Nov 12, 2018 / 08:25

New law designed to ensure healthy competition

The law, which features eight amendments to the Competition Law 2004, respects business rights and maintain state management at a reasonable level to ensure healthy competition.

The revised Competition Law 2018, which will take effect from July 1 next year, is expected to create a fair, healthy and transparent business and economic environment.
 
The new law can cover foreign manipulative behaviors affecting Vietnam’s market
The new law can cover foreign manipulative behaviors affecting Vietnam’s market
According to Tran Phuong Lan, head of the Economic Concentration Control Department of the Vietnam Competition and Consumer Authority, the new law covers many  provisions attuned to international   practices and is based on a combination of economic and legal ideas to increase the effectiveness of enforcement.
The law, which features eight amendments to the Competition Law 2004, respects business rights and maintain state management at a reasonable level to ensure healthy competition, Lan said.
“Specifically, the law has a broader scope and contains amendments on banned activities and competition restriction deals besides tightening controls over unfair competition actions, reorganizes competition management authorities and streamlines procedures to deal with competition-related affairs,” Lan said.
Under the bill, enterprises have the right to compete freely in accordance with the law and that the government guarantees their legitimate competition rights. Competitive activities shall be conducted on the principles of honesty and fairness without infringing upon the interests of the state, enterprises and consumers.
In addition, the new law will contribute to promoting business development through economic concentration activities.
“The amended Competition Law 2018 considers economic concentration as a business right. The previous version of the  law did not allow mergers between two companies if their combined market-share exceeded 50 percent. The amended 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,” Lan said.
The amended law also prohibits practices which have or may potentially restrict competition. Phung Van Thanh, deputy head of the Department of Investigation of Anti-Competitive Practices under the Vietnam Competition and Consumer Authority, stressed if enterprises entered into a cartel arrangement to increase prices, it would affect millions of consumers in Vietnam.
“However, there are some exceptions, like exporters taking part in a cartel to raise prices in overseas markets to generate more revenue and jobs for Vietnam, or a group of domestic television stations negotiating to get the best price on broadcasting rights for international sports programs,” Thanh said.
Cross-border deals under control
Notably, foreign enterprises manipulating the Vietnamese market from abroad and causing negative impacts to the country are now for the first time under the jurisdiction of the Competition Law 2018.
According to Lan, the amended law expands government to all transactions and forms of economic concentration that take place outside of Vietnam, but have anti-competitive effects on the Vietnamese market.
Taking the M&A case for the BigC supermarket chain by Thai Central Group as an example, Lan said, when the Thai group bought BigC Vietnam 2016, many businesses providing products to BigC raised concerns as the acquisition could have negatively affected their previously signed contracts.
In this case, although there were many potential pitfalls for the domestic market and retailers supplying BigC, it was difficult for the Vietnamese agencies concerned to take measures to deal with the case following regulations under the old competition law, as the transaction took place outside the territory of Vietnam.
“However, similar transactions taking place from July 1, 2019 will be dealt with in accordance with the Competition Law 2018. There will be evaluations and suitable measures to ensure a fair and healthy competitive environment as well as protect the relevant stakeholders in the market,” she said, noting that the Vietnam Competition and Consumer Authority will join forces with foreign organizations to investigate cross-border M&A deals.