Controlling the abuse of market dominance under the current vietnamese competition law

ncepts of market dominance, perspectives on the acts of abusing market dominant possition, the neccesity and mechanism for controlling abuse of market dominance. Most studies have the same position of dominant market (dominance in the way of EU competition law) or monopoly market (monopoly in the way of US antitrust law) to indicate the privileged position of The enterprise that holds economic power has the ability to effectively prevent existing competition in the market and gives it the ability to act independently with competitors, manifested in its ability to lead the market. Many perspectives emphasize a more cautious approach to the abuse of market dominant position, according to which, the determination of VTT abuse will need to be considered and evaluated both from the perspective of economics and legal sciences. , especially in the high-tech market, the market is dynamic and creative. 1.2. Research on the status on law and practice application about the law of controlling the acts of market dominant position. The international studies mainly in the common researches on competition law, competition policy, especially on EU competition law and policy (EU), The United States or included in comparative studies between EU competition law and EU policy, which are 6 considered the two basic models of competition law in the World. Studies have shown that the US laws on antitrust and the EU's law against the abuse of market dominant position have some things in common. However, the differences between them are at a fairly basic point, EU laws are more rigid and have a deeper intervention mechanism than US laws on antitrust. Domestic studies focused on analyzing and assessing the provisions of the 2004 Competition Law with issues such as identifying abuse of dominance, monopoly position, and analyzing specific dominant abuses such as acts of predatory pricing, acts of abuse related to prices ... 1.3. Studies on legal trends and complete solutions to control the abuse of market dominant position The researches of the authors in the world all mention the solution to improve the law on controlling the abuse of market dominant position as the trend of changing the approach to the abuse of these acts is an approach based on the nature of behavior, in line with modern economic thinking about unilateral behavior. Given the limitations of the Competition Law 2004, the domestic research also pointed out the direction and a number of solutions to improve the law on controlling the abuse of market dominant position in Vietnam. Follow that, we had to put in international economic integration scene; placed in an overall relationship with other legal institutions. It can be seen that the domestic researches on abuse of market dominant position under Vietnam's competition law mostly focus on analyzing specific abusive behaviors and leaving the concerns on issues brought about rationale theoreotical issues. In particular, in the context of the new Competition Law 2018, no evaluation studies on the 7 Competition Law 2018, on the basis of comparison to show the progress and reasonableness compared to the Competition Law 2004, do premise for approaching, understanding and constructing the provisions of the Competition Law 2018 on comprehensive abuse of market dominance. 2. Evaluation of literature review Fristly, about the object of competition law in general and the object of regulations on abuse of market dominance in particular. Secondly, about the concept of market dominant Thirdly, about the factors to determine the market dominant position of enterprise. Sáu là về nguyên tắc xử lý hành vi lạm dụng VTTLTT. Fourthly, about the concept of abuse of market dominance. Firthly, about identifying the market dominant abusive behaviours. Sixthly, about the principle of dealing with the market dominant abusive behaviours. 3. The issue needed to be solved by the dissertation - Research and systematize the theoretical background issues of policies and laws that control abuse of market dominance. - Research theoretical issues on the concept and content of laws that control market dominant abuses. Define the specific content and legal system of controlling abuse of market dominance. - Assessing the rationality and unreasonability of the current law on controlling the abuse of market dominance and the need for appropriate adjustment regulations to both ensure the business freedom of the enterprises and ensure target of competition law. - Proposing a system of complete views and specific solutions to perfect the law to control the abuse of market dominance. 8 4. Theoretical basis and research questions 4.1. Theoretical basis The establishment of the law on control of abuse of VTTT based on the theoretical basis and viewpoint of competition in the market economy. The view of promoting free competition is rooted in the economic theory of the invisible hand of economist Adam Smith (1723-1790). The viewpoint and theory of the competitive market needs state regulation developed by economists and jurisprudents from the nineteenth century. The basic rationale for the formation of the law to control acts of abuse of market dominance in Vietnam is the view of the Party and the State of Vietnam on perfecting the market economy institution in the context of international economic integration which emphasizes the need to ensure a healthy, fair and transparent competitive environment. 4.2. Research questions and research hypotheses Research questions : - What is market dominance abuse ? How does the abuse of market dominance affect competition, the development of the economy and the interests of consumers ? - Why should there be control over the abuse of a dominant market position by law ? - How is the structure and basic content of competition law on controlling the abuse of dominant market position ? - How is the experience of other countries in controlling the abuse of dominant market positions by competition law ? - How is the current situation of legal regulations on controlling acts of abusing dominant market position in Vietnam ? - Given the shortcomings and inadequacies, what directions and solutions are needed to improve the law on controlling the abuse of dominant market position ? 