INTRODUCTION OF THE LAWS ON ABUSE OF DOMINANT

INTRODUCTION OF THE LAWS ON ABUSE OF DOMINANT POSITION AND ABUSE OF MONOPONY POSITION IN VIETNAM Speaker: Mr. Trinh Anh Tuan Official Vietnam Competition Administration Department Ministry of Trade 1

Outline I. THE VIETNAM COMPETITION LAW II. COMPETITION PROCEEDINGS III. REMEDIES ON VIOLATIONS 2

The Competition Law has been passed on December 3, 2004 by the XIth National Assembly of the Socialist Republic of Vietnam at its 6 th session. Legal enforcement: from the 1 st July, 2005. Purpose: Create and maintain a fair and equal competitive environment and protect letigimate rights and interests of enterprises and consumers. 3

Scope of regulation Competition-restricting acts Unfair competition acts Order and procedures for settling competition cases 4

COMPETITION RESTRICTION ACTS Competition restriction agreements Abuse of dominant position on the market, abuse of monopoly position Economic concentration 5

Abuse of dominant position on the market, abuse of monopoly position Dominant position on the market? - One enterprise (> 30% or capable of restricting competition considerably) A group of enterprises (50, 60, 75%) Monopoly position? 6

Capable of Restricting Competition Considerably Financial capacity of the enterprise. Financial capacity of the organizations and individuals which established the enterprise. Financial capacity of the organizations and individuals with the right to control or govern the operations of the enterprise in accordance with the provisions of law or the charter of the enterprise. Financial capacity of the parent company. Technological capability. Ownership of or right to use intellectual property objects. Scale of distribution network. Other bases considered appropriate by the administrative body for competition [and/or] by the Competition Council. 7

Prohibited acts of abusing the dominant position on the market 1. Selling goods, providing services at prices lower than the aggregate costs in order to eliminate competitors 2. Imposing irrational buying or selling prices of goods or services or fixing minimum re-selling prices causing damage to customers. 3. Restricting production, distribution of goods, services, limiting markets, preventing technical and technological development, causing damage to customers 4. Imposing dissimilar commercial conditions in similar transactions in order to create inequality in competition 5. Imposing conditions on other enterprises to conclude 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 6. Preventing new competitors from entering the market 8

Prohibited acts of abusing the monopoly position Acts defined in Article 13 of this Law Imposing unfavorable conditions on customers Abusing the monopoly position to unilaterally modify or cancel the contracts already signed without plausible reasons 9

Competition Proceedings 10

The competition proceedings Initiated on Application received Decision of D. G. of VCAD Preliminary Investigation Suspended Official Investigation Report on Investigation Competition Council Public Hearing Issues to be verified: -relevant market -market share of the parties subject to investigation -evidence and gathering of further evidence -Identification of the unhealthy competitive practices Final Determination 11

Grounds for investigations 1. Complaints of organizations/individuals assuming infringement of interests caused by a an act violating the Law 2. Competition Agency seeing indications of violations to the Law. 12

Preliminary investigation Within 30 days, the Head of Competition Authority for one of the following decisions: - Suspend investigation - Continue official investigation; 13

Official investigation Matters to be verified: a. Verification of relevant market b. Verification of investigated party’s market share in relevant market; c. Collection & analyze evidence of violation. 14

Verification of relevant market Relevant market includes relevant product markets and relevant geographical markets. 15

Identification of relevant product market Relevant product market: a market of substitutable goods or services in terms of characteristics, usage and prices Bases for determination of products’ characteristics (a) Physical features; (b) Chemical features; (c) Technical features; (d) Side effects on the user; (dd) Ability to absorb [assimilate? ]. 16

Identification of relevant product market Determination of product’s purpose of usage and price: - product’s purpose of use is the main usage of that product. - price of product/service is the retailing price listed in accordance to legislations on price listing. 17

Identification of relevant geographical market Relevant geographical market is a specific geographical area within which enterprises compete with each other in buying/selling of goods under similar competitive conditions that are considerably different from adjacent areas 18

Determination of market share in relevant market Enterprise’s share of a product/service is percentage of the enterprise’s output sales out of total sales of all dealers of the products in relevant market/percentage of the enterprise’s input buy out of total input buy of all dealers of the product in relevant market by month, quater & year. Combined market share: total share in relevant market of enterprises engaging in anti-competitve agreements or economic concentration. 19

Time limit for official investigation Time 6 months from decision of official investigation Extension: 2 times possible, no more than 60 days each. Extension must be notified to relevant parties within 7 working days prior to expiry of the time limit. 20

Remedies Fines - Up to 5% - 5%-10% Additional sanctioning forms and Consequence remedying measures : - Confiscation of exhibits and means used for commission of violations of competition legislation. - To restructure the enterprises having abused their dominant position on the market; - To divide or split the merged or consolidated enterprises; to force the resale of the acquired enterprise parts; - To remove illegal provisions from the business contracts or transactions. 21

Thank you for your attention! 22