Written by Partner Ngoc Anh Bui, Counsel Ngan Nguyen, and Associate Viet Tran

1. Establishment of Viet Nam Competition Commission (VCC)  

On 10 February 2023, the Government issued Decree 03/2023/ND-CP on the functions, duties, powers and organizational structure of VCC (“Decree 03/2023”). Decree 03/2023 designates VCC as the primary regulatory authority tasked with overseeing matters related to anti-trust regulations and broader competition concerns.  

Since the effective date of Law on Competition No. 23/2018/QH14 adopted by the National Assembly of Vietnam (“Law on Competition 2018”) (i.e., 1 July 2019), Viet Nam Competition and Consumer Authority (“VCCA”) has not been granted with the authority to conduct investigations and settlement procedures in accordance with Law on Competition 2018 since this specific jurisdiction rests within the purview of VCC. The principal function of VCCA entails the reception of complaints pertaining to actions suggestive of competition law breaches. Subsequently, VCCA undertakes an elucidative role in these cases and offers requisite recommendations to curtail unfair market competition practices. It is instrumental in assembling records that shall be processed upon the establishment of VCC.

Effective from 1 April 2023, VCC will assume authoritative control over matters encompassing anti-competitive agreements, the abuse of dominant or monopoly market positions, prohibited unfair competitive practices, and economic concentration, or the clearance of merger filings.     

The establishment of VCC comes as a significant milestone after a prolonged period of anticipation. This regulatory body’s inception marks a pivotal moment in reinforcing competition and consumer protection in Vietnam’s market landscape. VCC’s authoritative jurisdiction over matters encompassing anti-competitive agreements, market dominance, unfair competitive practices, and economic concentration is expected to add a substantial layer of accountability and transparency to the Vietnamese business environment.

2. Anti-competitive agreements

Law on Competition 2018 outlines various types of anti-competitive agreements, including but not limited to the following:   

• agreements fixing the price of goods and services;
• agreements to share customers or to share consumer markets or sources of supply of goods and services;
• agreements in order for one or more parties to the agreement to win a tender when participating in tendering for supply of goods and services;
• agreements which exclude from the market other enterprises not parties to the agreement; and
• other agreements which have or may have an anti-competitive impact.

Since the effective date of Law on Competition 2018 (i.e., 1 July 2019), based on our public search, there are several instances of potentially prohibited anti-competitive agreements reported to VCCA, outlined as follows:

• Entrance into an agreement whereby the contractual parties agree to not sell the goods to non-contractual parties

An Phu Company claimed that B.Braun Vietnam Co., Ltd. and Central Pharmaceutical Company No. 1 – CPC1 may have violated the regulations on prohibited anti-competitive agreement on the ground that these two companies have entered into an agreement wherein they committed to refraining from selling their products to specific companies, including An Phu Company. In response to this matter, VCCA had requested the parties to explain and provide relevant information. Subsequent to these actions, An Phu Company successfully procured the products from B.Braun Vietnam Co., Ltd. 

• Suspicious agreement fixing the price of goods

Bac Trung Co., Ltd., a construction company, claimed that despite the global reduction in input material prices during the Covid-19 pandemic, the corresponding decrease was not mirrored in Vietnam. In response, VCCA initiated a preliminary assessment by examining the cost variations of specific materials including steel, brick, cement, and stone. This investigation revealed that the price of raw materials during the initial and second quarters of 2020 did not exhibit the alleged escalation as put forth by Bac Trung Co., Ltd. In fact, there were indications of a decrease. Isolated instances of supply chain disruption due to social distancing measures were identified as contributory factors to minor cost fluctuations, primarily observable in materials like sand and stone, which experienced an increase of approximately 5 to 10%.

• Other agreements which have or may have an anti-competitive impact

Hiep Thanh Co., Ltd., an agent representing Bayer Viet Nam, lodged a complaint highlighting discriminatory practices employed by Bayer Viet Nam, a prominent pesticide manufacturer. The grievance pertained to varying discount policies implemented for its agents. Notably, Bayer Viet Nam had instituted a distinct discount policy that granted more favorable incentives to agents in An Giang province, exceeding 20%, in contrast to agents situated in other regions in the southern part of Vietnam. This disparate treatment resulted in an inequitable competitive landscape, causing detriment to the other agents. Following an evaluation undertaken by VCCA, Bayer Viet Nam acknowledged the potential adverse implications of its actions on the competitive dynamics of pesticide products in the southern provinces. Consequently, Bayer Viet Nam voluntarily rescinded the preferential policy.   

