Socialist Republic of Vietnam

HA NOI — The long-awaited Competition Law should purge the economy of monopolies while creating a level playing field for all businesses, trade minister Truong Dinh Tuyen has said.

Speaking on Sunday at the 5th National Assembly meeting, he said, "the law is aimed at limiting monopolies in the economy and protecting the legitimate rights of enterprises in competition."

Speaking on the sidelines of the NA, Deputy Prime Minister Vu Khoan agreed saying the Competition Law is part of Viet Nam’s plan to eliminate business monopoly and ensure healthy competition between domestic and foreign businesses.

He described the law as one of the most important in Viet Nam’s process of integrating into the world economy, especially while the country is seeking World Trade Organisation (WTO) membership.

According to the draft law, any enterprise which has more than 30 per cent of the market share will get a ‘market domination’ tag, with ‘monopoly’ reserved only for enterprises which have absolutely no competitors.

Any two companies with a combined market share of not less than 50 per cent, three companies with 65 per cent and above, and four companies with 75 per cent and above will get the ‘market domination" label.

However, a company or a group of companies, controlling the market, will be considered to violate the laws only if they use this advantage against customers and other rivals.

The law prohibits competitors from coming together for certain deals like bids and price-fixing.

It bans firms holding a combined 30 per cent market share in a product from making deals that may hurt competition.

Tuyen explained that only with a market share at least that size could the firms cause real damage to the business environment and consumers.

Thus, enterprises together holding 30 per cent share and above in a particular product or service must report to authorities in case of plans for merger, acquisition or joint venture.

However, companies having a combined 50 per cent share or greater are prohibited from mergers and joint ventures, except for those that remain an SME after merger.

The trade minister emphasised on the sidelines of the NA that the Competition Law would cover all business organisations and individuals, including State-run enterprises.

It also outlines measures to prevent Government agencies from interfering with enterprises’ business operations, he said.

The draft law spells out nine acts of ‘unfair competition’: denigrating rivals, industrial espionage, undermining rival businesses, unfair advertising and marketing, illegal pyramid selling, falsifying product brochures, discrimination in trade associations and bribery and coercion in business.

Tuyen said that despite getting rid of monopolies, the country should still have large and competent corporations capable of fending off competition from international products as its markets open up.

But NA deputies expressed reservations about the ban on merger of companies having a 50 per cent market share.

The NA Economy and Budget Committee deputy director, Dang Van Thanh, said mergers, acquisitions and joint ventures were normal business practice with the Government actually encouraging the formation of large corporations.

Thanh warned, "this ban must be considered carefully. Results and purposes of these businesses, not only the size of market share, should be taken into account."

Deputies also expressed worries over the role of the Ministry of Trade (MOT) in the new law under which it is both the managing authority and the arbitrator, besides also being the owner of many enterprises.

But Tuyen assured that the agency enforcing the law would be completely independent though it is part of the ministry.

He said, the reason for the agency being under the MOT is that both the law and connected supervisory work are totally new to the government. Once the work is on track, it would be separated from the ministry, he assured.

Other laws

The NA also scrutinised draft laws on national security and electricity and the amended Publishing Law.

The house also heard about the ratification of a pact to demarcate sea borders in the Bac Bo (Tonkin) Gulf between Viet Nam and China. — VNS