In brief
The Vietnam Competition and Consumer Authority (VCCA) recently published an article explaining in detail the fundamental issues regarding agreements on price fixing, how such issue is addressed in other jurisdictions with developed antitrust regulations, and how it should be viewed within the context of Vietnam’s Competition Law No. 23/2018/QH14 (“Competition Law“).
Therein, the VCCA shares its views on what types of arrangement between competitors, or between enterprises operating in the same production/supply chain of goods/services, may be considered an “agreement to directly or indirectly fix the price of goods or services” pursuant to Article 11.1 of the Competition Law. Such arrangements may include setting minimum resale prices of goods and services and sharing of pricing information.
In depth
On 18 June 2021, the VCCA published an article explaining in detail the fundamental issues regarding agreements on price fixing, how such issue is addressed in other jurisdictions with developed antitrust regulations, and how it should be viewed within the context of Vietnam’s Competition Law.
Specifically, agreements on price fixing are regulated under Article 11.1 of the Competition Law as “agreements to directly or indirectly fix the price of goods or services.” Accordingly, such agreements are strictly prohibited among competitors, and are prohibited among enterprises operating in the same production/supply chain of goods/services if such agreement causes or may cause substantial anti-competitive effects on the market.
In recognizing that there is currently no further guiding legislation on how Article 11.1 of the Competition Law should be applied in practice, the VCCA provides the following point of view:
- Agreements to directly fix prices of goods and services include, but are not limited to, the following: (i) Agreement to apply specific prices to goods and services; (ii) Agreement to increase the price at a specific level or agree on the rate of price increase; (iii) Agreement not to reduce the price or only reduce the price at a specific level or agree on the discount rate; (iv) Agreement to apply price calculation formula or price components; (v) Agreement on the minimum price of goods and services; (vi) Agreement to determine or maintain prices within a certain range; (vii) Agreement to notify and consult each other when increasing or decreasing the selling price of goods and services; and (viii) Agreement on prices of goods and services to negotiate and enter into contract with any third party
- Agreements to indirectly fix prices of goods and services include, but are not limited to, the following acts: (i) Agreement not to discount, not to promote, not to grant credit or not to carry out after-sales programs, customer care or other commercial conditions directly related to the price; (ii) Agreement between suppliers and agents and distributors on the minimum resale price of goods and services to customers; and (iii) Exchange information on prices and promotion, price reduction and discount programs
According to this interpretation, we note two points worth mentioning regarding the direction of the development of the application of price-fixing regulations.
First, information exchange in the past was not specifically addressed under Vietnam’s competition regime. Under this shared perspective, at the very least, the mere exchange of information on pricing and price-related information may serve as a basis for finding violations under the Competition Law.
Second, based on this interpretation, the treatment of minimum resale price maintenance (RPM) clauses may be viewed not only as an abuse of dominance issue, but also as a potential anti-competitive agreement on price fixing. Accordingly, businesses would not only need to consider whether they hold a dominant market position on the relevant market before proceeding to implement an RPM provision on its distributors/retailers; they will also need to consider the anti-competitive impact that such agreement may cause.
Although the views above shared by the VCCA do not serve as a legal document, in absence of any other binding legislation or regulations on the topic, such perspective provides businesses with some level of understanding on how the current Competition Law’s regulation on price-fixing agreements should be applied in practice.
It appears that the VCCA has focused on price-fixing agreements and will likely be more active in enforcing against such arrangements if found to be in violation of the Competition Law. With that said, the competition regulators’ appetite for investigating price-fixing agreements between a local entity, such as a distributor, and an offshore manufacturers remains unclear. In any case, it is highly recommended that businesses in Vietnam and offshore manufacturers that have local distributors in Vietnam review their distribution agreements and other arrangements to identify and mitigate any potential breaches of the Competition Law.
Please refer to this link for the specific article published by the VCCA.