3. Abuse of dominant market position and abuse of monopoly position

Law on Competition 2018 enumerates several prohibited actions pertaining to the abuse of dominant market position or the abuse of monopoly position, encompassing, though not exhaustively, the following:    

• selling goods or providing services below total prime cost, which results in or is capable of resulting in excluding competitors;
• imposing unreasonable purchase or selling prices for goods and services, or fixing minimum re-selling prices which causes or is capable of causing loss to customers;
• restraining production or distribution of goods or services, limiting the market, or hindering technical and technological development, which causes or is capable of causing loss to customers;
• imposing different commercial conditions in similar transactions, which results in or is capable of resulting in hindering other enterprises from participating in or expanding the market or excluding other enterprises; and
• hindering the participation in or expansion of the market by other enterprises.

Several practical cases have emerged in connection with the aforementioned regulations, exemplified as follows:

• In 2020, Compressed Natural Gas reported the indication of the abuse of a monopoly position concerning the supply of low-pressure gas products by Petro Vietnam Low Pressure Gas Distribution Joint Stock Company. Following an examination and verification of the submitted details, VCCA issued a warning to Vietnam Low Pressure Gas Distribution Joint Stock Company which was implicated in the alleged abuse of its monopoly position.
• In 2021, Truc Phuong Service Trading Co., Ltd lodged a complaint suggesting that the retail distribution and discount policy of Tupperware Vietnam Co., Ltd may potentially amount to an abuse of dominant market position and abuse of monopoly position. After reviewing of the market practice and assessing the information provided by both parties, VCCA initially determined that there existed inadequate grounds to establish that Tupperware Vietnam Co., Ltd has engaged in the abuse of its dominant or monopoly position.
• In 2021, a group of agents of Heineken, holding a market share of approximately 40% in the relevant market, lodged a complaint regarding a prohibition by Heineken on the sale of Sabeco products. In response, Heineken affirmed that it had not introduced such a policy or instructed its staff to enforce such actions. In light of the situation, VCCA intervened by urging Heineken to issue an official directive mandating its employees to adhere to both competition laws and the internal policies of the brewery company.  

4. Prohibited unfair competitive practices

Law on Competition 2018 outlines several prohibited unfair competitive practices, including but not limited to the following:   

• infringing secret information in business;
• coercing customers or business partners of another enterprise by threatening or coercive conduct in order to compel them not to make or to cease a transaction with such other enterprise;
• providing untruthful information about another enterprise by way of directly or indirectly spreading untruthful information about such other enterprise which adversely impacts on the reputation, financial position or business activities of such other enterprise;
• causing disruption to the business activities of another enterprise by way of directly or indirectly hindering or interrupting the lawful business activities of such other enterprise; and
• illegally inducing customers.

In 2020, VCCA addressed a total of 11 cases pertaining to prohibited unfair competitive practices. This number experienced an escalation, reaching 14 cases in the year 2022. Among these, VCCA was engaged in evaluating and deliberating upon 8 cases submitted for consideration, while concurrently initiating proactive assessment to elucidate 6 additional cases. Several illustrative examples are presented below:

• Viet Nam Dairy Products Joint Stock Company lodged a complaint against Duc Viet Confectionery Food Processing Facility, alleging that the latter had engaged in unauthorized manufacturing and distribution of confectionery products using the Vinamilk trademark. This activity led to consumer confusion, thereby constituting an act of unfair competition. Specifically, the replication of product appearance and packaging akin to those already established in the market signifies a form of unfair competition conducts, as stipulated in Article 45.5(a) of Law on Competition 2018.^[1] In response, VCCA intervened by directing Duc Viet Confectionery Food Processing Facility to desist from using or printing packaging bearing the Vinamilk brand, as well as discontinuing the production and processing of products using Vinamilk brand and other protected brands in accordance with regulations governing unfair competition.
• Air conditioners using Nanoe X Technology of Panasonic Vietnam Co., Ltd, products using ScentAir ION technology of Appliancz Vietnam Joint Stock Company, products using Airocide technology of Viet My Technology and Equipment Joint Stock Company, Blueair Health Protect air purifiers of ASH Vietnam Co., Ltd, Philips disinfection air cleaner of In Situ System Integration Co., Ltd, Covid Nano sterilization and disinfection sprayer of Thai Thang Electronics Co., Ltd. have been claimed by the manufacturers that the feature of those products containing the prevention or eradication of SARS-CoV-2 virus. VCCA’s examination revealed that such claims was largely based on test outcomes conducted under controlled laboratory conditions, involving restricted parameters such as materials, space, volume, air humidity, temperature, and other specialized circumstances, and has not been tested in real-world conditions. However, the product description above failed to explicitly convey or clarify these limitations, including:
• The information provided about the product promotion images is inadequate, lacking clarity or rendered too small to be read; or the information about product promotion videos is too fast to read;
• The information about functions of eradicating, inhibiting or preventing viruses is given on the basis of laboratory test results while limited conditions in laboratories are not specified or disproportionate to actual use conditions;
• The products offer no functions relating to Covid-19 but their name and function information are associated with Covid-19 such as CV19, virus killing (without specifying whether it is Covid-19 virus or not), etc.

Upon evaluation, VCCA reached the conclusion that the provision of information about the effect of preventing, inhibiting and eradicating the Covid-19, SARS-Cov-2 virus of the products as mentioned above showed signs of violating Article 45.5(a) of Law on Competition 2018. As a consequence, VCCA issued warning and requested the above enterprises to review and revise the information pertaining to their products to ensure the compliance with Law on Competition 2018.

• The case of Heineken discussed in Section 3 above may also be potentially subject to Article 45.2 of Law on Competition 2018.[2]

5. Economic concentration
 

• • Overall statistics

Set forth below are the statistics on the economic concentration dossiers published by VCCA:    

• Type of appraisal  

In 2021, a total of 3 transactions out of 130 underwent official appraisal. Similarly, in 2022, the count remained at 2 out of 154 transactions subject to the same process. VCCA, in its report, highlighted that these particular transactions necessitated officially appraisal due to the fact that the market share or the combined market share of the involved participant(s) surpassed 20% in the relevant market. It is noteworthy that the official appraisal procedure entails a greater degree of complexity compared to the preliminary appraisal, imposing greater demands in terms of both timing and documentation.  

• Geographical areas

One of the novel regulations introduced by Law on Competition 2018 is the inclusion of offshore economic concentration transactions within its regulatory purview. As a result, these offshore transactions may potentially fall under the ambit of the Law on Competition 2018 and consequently be subject to the merger filing obligation, contingent upon whether the offshore transaction possesses or could potentially yield a competition-restraining impact on the Vietnam’s market. Notably, certain offshore economic concentration transactions have indeed been subjected to merger filing requirement in Vietnam. As noted in Section 4.1 above, the volume of offshore transactions in the total merger filing submissions was 30.16%, 29.92% and 38.35% for the years 2020, 2021 and 2022, respectively.   

In their reports, VCCA elaborated on the rationale behind subjecting offshore transactions to merger filing requirement within Vietnam, clarifying that:

• the participating enterprises do not have commercial presence in Vietnam but have business activities in Vietnam through exporting goods to Vietnam or providing cross-border services; or
• the participating enterprises have commercial presence in Vietnam (subsidiaries, branches, authorized agents, etc.).        

In instances of economic concentration transactions performed outside the territory of Vietnam, VCCA has also engaged in consultation with various foreign competition authorities connected to the said transactions. This collaborative approach has been adopted to facilitate the exchange and dissemination of pertinent information. Such consultations aim to bolster the evaluation process concerning the potential implications or likelihood of anti-competitive effects associated with these economic concentration transactions within the Vietnamese market.

• Form of economic concentration

Since 2020, more than 78% of merger filing dossiers are in the form of acquisition. Whereas, there is only 1 transaction is made in the form of consolidation.    