9 Research hypotheses : - Building a theoretical basis and perfecting the mechanism to control the abuse of dominant market position is important for establishing and maintaining a fair and healthy competitive environment in Vietnam. - The provisions of Vietnamese law on controlling acts of abusing dominant market position still have inappropriate points, and there still exist legal gaps. - The improvement of legal regulations on controlling the abuse of dominant market position in Vietnam is one of the requirements of the process of perfecting the market economy institution with a competitive policy to ensure enjoy the freedom of competition of enterprises while ensuring the objectives of the competition law, in accordance with Vietnam's economic and social conditions and international practices in the process of international economic integration. CONCLUSION OF LITERATURE REVIEW CHAPTER 1 THEORETICAL ISSUES ON LAW ON CONTROLLING THE ABUSE OF MARKET DOMINANCE 1.1. Controlling the abuse of market dominance 1.1.1. Concept, characteristics of market dominance behaviours 1.1.1.1. Concept of market dominance In ECJ's view, market dominance “relates to a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers”. According to Chapter 2, Model Law on Competition of 10 UNCTAD, dominant position of market power refers to a situation where an enterprise, either by itself or acting together with a few other enterprises, is in a position to control the relevant market for a particular good or service or group of goods or services”. Competition law of Vietnam has a distinction between market dominance and monopoly. Accordingly, monopoly is a situation where the market is completely uncompetitive, monopoly enterprise has no competitors. Meanwhile, in the market where there is market dominance enterprise, even though the enterprise has considerable market power, has the ability to dominate and control the market, there are still competitors. certain competition. The general definition of market dominance can be drawn as follows: Market dominance is the position of a business or group of enterprises that holds significant market power capable of restricting competition in the relevant market and behaving independently of competitors, customers and consumers. 1.1.1.2. Concept of market dominance behavior The general definition of the abuse of a dominant market position can be drawn as follows: Abuse of a dominant market position is the behavior of an enterprise with a dominant position, exploiting market power. it has to maintain, enhance the position of the business in the market, hinder competition, harm to competitors and customers of the business. 1.1.1.3. Characteristics of market dominance behavior a. The subject is an enterprise or a group of enterprises with a dominant position or an enterprise with a monopoly position in the relevant market. 11 b. Dominant enterprises or groups of enterprises have or are currently abusing acts that negatively impact competition in the market. c. Abuse of dominant market position is unilateral behavior of enterprises. d. The consequences of abuse are distorting market structure, hindering or eliminating competition in a specific market. 1.1.2. The concept, characteristics and purpose of controlling the abuse of market dominance 1.1.2.1. The concept of controlling the abuse of market dominance Controlling the abuse of market dominance is the act of state agencies and competent entities performing the State's management function, affecting enterprises through measures and ways different methods to monitor, detect, prevent and handle abusive acts of enterprises with market dominance in order to protect and maintain the competitive order and ensure the lawful rights and interests of enterprises, state, other business entities and consumers. 1.1.2.2. Characteristics of controlling abuse of market dominance - Controlling the abuse of a dominant market position to create, maintain and protect a fair and fair competitive environment. - The object of controlling the abuse of market dominance is enterprises having dominant market position. - Control the abuse of a dominant market position within the limits of enterprises' business freedom. - Controlling acts of abusing dominant market positions, leading to restriction of economic privileges of enterprises with dominant market position. - Controlling the abuse of dominant market position with limited scope due to the free business principle. 1.1.2.3. The purpose of controlling the abuse of market dominance 1.1.3. Tools to control market abuse 1.2. Law on controlling the abuse of market dominance 1.2.1. Concept of law on controlling the abuse of market dominance The law on controlling acts of abusing dominant market position 12 of enterprises is a total of laws promulgated by the State to regulate acts of abusing market power of enterprises having positions. dominate the market causing competition restriction impact. The law on controlling acts of abusing dominant market position is an important part of competition law. The basic source of legislation on controlling acts of abusing dominant market position is the competition law of countries. 1.2.2. The objective of controlling the abuse of a dominant market position in the competition law The objective of the competition law in controlling the conduct of enterprises with market dominance is to prevent these enterprises from abusing market power to limit and eliminate competition and thus causing loss to social welfare, damage to consumers. In other words, the application of the law to control market dominance is not aimed at eliminating the dominant position of enterprises but only abusive behaviours of market dominance to gain profits or to distort the competition, destroy the competition. 