Viet Australia's laws update: The new Law on Competition No. 23/2018/QH14

The new Law on Competition No.23/2018/QH14 was passed on 12 June 2018 and it will come into effect on the 1st July 2019. This law is about to replace the old Law on Competition of 2004 which progressively became obsolete as the Vietnamese economy evolved.

Under the previous Law on Competition of 2004, economic concentration was prohibited if the participants’ combined market share in a particular sector is 50% or more. The new Law on Competition will prohibit any economic concentration that “causes or is likely to cause a substantial weakening of competition”. This law defines a number of criteria to assess whether an economic concentration can substantially lessen competition in a particular sector, and this criteria which will be assessed by the National Competition Commission (NCC).

The new Law on Competition will also introduces a new threshold for compulsory notification of economic concentration to the NCC. This new threshold is no longer based on the combined market share as under the previous law. Instead, the new threshold includes a number of criteria including total assets of the participants, total revenue of the participants, transactional value of the economic concentration and aggregate market share of the participants.

From the 1st July 2019 this new law will prohibit certain types of anti-competitive agreements if the businesses are in the same sector or if those agreements can have an impact on the competitiveness in a particular sector.

Agreements prohibited in case businesses are in the same sector:

• Directly or indirectly fixing prices;
• Sharing customers or markets or supply sources; and
• Controlling the quantity of goods produced, sold, or bought as well as services provided.

Agreements prohibited in case they have a negative impact on the market competitiveness:

• Restraining investments, technical, and technological capabilities; and
• Forcing other companies to sign contracts related to the buying or selling of goods and services or bind them into commitments not related to the content of the contract.

According to the previous Law on Competition, these agreements were only prohibited in case the combined market share of the parties were 30 percent or more.

A leniency program has also been introduced in the new Law on Competition. Now, businesses that are part of an anti-competitive agreement may be entitled to leniency if they voluntarily reach out to the government authorities before an investigation is formally opened. This program will only be available to the first three applicants, with the first applicant being eligible for a penalty exemption of 100 percent, while the second and third will be eligible for an exemption of 60 percent and 40 percent respectively.

If you have any questions concerning Vietnamese laws, business in Vietnam or any other related topic, and/or if you are interested in our Company's services, feel free to contact us by email: [email protected], or you can reach us by phone at (+84) 0903770777.

Viet Australia's Auditing Ltd. team