• Source of data

Law on Competition 2018 does not explicitly specify the sources of data required for calculating market share within the context of merger filing dossier. However, in practice, both MOIT and VCCA previously, as well as VCC presently, have demonstrated a tendency to only accept data provided by Vietnamese competent authorities, reputable market research companies and other reliable sources. In addition, VCCA has actively maintained the updating of its market database, while concurrently establishing its proprietary repository of sales and asset-related information spanning diverse sectors. This compilation aids in the supervision of economic concentration within the market. After more than four years since the enactment of the Law on Competition 2018, Vietnamese competition authorities may have progressively amassed an extensive database encompassing various sectors. This repository facilitates the verification of data submitted by companies within merger filing dossiers, while concurrently reinforcing the enforcement of merger filing obligations for participants engaged in economic concentration transactions.       

• Administrative fines

According to the outcomes of our public research, no instances have come to our attention involving administrative fines imposed due to the non-submission of merger filing dossiers. It is important to note that this situation could be attributed to the absence of VCC until the issuance of Decree 03/2023. Since the establishment of VCC, it holds the capacity to undertake proactive assessments of economic concentration transactions, even retroactively for transactions that have already concluded. This authority extends to the potential imposition of administrative fines if circumstances warrant such actions.      

• Practical notes

Since the implementation of the Law on Competition 2018, several noteworthy observations have emerged from a practical standpoint, including:  

• Certain economic concentration transactions performed outside the territory of Vietnam exhibit a high degree of complexity, often entailing multiple intricate steps, stages, and a blend of diverse forms within a single transaction. Consequently, the assessment of economic concentration necessitates a comprehensive and inclusive approach, encompassing the entirety of steps, stages and forms encompassed by a transaction. This practice diverges from a limited focus on isolated steps, stages, or singular forms that would be inadequate to capture the intricacies inherent in such transactions.
• The complicated nature of economic concentration transactions requires a comprehensive assessment of the anti-competitive effects. This assessment should encompass both direct and indirect effects. Additionally, it is imperative to forecast the possible anti-competitive repercussions that these transactions might engender. Such a comprehensive approach is vital in order to adequately grasp the multifaceted impact these transactions could have on competition within the market.
• The intra-group restructuring may also trigger the merger filing obligation.
• In the case of economic concentration transactions taking place outside Vietnam, VCCA has engaged in consultations with various foreign competition authorities linked to these transactions. The aim of such consultations is to facilitate the exchange and dissemination of pertinent information. This collaborative effort is designed to aid in assessing the potential impact and the likelihood of anti-competitive effects arising from these economic concentration transactions within the Vietnamese market. The same approach is expected to be continued by VCC going forward.
• VCCA regularly reviews economic concentration transactions within the market. This involves the continual updating and synthesis of statistical data pertaining to the landscape of mergers, acquisitions, and joint ventures involving both domestic enterprises and foreign entities engaged in business activities within Vietnam. The same approach is expected to be continued by VCC going forward.
• VCCA additionally assumes a proactive role in researching and evaluating economic concentration transactions taking place in the market. As part of this proactive stance, VCCA reaches out to the involved participants, soliciting explanations and relevant. The same approach is expected to be continued by VCC going forward.

A case in point is the year 2019, during which VCCA requested the participants in the subsequent economic concentration transactions to furnish explanations and pertinent data for review:

• the merger of VinCommerce General Commercial Services Joint Stock Company and VinEco Agricultural Production Development Investment Co., Ltd. into Masan Group; and
• the acquisition of shares in Hau Giang Pharmaceutical Joint Stock Company by Taisho Pharmaceutical Co. Ltd., of Japan.

[1] Article 45.5(a) of Law on Competition 2018: Providing false or misleading information to customers about an enterprise or goods, services, promotion or transaction conditions for goods or services provided by such enterprise in order to attract the customers of another enterprise

[2] Coercing customers or business partners of another enterprise by threatening or coercive conduct in order to compel them not to make or to cease a transaction with such other enterprise.

[3] Among the submitted merger filing dossiers, there are some dossiers returned by the authority while some others were withdrawn by the applicants. These figures are calculated based on the dossiers received the results from the authority.

[4] These 5 dossiers were submitted after the effective date of Law on Competition 2018.

[5] 13 out of 125 economic concentration transactions performed from July 2019 to June 2021 are subject to official appraisal.  

[6] Among the submitted merger filing dossiers, there are some dossiers returned by the authority while some others were withdrawn by the applicants. This figure is calculated based on the dossiers received the results from the authority.