Anti-competitive agreements play a critical role in shaping market dynamics, particularly in transitional economies like Vietnam. These agreements, while serving certain industry needs, often undermine fair competition and consumer interests. This analysis examines Vietnam’s legal framework on anti-competitive agreements, evaluates their characteristics, and highlights the implications for competition law enforcement, providing recommendations for improvement.
1. Regulations on Anti-Competitive Agreements
Anti-competitive agreements in Vietnam are governed by Article 11 of the 2018 Competition Law. These agreements include the following types:
- Direct or indirect agreements to fix prices for goods and services.
- Agreements to divide customers, consumption markets, sources of supply, or service provision.
- Agreements to limit or control production, purchase, or sale quantities of goods and services.
- Agreements allowing one or more parties to win bids when participating in tenders for the supply of goods and services.
- Agreements that prevent, restrain, or block other businesses from entering the market or expanding their operations.
- Agreements to eliminate non-participating businesses from the market.
- Agreements to restrict technological development, innovation, or investment.
- Agreements imposing or fixing conditions for signing contracts on the sale of goods, provision of services, or forcing other businesses to accept obligations unrelated to the contract’s subject.
- Agreements not to transact with non-participating parties.
- Agreements to restrict the consumption market, supply sources, or services of non-participating parties.
- Other agreements that cause or are likely to cause anti-competitive effects.
2. General Assessment of Anti-Competitive Agreements in Vietnam
Anti-competitive agreements in Vietnam have historical and socio-economic roots, reflecting a transition from a centrally planned economy to a market-oriented system. The following observations highlight the nature and impact of these agreements:
a. Historical Context and Characteristics
Anti-competitive behaviors partly stem from Vietnam’s past centralized planning system. Historically, such agreements were perceived as cooperative measures aimed at protecting the interests of specific business groups. Before the enactment of the 2018 Competition Law, these agreements were not regulated by law and were thus considered lawful. They were commonly facilitated through trade associations.
b. Legal and Regulatory Challenges
Anti-competitive behaviors may also be influenced by regulations on price control or trade association management. Unlike many other countries, such agreements in Vietnam often receive implicit support from state agencies, creating a unique regulatory environment. Consumers, on the other hand, lack strong organizations to challenge the abuse of market power by trade associations.
c. Forms of Agreements
These occur between competitors at the same level of the supply chain and often result in greater harm to competition. These occur between businesses at different levels of the supply chain, such as manufacturers and distributors.
d. Impact on Consumers and State Resources
Anti-competitive agreements not only harm consumers by limiting choices and inflating prices but also waste state resources, especially in areas like public procurement and infrastructure projects.
e. Evolving Awareness
The adverse effects of anti-competitive agreements are increasingly recognized in Vietnam, prompting calls for stricter legal frameworks and enforcement mechanisms.
3. Legal Features of Anti-Competitive Agreements
The legal characteristics of anti-competitive agreements include the following:
a. Parties to the Agreement
These agreements involve businesses, defined as organizations or individuals engaged in commercial activities. This includes producers, public service providers, and state-run enterprises in monopoly sectors. Parties may include both direct competitors and businesses linked within the same production or distribution chain.
b. Forms of Agreements
These agreements can be formalized in writing or made orally. While the form does not affect legality, written agreements are critical for investigation and enforcement. Agreements may be official through contracts, resolutions, or decisions, or informal through implicit or explicit understandings.
c. Objectives of Agreements
Agreements can aim to reduce competition horizontally (among direct competitors) or vertically (across supply chains). The primary goal is often to create market dominance, eliminate competitors, and manipulate market rules. Such agreements can harm consumers by restricting access to competitive pricing and product diversity.
d. Manifestation of Decisions and Commitments
In some cases, agreements are facilitated through trade association resolutions or decisions. Agreements may also involve commitments to comply with specific requirements, creating interdependence among businesses.
e. Legal Implications
The method and medium of the agreement significantly influence investigation and enforcement processes. The form of the agreement affects the determination of liability and legal outcomes.
4. Recommendations for Strengthening Legal Frameworks
To address the challenges posed by anti-competitive agreements, the following measures are recommended:
a. Distinguishing Horizontal and Vertical Agreements
Horizontal agreements, which typically cause greater harm, require stricter oversight compared to vertical agreements. The Competition Law should enhance control mechanisms for horizontal agreements.
b. Refinement of Prohibited Agreements
Market share should not be the sole criterion for assessing the legality of agreements. Additional factors, such as industry diversity, relevant market conditions, and participation duration, should be considered for a more comprehensive evaluation.
c. Evaluation Criteria
Most anti-competitive agreements involve price or production restrictions. These factors are fundamental in assessing legality. Additional factors, such as the number of market participants, transaction volumes, and supply methods, should be included to ensure fair and transparent competition.
d. Consumer and Market Impact
Assessing the impact on consumer welfare and market transparency is crucial to determining the broader implications of anti-competitive agreements.
In conclusion, anti-competitive agreements in Vietnam reflect both historical legacies and current regulatory gaps. While the 2018 Competition Law provides a framework for addressing these challenges, further refinements are necessary to align with international standards and ensure fair competition. Strengthened enforcement mechanisms, clearer legal definitions, and enhanced consumer advocacy are essential for fostering a competitive and transparent market environment.
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