1.2.3. Approaches to controlling abuse of market dominant position For more than a decade, the absolute prohibitions of competition laws of countries for certain acts of enterprises are considered abusive (the principle of per se rule), although slow, but gradually replaced with regualtions based on the rule of reason. 1.2.4. The structure of law on controlling the abuse of dominant market position 1.2.4.1. Identifying enterprises, groups of enterprises have a market dominant position a) relevant market Identifying the relevant market is determining the range of close substitutes for a specific product and the geospatial range in 13 which consumers will easily switch to other suppliers of alternative products. Thus, relevant market concepts include relevant product market and related geographic market. b) Identifying the market power of an enterprise, group of enterprises Factors are often specified in competition laws of countries to determine whether a business has a dominant position in the relevant market, including such factors as follow: - Market shares - Number and market share of competitors - Characteristics of related products - The countervailing power of other market participants (such as the power of buyers. - Market characteristics such as legal environment, speed of technology replacement, the existence of potential competitors - Barriers to market entry and expansion. 1.2.4.2. Identify market dominance behavior - Price abuses such as predatory price, excessive price, price discrimination. - Behavior that limits production, market or technical development. - Imposing different conditions on similar transactions - Imposing the terms of conclusion is not directly related to the object of the contract. 1.2.4.3. Competence and procedures for handling the abuse of dominant market positions The competition authority is the entity exercising control and the enterprise or group of firms with dominant market position is the 14 controlled entity. The laws of most countries agree that competition legal proceedings are administrative proceedings. 1.2.4.4. The legal consequences of performing abuse of dominant market position A common feature of most competition agencies in the world is to treat fines as a form of deterrence rather than compensation. Another effective deterrent is confiscation of the profits gained from the illegal activity. In addition to traditional penalties, other ways to prevent violations may also need to be considered. For example, The obligation to disclose sanctions because the damage done to the reputation of the business can be a very effective form of containment. Business managers may be suspended from their functions for a given period. Even penalties such as claims, community services, orders not allowed to leave the country and supervision can be imposed. 1.3. Model of controlling abuse of dominant position according to competition law of countries. 1.3.1. Experience of the EU 1.3.2. Experience of the United States 1.3.3. Experience of the Japan CONCLUSION OF CHAPTER 1 CHAPTER 2 COTROLLING THE ABUSE OF MARKET DOMINANCE UNDER VIETNAMESE COMPETITION LAW 2.1. Curent status of comtrolling the abuse of market dominance 15 2.1.1. Identifying enterprises, groups of enterprises have a market dominant position 2.1.1.1. Identifying the relevant market ccording to Clause 7, Article 3 of the Competition Law 2018, the relevant market is a market of goods and services that can be substituted for each other in terms of characteristics, purposes and prices in specific geographical areas. similar competition conditions and significant differences with adjacent geographic areas. 2.1.1.2. Bases for determining market dominance of an enterprise Market share According to clause 1, Article 10 of the Competition Law 2018, The market share of an enterprise in the relevant market is determined by one of the following methods: a) The percentage of sales revenue of an enterprise out of the total sales revenue of all enterprises on the relevant market on a monthly, quarterly or yearly basis; b) The percentage of purchase revenue of an enterprise out of the total purchase revenue of all enterprises on the relevant market on a monthly, quarterly or yearly basis; c) The percentage of volume of product/service sold by an enterprise out of the total volume of products/services sold by all enterprises on the relevant market on a monthly, quarterly or yearly basis; d) The percentage of volume of product/service purchased by an enterprise out of the total volume of product /service purchased by all enterprises on the relevant market on a monthly, quarterly or yearly basis. Subtantial market power 16 According to Article 26, Competition Law 2018, Substantial market power of an enterprise or group of enterprises is determined based on some of the following factors: Market shares of enterprises on the relevant market; Financial strength and size of the enterprise; Barriers to market entry and expansion to other enterprises; Ability to obtain, assess, control the goods distribution/consumption market or sources of supply; Advantages in technology and technical infrastructure; Right to own, obtain and assess infrastructure; Right to own or use subject matters of intellectual property; Ability to transfer to other sources of supply or demand associated with other goods and related services; Particular factors in the sector that the enterprise runs the business. 