New law designed to ensure healthy competition

Tran Phuong Lan, Head of the Economic Concentration Control Department of the Vietnam Competition and Consumer Authority under the Ministry of Industry

Could you indicate the major differences between the Competition Law 2018 and its 2004 version?

The Competition Law 2018 combines economic and legal thinking to enhance its feasibility. It contains eight amendments and supplements to the Competition Law 2004, created in the spirit of respect for business rights and maintaining state management at a reasonable level to ensure healthy competition.

Specifically, the Competition Law 2018 has a broader scope and contains amendments and supplements on banned activities and competition restriction deals. The new law tightens controls over unhealthy competition actions, reorganizes competition management authorities and streamlines procedures to deal with competition-related affairs.

What points make the new law progressive compared with its old version?

The Competition Law 2004 revealed limitations after it was in force for 12 years.

The Competition Law 2018 applies to all competition restriction actions and economic concentration transactions that take place beyond Vietnam’s territory but have a considerable impact on the Vietnamese economy. Its new approaches conform to the economic development trends, as well as the increased presence of multinational companies, mergers and acquisitions (M&A), as well as competition restriction.

Let’s take the acquisition of the Big C Vietnam supermarket chain by the Central Group (Thailand) as an example. The signing of this acquisition deal took place beyond Vietnam’s territory and therefore was not subject to the Competition Law 2004, although all companies supplying products for the supermarket chains were very interested in changes resulting from the acquisition. Vietnamese competition management authorities also considered the deal’s unfavorable impacts on domestic retailers and suppliers. However, they could not confirm whether the deal would restrict competition or not and therefore took no measure to ensure healthy competition. A national competition commission to be established under the Competition Law 2018 will have the right to intervene in such deals and propose suitable measures to ensure healthy competition.

Another example is related to maritime transport costs. Vietnamese shipping companies can be involved in tacit agreements that take place outside Vietnam’s territory to raise transportation costs. Prior to the promulgation of the Competition Law 2018, competition management authorities did not have the right to intervene in such cases although they received various complaints from goods owners.

What is the basis for the national competition commission to deal with affairs that take place outside Vietnam?

Item 7 in Chapter 8 of the Competition Law 2018 pertains to international cooperation in competition management. It will create a legal framework for Vietnamese competition authorities to cooperate with their counterparts in other countries to bring the law to life.

The new competition law is expected to create a healthy business environment for Vietnamese retailers and suppliers

How will the new law govern economic concentration activities?

The Competition Law 2018 considers economic concentration as a business right. The old law did not allow mergers between two companies if their combined market-share exceeded 50 percent. The new law gives businesses the right to make their own M&A decisions. However, the national competition commission will be responsible for assessing the adverse impacts of M&A deals on competition.

The law will contribute to promoting business development through economic concentration activities. The state will only intervene if economic concentration is found to have an adverse impact on the national competitive environment.