The Vietnamese Competition Law (Competition Law) regulates conduct that restricts competition in Vietnam.
The Competition Law applies to business organizations, individuals and enterprises producing or supplying products or services in the public interest, enterprises operating in industries and sectors that represent state monopolies and foreign enterprises and trade associations operating in Vietnam.
The Competition Law prevails if there is an inconsistency between provisions of the Competition Law and other laws regarding acts that restrict competition and/or unfair competition. Provisions of international treaties to which Vietnam is a signatory or participant will, however, prevail where such provisions are inconsistent with the provisions of the Competition Law.
The Vietnam Competition Authority (VCA) was established under the Competition Law. It is an organization under the Ministry of Trade and Industry. With respect to competition matters, the VCA has the duties and powers to investigate anti-competitive behaviors, control mergers, consolidations, acquisitions and joint ventures between enterprises, i.e., the economic concentration process, and handle unfair competition practices in accordance with the Competition Law. For anti-competitive behaviors such as agreements in restraint of competition or abuse of dominance, after completing the investigations, the VCA will transfer its reports and the case file to the Competition Council for further handling.
The Competition Council consists of 11 to 15 members who are appointed and removed by the Prime Minister. It is an independent agency with the main function of adjudicating anti-competitive behaviors after they have been investigated by the VCA. Specifically, for each competition case referred to it by the VCA, the Competition Council will establish a panel which will review the investigation report and decide whether to conduct a hearing on the case.
2.1 Online submission of applications
Under a new regulation issued in December 2011, submissions of applications (such as merger filing or applications for exemption) and complaints to the VCA can be made online. Enterprises may choose to submit applications or complaints in person or via the online system. For the purpose of online submissions, true copies (i.e., scanned copies of originals or electronic files) affixed with the valid electronic signatures of the competent representatives of enterprises are required.
According to the Competition Law, agreements to restrict competition include the ones that:
- set prices directly or indirectly;
- divide markets or sources of supply;
- limit production, purchase or sales volumes;
- restrict technical/technological development and investment;
- impose conditions or unrelated obligations on the signing of contracts;
- prevent or inhibit others from entering the market;
- preclude from the market enterprises that are not parties to the agreement; or
- collude in biddings.
The agreements identified at (f) to (h) above are strictly prohibited regardless of the parties’ market share. The agreements identified at (a) to (e) above are prohibited only if the parties to the agreement have a combined market share of 30 percent or more. Exemptions may be granted to the agreements identified at (a) to (e) if certain criteria are satisfied, including reduction of costs and other benefits for consumers.
4.1 Market-dominant position and monopoly position
An enterprise is deemed to have a market-dominant position if it has a market share of 30 percent or more, or if it is capable of causing a considerable restriction of competition.
Enterprises or a group of enterprises are deemed to have a market-dominant position if they act together to restrict competition and:
- two of them have a combined market share of 50 percent or more;
- three of them have a combined market share of 65 percent or more; or
- four of them have a combined market share of 75 percent or more.
An enterprise is deemed to hold a monopoly position if it does not have any competitors.
4.2 Abuse of market dominance or a monopoly position
It is prohibited for enterprises with a dominant or monopoly position in the market to conduct the following acts:
- selling goods or services at prices below the total cost price for the purpose of precluding competitors;
- imposing unreasonable purchase or sale prices of goods or services, or fixing minimum resale prices, causing damage to customers;
- restricting production or distribution, limiting the market, or hindering technical or technological development, causing damage to customers;
- applying different commercial terms on identical transactions for the purpose of creating inequality in competition;
- imposing conditions or unrelated obligations on the signing of contracts; or
- hindering market entrance by new competitors.
In addition to the above, enterprises with a monopoly position are also prohibited from engaging in the following acts:
- imposing adverse conditions on consumers; or
- taking advantage of the monopolistic position to unilaterally change or cancel an executed contract without legitimate reasons.
The Competition Law includes the concept of “economic concentration.” Economic concentration includes mergers, consolidations, acquisitions and joint ventures. Definitions of mergers, consolidations, acquisitions and joint ventures are provided in the Competition Law.
An economic concentration is prohibited if the combined market share of enterprises participating in the economic concentration represents more than 50 percent in the relevant market. Where the enterprises participating in an economic concentration have a combined market share ranging from 30 percent to 50 percent in the relevant market, the legal representative of those enterprises must notify the VCA of the proposed economic concentration. The economic concentration procedures at the relevant authorities (e.g., business registration, amendment of business licenses, etc.) can only be carried out after those enterprises have obtained the VCA’s confirmation that such economic concentration is not prohibited under the Competition Law. Exemptions may be granted to prohibited economic concentrations if certain criteria are satisfied.
The main penalties for a violation of the Competition Law include:
- warnings; or
- monetary fines of up to 10 percent of the enterprise’s total annual revenue.
Supplementary penalties for a violation of the Competition Law include:
- revocation of business licenses, revocation of sub-licenses and/or professional practicing certificate; and/or
- confiscation of materials and facilities used to commit the breach of the Competition Law.
In addition, violators may also be subject to the following remedial measures:
- restructure of the enterprise that abuses its dominant position;
- division or split of the enterprise that has merged or consolidated, or compulsory sale back of the acquired enterprise;
- public retraction;
- preclusion of terms in violation of the provisions of the Competition Law from the relevant contract or business transactions; and/or
- other necessary measures in order to remedy the anti-competitive effects caused by the violating act.
The Competition Law includes a number of provisions regarding the functions of the VCA, the Competition Council, investigation and handling procedures of competition cases, competition-related proceedings, and procedures for seeking exemption from the above-mentioned prohibitions.
There is no leniency/immunity regime available under the Competition Law.
The Competition Law covers “foreign organizations operating in Vietnam”. However, from both regulatory and practical aspects, it is unclear whether this term includes offshore entities that have no commercial presence in Vietnam.
 The VCA also oversees trade remedies and consumer protection matters in addition to competition matters.
 Under Vietnamese law all communications of a company to a state agency must be signed by the legal representative or an authorized representative who is specifically empowered by the legal representative. Vietnamese law is drafted such that the legal representatives must notify the VCA for economic concentrations.