Introduction
At the end of October 2018, the Ministry of Industry and Trade (MOIT) published the first draft of a new Decree on Making Detailed Provisions For And Guiding Implementation Of A Number Of Articles Of The Law On Competition (“Draft”) with the objective of providing guidelines of the new Law on Competition No. 23/2018/QH14 which shall be effective from the 1st day of July 2019 (“New Competition Law”).
According to the New Competition Law, there are 13 areas for which the Government shall have to set forth procedures or provide guidelines. With this background, the Draft includes 59 articles separated into 8 chapters and focuses on:
(i) Related markets and market share;
(ii) Assessment of substantial anti-competitive effects caused or probably caused by restricted-competitive agreements;
(iii) Significant market power;
(iv) Economic concentration; and
(v) Competition proceedings and clemency policy.
Draft Main Points
The main points of the Draft are:
(i) Determining what is the related market (Chapter II)
- Determine the ability to replace supply: The Draft specifies the factors to determine the ease and ability to substitute goods and services in terms of characteristics, use purposes and prices. For the terms of characteristics, it is determined by the characteristics of the goods or services, main components, physical properties, chemical properties, technical features, side effects, ability of consumers to , other specific characteristics.
- Determine what is the related geographical market: The Draft specifies the elements for determining geographical boundaries in which goods and services may be interchangeable with similar competition conditions and differ significantly from nearby geographical areas. Those elements include: business establishments of enterprise and other related enterprise, transportation costs, delivery time, barriers to entry or expansion of the market, consumer habits and costs, time for consumers to purchase goods and services in neighboring areas, characteristics of goods, services and geographical area.
(ii) Assessment of substantial anti-competitive effects caused or probably caused by restricted competition agreements (Chapter III)
The Draft provides guidelines for 6 factors (mentioned in Article 13.1 of the New Competition Law) based upon which the National Competition Commission shall assess substantial anti-competitive effects caused or probably caused by a restricted competition agreement. Accordingly, depending upon the specific case, the most important factor shall be specified in the investigation and could be adjusted based upon the evidence and data.
Regarding the market share of enterprises participating in the agreement, the level to control is in case of when the combined market share of the participating enterprises is 10% or more.
(iii) Specify significant market power (Chapter IV)
The Draft provides guidelines for 9 factors mentioned in Article 26.1 of the New Competition Law) based on which market power of an enterprise or group of enterprises is determined.
(iv) The notification threshold of economic concentration (Chapter V)
The threshold relevant to assessing economic concentration under the Law is that:
a) one of enterprises participating in the economic concentration has total assets in the Vietnam market of 1,000 billion VND or more in the fiscal year preceding the year of implementing economic concentration.
b) the Transaction value of economic concentration is 500 billion VND or more,
c) One of enterprises participating in the economic concentration has total revenue in the Vietnamese market of 1,000 billion VND or more in the fiscal year preceding the year of implementing economic concentration, or
d) The combined market share of enterprises participating in the economic concentration is 30% or more in the relevant market in the fiscal year preceding the year of implementing economic concentration.
In addition to the above, the Draft also provides guidelines for economic concentration which occurs beyond Vietnam.
Consultation
After publicizing the Draft, MOIT held some seminars for receiving feedback on the Draft. Many articles in the Draft have received very different opinions. The new Competition Law shall be effective from the 1st day of July 2019 and the guiding Decree is also planned to take effect from the 1st day of July 2019. It is expected that the second version the Draft shall be publicized soon.