2.1.2.2. Determination of the market dominance of the enterprise. According to Clause 1 Article 24 Competition Law 2018, An enterprise shall be considered to hold a dominant position on the market if it has substantial market power as specified in Article 26 of this Law or has market shares of 30% or more on the relevant market. According to Clause 2 Article 24 Competition Law 2018, A group of enterprises shall be considered to hold a dominant position on the market if they jointly cause anti-competitive effects and have substantial market power as specified in Article 26 of this Law or their total market shares fall into one of the following cases: a) Two enterprises having the total market share of 50% or more on the relevant market; b) Three enterprises having the total market share of 65% or more on the relevant market; c) Four enterprises having the total market share of 75% or more 17 on the relevant market; d) At least five enterprises having the total market share of 85% or more on the relevant market 2.1.2. Identify market dominance behavior 2.1.2.1. Defining market dominance behavior According to Clause 5 Article 3 Competition Law 2018 “Abuse of a dominant position, abuse of monopoly position” means behavior of enterprises with dominant position, monopoly position which causes or may cause anti-competitive effects 2.1.2.2. Specific market dominance abuses a) Selling goods or providing services below costs that drives or probably drives competitors out of the market; b) Imposing irrational buying or selling prices of goods or services or establishing minimum resale price maintenance (RPM), which causes or possibly causes damage to customers; c) Restricting production and distribution of goods, services, limiting markets, preventing technical and technological development, which causes or possibly causes damage to customers; d) Applying dissimilar commercial conditions in similar transactions, which leads to or possibly leads to prevention of other enterprises from market entry or expansion or exclusion of other enterprises; e) Imposing conditions on other enterprises to conclude goods or services purchase or sale contracts or requesting customers to accept obligations which have no direct connection with subjects of such contracts, which leads to or possibly leads to prevention of other enterprises from market entry/expansion or exclusion of other enterprises; 18 f) Preventing other enterprises from market entry or expansion; g) Other prohibited abuse of a dominant position prescribed in other laws. 2.1.3 Competence and procedures for handling the abuse of dominant market positions 2.1.3.1. Provisions on handling competence According to the provisions of Point b, Clause 2, Article 46 of the Competition Law 2018, the national competition authority of Vietnam is the National Competition Commission competent to advise the Minister of Industry and Trade to perform the management function. the State on competition concurrently performs the function of jurisdiction, conducting competition legal proceedings, handling acts of restraint of competition, including acts of abusing dominant market position. 2.1.3.2. Provisions on order and procedures for investigation and handling Investigation phase: The process of investigating and handling cases of abuse of dominant market position starts when the National Competition Commission receives information detected by organizations and individuals; Complaints of organizations and individuals that their lawful rights and interests are infringed upon due to violations of the law on competition; The National Competition Commission detects acts that show signs of violations of competition laws. Handling phase: According to Article 91 of the Competition Law 2018, within 15 days of receiving the case file, investigation report and investigation conclusion, the President of the National Competition 19 Commission must issue an establishment decision The Council handling cases to handle cases of abuse of market dominance. Initiate a lawsuit to resolve complaint: In case of disagreeing with the complaint settlement decision, the organization or individual has the right to initiate a lawsuit against part or the whole of the decision to resolve the complaint. provincial level in accordance with the Law on Administrative Procedure within 30 days from the date of receipt of the decision on complaint settlement. 2.1.4. Legal consequences of abusing dominant market position According to Articles 110 and 111 of the Competition Law 2018, enterprises that commit acts of abusing their dominant market position in particular and acts of restraint of competition in general shall, depending on the nature and severity of their violations, be sanctioned. administrative violations or criminal prosecution; If causing damage to the interests of the State, the legitimate rights and interests of organizations and individuals, they must pay compensations therefor according to the provisions of law. 2.2. Practice of law enforcement on controlling abusing dominant market position 2.2.1. Situation of abusing dominant market position to limit competition in market economy in Vietnam 2.2.1.1. Identify market structure in Vietnam 2.2.1.2. Abuse of strengths, abuse of dominant market position to limit competition 2.2.2. Practicing law enforcement on controlling abuse of businesses with market dominance in Vietnam 2.2.2.1. 2.2.2.1. Current situation of Competition Law enforcement 20 agencies in Vietnam today 2.2.2.2. Results of investigations and handling of cases of abuse of dominant market position in the period of 2006 - 2017 2.2.2.2. The law enforcement on controlling abuse of enterprises has a dominant market position on the side of enterprises 2.2.3. The cause of the inadequacies and limitations in the implementation of the law - The inadequacies of competition regulations on controlling abusive behavior of enterprises have a dominant market position. - The lack of harmony, even conflict between competition laws and specialized laws. - The lack of effective coordination mechanism between the competition authority and the sector regulatory agencies to perform the task of protecting the competitive environment. - Limitations in competencies of competition agencies. - The role of the business community