Competition

Vietnam Law on Competition is effective since July 1^st 2005. Compared to other countries, the issuance of this law late, however the law covers some progressive regulations, especially modifications relating to behaviors and actions by the state owned enterprises which are not yet regulated by other countries. The competition Law has created a fair ground for all types of enterprises, provided legal foundations for a fair competition environment. Vietnam Competition Administration Department and Vietnam Competition Council (VCC) is the direct state management agencies relating to competition activities.

Enterprises working in Vietnam are free for their competition in line with legal framework. The state protects legal competition in doing businesses. The state management agencies must not have any behaviors or activities which limit or prevent the competition activities in markets such as requiring individuals, enterprises or businesses to purchase/sell/provide services with specified enterprises which are nominated or introduced by the state management agencies. Except for goods and services which are the state autonomy or in cases of emergency; the state management agencies must not discriminate among businesses or enterprises, imposing these enterprises or businesses to make alliance in order to eliminate or limit or create barrier to other businesses or enterprises in the competition market. 

During the operation, enterprises are not entitled to negotiate limitations to competition such as negotiation for imposing prices of goods and services; negotiations for consuming market allocation and source providers of goods and services; negotiations for limiting or controlling quantity and volumes of production, purchase/sales of goods and services; negotiations for restriction on techniques, technology and investment etc. if the negotiation parties have relevant market proportions of 30% upwards. Negotiations limiting competition are exempted for certain duration if they meet one of the following conditions: price reduction benefiting consumers; promotion of techniques, technology and increase of goods-services quality; consistency on business conditions, delivery, payment without interfering prices and price factors; promotion of competition of Vietnamese small and medium enterprises in the international markets.

 

In Vietnam, enterprises are considered having dominant position in market if they have market share of 30% upwards in the market areas which they might have influencing roles to competition. For enterprises, the market shares applied are 50% upwards (2 enterprises) and 65% upwards (3 enterprises) and 75% upwards (4 enterprises). Enterprises considered as having autonomy in the related market if they have no competitors in their related services or products. Dominant enterprises or monopoly sectors shall not be allowed to conduct any behaviors which are harmful to competition freedom such as selling products, service provision using lower prices in order to defeat competitors; imposing inappropriate fixed prices for purchasing or sale prices of services and products or imposing minimum sale prices causing loss to clients; imposing different commercial and trade conditions in similar transactions in order to cause unfair competition; or preventing market participation of new competitors etc.

 

In business, enterprises can carry out economic concentration activities under forms of merging, consolidation and acquisitions or buying from previous enterprises or joint ventures between enterprises. However, Vietnamese legal system prohibits any economic concentration activities if market shares of the enterprises account for 50% of the relevant markets. Except for cases of parties involved in economic concentration activities are under high possibility of bankruptcy or dissolution or the economic concentration activities shall enhance the expansion of exports activities or socio-economic, advanced techniques and technology development. In case of insurance companies, credit organisation which would like to buy enterprises from current entrepreneurs in order to sell out later with the maximum timeline of 1 year, it is not considered as economic concentration activity if new entrepreneurs who buy enterprises from the previous entrepreneurs are unable to control or influence the sold enterprises or execute this obligation within compulsory framework on purposes of re-selling.

 

 

The Vietnam law on Competition prohibits enterprises from unfair competition actions such as providing misleading instructions, infringing business secrets, coercion in business, disruption of other enterprises; defamation of other enterprises; advertisement aimed at unfair competition, promotion aimed at unfair competition; discriminative behaviors of the enterprise associations; illegal multi level selling of products etc.

 

Organisations, individuals can send a complaint for their legal rights and benefits if they believe that they are exploited and harmed by competitors behaviors to the government competent competition management office. Limitation period of a complaint for unfair competition and deadline for making a decision on an investigation of unfair competition made by the government competition management agency is 2 years from the date on which the alleged breach of the Competition Law occurred .

 

Any organisations or individuals violating the competition law shall be fined or penaltised. A fine can reach to 10 % of the total turnover for the preceding financial year of its breached activities. Depending on the seriousness of the offence, additional sanctions may also be imposed, such as contract amendment, corporate restructure or divestiture.