Issues Related to Competition Laws

Vietnam

E. Competition and Monopoly Pricing:

- Ordinance 40-2002-PL-UBTVQH10 of the National Assembly dated 26 April 2002 codifies and consolidates a number of items of legislation on prices and price controls, effective as of 1 July 2002. Detailed regulations on pricing were issued under Decree 170-2003-ND-CP of the Government dated 25 December 2003 and became effective as of 14 January 2004. Applicable to all foreign and domestic organizations and individuals engaged in production or business activities in Vietnam ("businesses"). Ordinance 40 provides for:

(a) State management of the stability of market prices of important and essential goods and services (prescribed in Decree 170 as including petrol, oil, liquefied gas, cement, iron, steel, rice, coffee, cotton, sugar cane, salt, and certain kinds of medication);

(b) Determination by the State of prices of land, water surfaces and important natural resources, State owned assets to be sold or leased out, goods or services subject to monopoly (including electricity, transportation and post and telecom services), and goods and services important for national welfare and people’s livelihood (including petrol, treated water, basic medicines, bus transportation and subsidized commodities);

(c) Evaluation of prices of State owned assets;

(d) Control of monopoly prices (defined as the price of goods or services fixed by any one seller or purchaser organization or individual in the market, or the price of goods or services of multiple organizations and individuals co-operating in a monopoly, holding a major share of the market and having the power to dominate market prices);

(e) Control of price monopoly co-operation (price-fixing);

(f) Prohibition on dumping;

(g) Other prohibitions on businesses with respect to pricing.

Decree 170 limits the definition of "price monopoly co-operation" to price-fixing agreements between businesses aimed at dominating the market exceeding the market share stipulated by law (italicized words do not appear in Ordinance 40). But the new regulations do not stipulate the relevant market share. Of note, the price-fixing provisions of the current draft of the Law on Competition prescribe a market share threshold of 30%. Decree 170 expressly prohibits the following conduct deemed to be price monopoly co-operation:

• agreement between businesses to fix prices, control prices, change prices for sale of goods and services aimed at restraining competition, infringing the legal interests of other businesses or of consumers;
• sudden sale of one (identical or similar) type of goods or services at one uniform price by several businesses at one particular point of time;
• agreement between businesses to create scarcity of goods by way of limiting production, distribution, transportation, sale of goods or supply of services; destructing or damaging goods; or taking advantage to speculate and increase prices;
• agreement between businesses to apply conditions of sale or purchase of goods and supply of after-sale services which affect prices of goods and services;
• agreement between businesses to change prices of sale and purchase of goods and services in order to eliminate or force other enterprises to co-operate with them or become their affiliates.

Implementing Decree 170, Circular 15-2004-TT-BTC of the Ministry of Finance dated 9 March 2004 provides detailed guidelines on regulation of petrol, oil, liquefied gas, cement, iron, steel, rice, coffee, cotton, sugarcane, salt and some medications (effective as of 6 April 2004). Of note, Circular 15 prescribes the circumstances in which prices will be deemed to have "abnormally fluctuated", for the purposes of State management of stability of market prices.

Under the Decree 169-2004-ND-CP of the Government dated 22 September 2004 on Dealing with Administrative Offences in Pricing Sector, any domestic or foreign organization or individual engaged in production or business activities in Vietnam and breaching the provisions on price stabilization will be subject to a VND5-10 million fine.

The price-fixing provisions of Ordinance 40 and Decree 170 lay foundations for the Law on Competition.