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INTRODUCTION OF THE LAWS ON INTRODUCTION OF THE LAWS ON ABUSE OF DOMINANT POSITION AND ABUSE OF DOMINANT POSITION AND

ABUSE OF MONOPONY POSITION IN VIETNAMABUSE OF MONOPONY POSITION IN VIETNAM

Speaker: Mr. Trinh Anh Tuan

Official

Vietnam Competition Administration Department

Ministry of Trade

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OutlineOutline

I. THE VIETNAM COMPETITION LAW

II. COMPETITION PROCEEDINGS

III. REMEDIES ON VIOLATIONS

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The Competition LawThe Competition Law

The Competition Law has been passed on December 3, 2004 by the XIth National Assembly of the Socialist Republic of Vietnam at its 6th session.

Legal enforcement: from the 1st July, 2005.

Purpose: Create and maintain a fair and equal competitive environment and protect letigimate rights and interests of enterprises and consumers.

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Scope of regulationScope of regulation

Competition-restricting acts

Unfair competition acts

Order and procedures for settling competition cases

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COMPETITION RESTRICTION ACTSCOMPETITION RESTRICTION ACTS

Competition restriction agreements

Abuse of dominant position on the market, abuse of monopoly position

Economic concentration

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• Dominant position on the market?

- One enterprise (> 30% or capable of restricting competition considerably)

- A group of enterprises (50, 60, 75%)

• Monopoly position?

Abuse of dominant position on the market, abuse of Abuse of dominant position on the market, abuse of monopoly positionmonopoly position

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Capable of Restricting Competition ConsiderablyCapable 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.

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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

Prohibited acts of abusing the dominant position on the marketProhibited acts of abusing the dominant position on the market

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Prohibited acts of abusing the monopoly positionProhibited 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

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CoCompetition mpetition ProceedingsProceedings

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The competition proceedingsThe competition proceedings

Initiated on Application receivedInitiated on Application received Decision of D.G. of VCADDecision of D.G. of VCAD

VCADVCAD

Preliminary InvestigationPreliminary Investigation

Official InvestigationOfficial Investigation

Report on InvestigationReport on Investigation

Competition CouncilCompetition Council

Public HearingPublic Hearing

Final DeterminationFinal Determination

Investigation SuspendedInvestigation Suspended 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

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

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Grounds for investigationsGrounds 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.

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Preliminary investigationPreliminary investigation

Within 30 days, the Head of Competition Authority for one of the following decisions:

- Suspend investigation

- Continue official investigation;

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Official investigationOfficial 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.

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Verification of relevant marketVerification of relevant market

Relevant market includes relevant product markets and relevant geographical markets.

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Identification of relevant product marketIdentification 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?].

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Identification of relevant product marketIdentification 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.

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Identification of Identification of relevant geographical marketrelevant 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

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Determination of market share Determination of market share in relevant marketin 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.

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Time limit for official investigationTime 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.

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RemediesRemedies

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.

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Thank you for your attention!