ANTI-CARTEL ENFORCEMENT IN VIETNAM

Presented by: Le Thanh VinhVietnam Competition Administration Department – Ministry of Trade

Seoul, 07/04/2006

OUTLINE

Cartel situation in Vietnam; Anti-cartel under Vietnamese Law; Vietnam Competition Law; Anti-cartel enforcement authorities; Anti-cartel enforcement issues in Vietnam.

CARTEL SITUATION IN VIETNAM

Various forms of cartel: Price fixing; market division; quantity restriction; bid rigging; etc.,…

Different sectors.

ANTI-CARTEL UNDER VIETNAMESE LAW (1)

Before 2004: No Competition Law but some provisions on competition matters did exist.

Anti-cartel has been governed by many laws and regulations, typically:

- Ordinance on Price (still effective);

- Decrees on Bidding (now Law on Bidding);

- Criminal Code (still effective)….

ANTI-CARTEL UNDER VIETNAMESE LAW (2)

3/12/2004: Competition Law was passed to fight against competition-restriction practices, including competition restriction agreements (Cartel).

But other laws are also effective in parallel with Competition Law.

VIETNAM COMPETITION LAW & GUIDELINES (1)

Effective as from 1/7/2005. Mandatory guidelines include:

- Decree 116/2005/ND-CP of the Gov. dated 15/09/2005 Guiding the Implementation of some Articles of Competition Law;- Decree 120/2005/ND-CP of the Gov. dated 30/09/2005 Providing for Administrative Penalty on Violations against Competition Law;

VIETNAM COMPETITION LAW & GUIDELINES (2)

- Decree 110/2005/ND-CP of the Gov. dated 24/08/2005 on Administration of Multi-level Marketing;

- Circular 19/2005/TT-BTM of the Ministry of Trade dated 08/11/2005 on Guiding the Implementation of Some Articles of Decree 110/2005/ND-CP.

CARTEL - COMPETITION RESTRICTION AGREEMENTS (1)

Art. 8 of Competition Law lists 8 competition restriction agreements, including: 1. Agreements on directly or indirectly fixing goods or

service prices; 2. Agreements on distributing outlets, sources of supply

of goods, provision of services; 3. Agreements on restricting or controlling produced,

purchased or sold quantities or volumes of goods or services;

4. Agreements on restricting technical and technological development, restricting investments;

CARTEL - COMPETITION RESTRICTION AGREEMENTS (2)

5. Agreement on imposing on other enterprises conditions on signing of 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. Agreements on preventing, restraining, disallowing other enterprises to enter the market or develop business;

CARTEL - COMPETITION RESTRICTION AGREEMENTS (3)

7. Agreements on abolishing from the market enterprises other than the parties of the agreements;

8. Conniving to enable one or all of the parties of the agreement to win bids for supply of goods or provision of services

PROHIBITION

Rule of reason:

Competition restriction agreements from 1 to 5 above, are prohibited in the case that parties of the agreement have combined market share of 30% or more on the relevant market.

Per se

Competition restriction agreements from 6-8 above are per se prohibited.

EXEMPTIONS (1) Only competition restriction agreements from 1 – 5

above may be considered to be exempted; When? If they meet one of the following conditions in

order to reduce costs to benefit consumers: Rationalizing the organizational structure, business

model, raising business efficiency; Promoting technical and technological advances,

raising goods and service quality; Promoting the uniform application of quality

standards and technical norms of products of different kinds;

EXEMPTIONS (2)

Harmonizing business, goods delivery and payment conditions, which have no connection with prices and price factors;

Enhancing the competitiveness of small- and medium-sized enterprises;

Enhancing the competitiveness of Vietnamese enterprises on the international market.”

ANTI-CARTEL ENFORCEMENT AUTHORITIES

Vietnam Competition Administration Department (VCAD);

Competition Council.

VCAD (1)

Overall functions

State administration over competition, anti-dumping, anti-subsidies, application of safeguards, consumer protection; to cooperate with enterprises against petitions relating to anti-dumping, anti-subsidies and application of safeguards.

VCAD (2)

Anti-cartel

- To investigate over competition case relating to behaviors restricting competition, including competition restriction agreements;

- To examine Dossiers requesting for exemption and submit to Minister of Trade for decision.

VCAD (3)

Organizational Structure - 6 Divisions:

- Competition Restriction Case Investigation Division;

- Supervision and Management of Competition Division;

- Unfair Competition Case Investigation and Handling Division;

- Consumer Protection Division;

- Anti-dumping, Anti-subsidy and Safeguard Division;

- International Cooperation Division.

VCAD (4)

Organizational Structure (cont.) General Office. Professional Organizations:

- Information Centre;- Investigator Training Center.

Representative Offices:- In Danang and Hochiminh city;- In other cities and provinces decided by

Minister of Trade.

DIRECTOR GENERAL OF VCAD (1) Powers and responsibilities

- To decide to assign investigators to investigate specific competition cases;- To inspect investigative activities of competition case investigators;- To decide to modify or cancel groundless and illegal decisions issued by competition case investigators;- To decide to change competition case investigators;- To decide to request expertise;- To decide to apply, change or cancel administrative preventive measures pending the transfer of competition case dossiers to the Competition Council for handling;

DIRECTOR GENERAL OF VCAD (2)

- To decide to conduct preliminary investigation, stop investigation, conduct official investigation of competition cases falling under the competence of the competition-managing agency;- To invite witnesses at the requests of the involved parties at the investigation stage;- To sign written conclusions on the investigation of competition cases, submitted by the assigned investigators;

DIRECTOR GENERAL OF VCAD (3)

- To transfer competition case dossiers to the Competition Council in cases where the competition cases involve competition-restricting acts;

- To settle complaints and denunciations falling under the competence of the competition -managing agency.

COMPETITION COUNCIL (1)

Organizational Structure: 11-15 members appointed by Prime Minister; Secretariat.

Function: To handle cases relating to competition restriction

practices, including competition restriction agreements.

COMPETITION COUNCIL (2) Tasks and powers:

To handle cases relating to competition restriction practices;

To establish Competition case handling council to handle a specific case;

Request individuals, organizations to provide necessary information, materials;

To decide to impose, change or abolish ... After receiving dossier of a competition case;

To handle appellate to cases relating to competition restriction practices.

INVESTIGATION AND HANDLING OF COMPETITION CASE PROCEDURES

Submission of Complaint

Decision on preliminary investigation

Preliminary investigation

Suspension of investigation Decision on official investigation

Decision on handling of competition case

Hearings

Official investigation

Transferring dossiers to

criminal procedure

prosecutorsSuspension of competition case handling

ANTI-CARTEL ENFORCEMENT ISSUES

So far, no competition case has been investigated.

Issues: Public awareness of Competition Law; Lack of resources; Too complicated relationships between

businesses and with state officials;

THANK YOU FOR YOUR ATTENTION!