www.pwc.com/vnPwC Vietnam Legal NewsBrief

26 July 2018 New Law on Competition

At a glance...

The new Law on Competition dated 12 June 2018 replaces the Law on Competition 2004.

• The governing scope of the New LOC expands to any practiceswhich have or potentially have a competition-restraining impacton Vietnam’s market. Accordingly, all agencies, organizations andindividuals “relating” to a competition-restraining practice will begoverned by the New LOC regardless of whether in Vietnam oroverseas.

• Market share is currently defined as the ratio between the revenueof the concerned enterprises and the revenue of all enterprises inthe market. The New LOC adds more methods, which are basedon the quantity of units of goods/services, to determine themarket share.

• More scenarios are added to the current list of competition-restraining agreements, inter alia including agreements not totrade with, or to limit the sale markets/ supply sources of, partiesnot participating in the agreements.

• Currently, certain competition-restraining agreements when theparties have a combined market share of 30% or more areprohibited. Such threshold percentage is removed in the NewLOC. Instead, the concept of “significant competition-restrainingimpact or ability to cause significant competition-restrainingimpact” is introduced. Six assessment factors to determine theimpact thereof are listed in the New LOC, according to whichmarket share ratio is just one of the criteria. The Government is toprovide detailed regulations in this regard.

• Prohibitions of competition-restraining agreements are describedin more detail in the New LOC, ranging from those that are per seillegal to those that are prohibited if they cause or potentiallycause significant competition-restraining impact. Of note, inaddition to horizontal competition-restraining agreements, theNew LOC for the first time deals with vertical arrangementsamong “enterprises conducting businesses at different stageswithin the same manufacturing, distribution, supply chain of aspecific type of products or services”.

The National Assembly has passed a new Law on Competition (“New LOC”) which will be effective from 1 July 2019 and replace the Law on Competition 2004. The New LOC continues to prohibit (i) competition-restraining agreements, (ii) abuse of dominant market position/ monopoly position, (iii) economic concentration, and (iv) unfair competitive practices. Below are some notable changes.

• In order to assess a dominant market position, besides the currentlyapplied 30% market share threshold, the new concept of “significantmarket force” and the factors to determine it are introduced. Thoseenterprises which have a market share of less than 10% in the relevantmarket are no longer considered as belonging to “the group ofenterprises which hold a dominant market position”.

• Forms of economic concentration remain such as merger,consolidation, acquisition and joint venture. The threshold of 50%combined market share is no longer used to determine an economicconcentration in the New LOC. Instead, like the provisions forcompetition-restraining agreements, the National CompetitionCommittee (“NCC”) will assess “significant competition-restrainingimpact or ability to cause significant competition-restraining impact”based on the factors listed in the New LOC.

• The New LOC requires enterprises participating in a merger,acquisition, consolidation or joint venture to notify NCC ahead of timeif such arrangements reach the threshold for required notification ofeconomic concentration. Such a threshold is unclear under the NewLOC. The Government is to provide detailed regulations to clarify this.

• The New LOC removes provisions on exemptions from prohibition ofeconomic concentrations. Enterprises participating in a merger,acquisition, consolidation or joint venture are therefore unable to seeksuch exemptions from July 2019.

• The New LOC introduces a leniency policy, according to which a partyto a competition-restraining agreement may be entitled to exemptionor reduction of penalties if it voluntarily declares the breach before theissuance of an investigation decision. This entitlement is applicable toonly the first three enterprises submitting an application for leniency.

Speak to us

Richard irwinPartner, PwC VietnamTax Services+84 28 3824 0117r.j.irwin@pwc.com

Phan Thi Thuy DuongSenior Associate, PwC Legal+84 28 3823 0796, ext. 1508phan.thi.thuy.duong@pwc.comom

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