Draft Of New Competition Law In Vietnam.

 

26 April, 2017

 

 

A draft of the new Competition Law (Draft Law) has been recently posted on the Government Portal for public review and commentary. The finalized Draft Law is expected to be submitted to the National Assembly in October 2017 and adopted in May 2018.

 

A summary of the key changes that are proposed in the Draft Law are set out below:

 

1. Introduction of a leniency program for anti-competitive agreements

 

Unlike the current Competition Law1, under the Draft Law, a company that has engaged in an anti-competitive agreement may be entitled to leniency (i.e., exemption or reduction of sanctions, if a company voluntarily reports their participating in a cartel to the competent authority). The competent authority’s decision on whether or not to apply leniency towards the leniency seeking company will depend on certain guidelines specified in the Draft Law. While it will take time to evolve, introduction of the new leniency program implies that Vietnamese authorities are more than ever committed to fight cartels.

 

2. Introduction of "Significant Market Power" criteria for determining the market-dominant position

 

In addition to the existing market shares criteria under the current Competition Law, the Draft Law introduces a new concept to determine the market-dominant position of a company – “significant market power”. Factors to determine the significant market power of a company include, but are not limited, to the following:

 

• the capability of accessing and controlling the consumption/ supply market;
• the financial capacity of the company;
• the technological capacity of the company; and/or
• the facilities of the company.

 

3. Changes to the approach on economic concentration

 

Currently, an economic concentration of enterprises that have a combined market share of 50% or more in the relevant market is prohibited under the Competition Law. The Draft Law, however, would prohibit all economic concentrations which can potentially have a significantly negative impact on competition in the relevant Vietnamese market. With this new regulation, the Draft Law is proposing to expand its scope of control to include both vertical and mixed transactions, instead of just regulating horizontal transactions.

 

Moreover, the Draft Law set out new economic concentration notification thresholds as follows:

 

• either party holding 20% market share or having total annual revenue of VND 500 billion (about USD 23 million) in the year prior to the transaction; or
• value of the transaction from VND300 billion (about USD 13 million).

 

4. Removal of certain unfair competition practices

 

The Draft Law removes certain unfair competition practices which have been already regulated in other legal documents (e.g., Intellectual Property Law and Advertising Law) to avoid overlap. These practices include misleading instructions, advertisement aimed at unfair competition, promotion aimed at unfair competition, and illegal multi-level selling of goods.

 

5. Restructuring of the existing competition authorities

 

As a way to enhance efficiency and management of cases, the Draft Law consolidates the Competition Council and the Competition Authority into one single body, the National Competition Commission.

1 Competition Law No. 27/2004/QH11, which was adopted by the National Assembly on 3 December 2004 and took effect on 1 July 2005.

 

 

For further information, please contact:

 

Chi Anh Tran, Baker & McKenzie

chianh.tran@bakermckenzie.com