agreements; or
11. Other agreements that cause or may cause anti-competitive effects.
Which anti-competitive agreements are prohibited to conduct?
Almost anti-competitive agreements is to seek profit at all costs. However, the Government does not control all anti-competitive agreements since there are still anti-competitive agreements having a positive impact on the market. Therefore, the LOC 2018 has provided two levels of method dealing with anti-competitive agreements, including the implicit prohibition principle and the impact assessment prohibition principle.
In which, the implicit prohibition principle is applied to 04 types of anti-competitive agreements among enterprises, including:
1. Price fixing agreement;
2. Agreement on division of customers, distribution of markets, sources of goods and services;
3. Agreement to limit or control the quantity and volume of production, purchase, sale of goods or provision of services; and
4. Agreement on allowance one or both parties of agreements to win a tender when participating in tenders for the supply of goods or services.
The impact assessment prohibition principle is applied to a number of types of anti-competitive competitive agreements that cause or are likely to cause a significant anti-competitive effect on the market if parties to an agreement are rivals for each other and for all acts of anti-competitive agreements (except for 03 types: (i) agreement for one or both parties to the agreement to win a bid when participating in bidding in supplying supply of goods and services; (ii) agreement to prevent, restrain or prevent other enterprises from participating in the market or develop business; and (iii) agreement to remove from the market enterprises which are not involved parties of agreement) when exerting or potentially exerting a significant anti-competitive effect on the market in the event that the parties to the agreement are enterprises operating at different stages of the same chain production, distribution and supply of a certain type of goods or service).
How do Vietnamese competent authorities assess substantial anti-competitive effects caused or probably caused by anti-competitive agreements?
Regarding assessment of substantial anti-competitive effects caused or probably caused by anti-competitive agreements, the National Competition Commission of Vietnam (“NCC”) shall assess the substantial anti-competitive effects based on:
1. Market share of the enterprises engaging in the agreement;
2. Barriers to market entry and expansion;
3. Limitations to technological research, development, renovation or technological capacity limitation;
4. Reduction in accessibility or ownership to essential infrastructure;
5. Increase of customers’ costs and time for buying goods and services of the enterprises engaging in the agreement or customers’ switching to other related products; and
6. Obstruction of competitive in the market through control of other specific factors in the sectors and domains related to the parties engaging in the agreement.
When an anti-competitive agreement is exempted from prohibition pursuant to the LOC?
Some types of anti-competitive agreements that belong to the prohibition group may be considered for exemption if they meet one of the following conditions and are beneficial to consumers, including: (i) promoting technical and technological advances, raising the quality of goods, services; (ii) increasing the competitiveness of Vietnamese enterprises on international market; (iii) promoting the single application of quality standards and technical norms of product categories; (iv) agreeing on conditions for contract performance, goods delivery and payment, which are not related to prices and price elements.
Procedure for applying for exemption:
In terms of procedure, enterprises intending to enter an illegal anti-competitive agreement must apply for exemption to the NCC. Within 07 working days from receipt of an exemption application, the NCC shall notify the applicant in writing that whether the application is complete and valid. If the application is incomplete or invalid, the NCC shall notify the applicant in writing of which matters should be reconsidered and allow them 30 days to make amendments from the date of notice. Upon expiry of 30 days, if no amendment is made or the application is not amended completely, the NCC shall return the application.
After receiving a notice certifying that the application is complete and valid, the applicant shall pay an amount of appraisal fee as prescribed in law on fees and charges. The application is accepted when the applicant fully pays the appraisal fee. Please note that time limit for granting exemption is 60 days from the date on which the application is accepted. Additionally, the exemption period which is no longer than 05 years from the date of issuance of exemption decision.
What kinds of legal consequence could be subject if violating regulations of on anti-competitive agreements of the LOC 2018?
If failing to comply a regulation of the LOC 2018 on anti-competitive agreements between enterprises engaging in the same relevant market or entered into by enterprises doing business in different stages of the same chain of production, distribution or supply of a certain type of goods or services, enterprises shall be imposed a fine ranging from 01% to 05% or 10% of total turnover which was earned from the relevant market in the financial year preceding the year. Additionally, profits illegally earned from the violation shall be confiscated and the violating entities are forced to remove illegal terms and conditions from business contracts, agreements or transactions.[/vc_column_text][/vc_column][/vc_row]