The Competition Law 23/2018/QH14 (Competition Law 2018)
in Vietnam took effect on July 1 2019 and replaced the old
Competition Law 27/2004/QH11 (Competition Law 2004). The new
law contains substantial changes to the old law, and such
changes may have an impact on foreign investors' business
practices in Vietnam. In this article, we explain one of those
changes using the following hypothetical case:
Companies A and B are manufacturers in Vietnam and started
sharing information with a view toward business collaboration.
The information to be shared may include sensitive and
confidential information such as the product prices of A and
Is the above information sharing permissible under Vietnam's
Changes included in the new Competition Law
In Vietnam, competition restriction agreements are
categorised into two types: (1) 'per se' prohibition
(agreement itself is illegal); and, (2) conditional prohibition
(agreement is prohibited only if it falls under certain
conditions). Under the Competition Law 2004, a market share
approach was used for type (2) agreements (that is, only if the
combined market share of the parties to the type (2) agreement
was 30% or more, such agreement was prohibited). The new
Competition Law 2018 changed that 30% market share-based
approach to an effect-based approach (in other words, the type
(2) agreement is prohibited only if such agreement has a
substantial competition restraining impact). This shift is in
line with the global trend and will be beneficial for foreign
investors in Vietnam in the sense that not all the agreements
are prohibited merely due to their formality. On the other
hand, the new approach will cause less predictability,
especially where enforcement practice is not well established.
In this context, it should be noted that no decree detailing
the Competition Law 2018 has been issued at the time of writing
this article, although the law itself is already effective.
Such a lack of detailed guidance may further reduce the
predictability of the new law in practice.
Returning to the hypothetical case, agreements for (a) price
fixing, (b) market sharing, and (c) output limiting among
competitors (horizontal relationship) were previously
categorised as a type (2) conditional contract. This means that
they were not restricted as long as their combined market share
remained less than 30% (Articles 8.1 and 9.2 of the Competition
Law 2004). Under the Competition Law 2018, these three types of
agreements are categorised as (1) 'per se' prohibition
agreement. This means they are banned, regardless of the market
share or importance of the competition restrictive impact.
(Articles 11 and 12 of the Competition Law 2018).
On a related note, it was unclear if these agreements among
vertical relationship parties (for example, supplier,
manufacturer, and sales agent) were prohibited under the
Competition Law 2004, but the Competition Law 2018 clarifies
that those vertical agreements are also prohibited as type (2)
agreements (in other words, they are prohibited if they have a
substantial competition restraining impact, either in the
upstream or downstream market).
Risk of information sharing under the Competition Law
Similar to other jurisdictions, Vietnam's antitrust system
does not prohibit information sharing itself. However, the
sharing of sensitive and confidential information may raise
suspicions if it is an arrangement for prohibited competition
restriction agreements. In assessing the risk posed by the
information sharing, three main questions should be addressed:
(i) with whom is the information being shared? (ii) what are
the details of the information to be shared? and, (iii) why
does such information need to be shared with competitors?
With whom is the information being shared?
As explained above, horizontal anti-competitive agreements
are per se prohibition, while vertical agreements are
prohibited depending on their impact on competition. Therefore,
if companies A and B in the hypothetical case above are
competitors, the risk of information sharing is higher compared
to where companies A and B are supplier and manufacturer.
What are the details of the information to be shared?
The antitrust risk posed by information sharing practices
may vary based on the nature of the information to be shared. A
mere exchange of general information such as political trends,
or a regulatory update, is generally less risky than an
exchange of sensitive and confidential information such as
price, cost, customer list (division of customer/market), or
In the situation above, the information to be shared
contains product prices of A and B, and it may raise suspicions
of a price-fixing arrangement.
Why does such information need to be shared with
If information sharing is conducted between the vertical
companies, the purpose of such information sharing is an
important factor in determining if it is prohibited as an
anti-competitive agreement. For example, if the information
sharing is for the purpose of joint research and product
development between the supplier and manufacturer and such
joint research and product development rather enhances
competition in the market, such information sharing is less
likely to be prohibited. Even in a horizontal relationship,
information sharing for a certain purpose that is permissible
under other laws may be exempted as an exception under the
Competition Law 2018. How an agreement under which the
pro-competitive effect outweighs the anti-competitive effect
within the Vietnam market is treated is unclear under the
Competition Law 2018, but we hope that guidelines or
enforcement practice will clarify that such agreement will not
be prohibited and the authority's exemption decision process is
not required for such a purpose.
In the situation above, depending on the purpose of
information sharing and the collaboration between A and B, such
information sharing may be allowed under the Competition Law
Vietnam's Competition Law is still under development and
only a limited number of precedent cases under the old law have
been published. How the competent authority may view or
interpret an act of information sharing and how strictly they
will enforce it under the new law remains uncertain. It would
be no surprise if the competent authority were to enhance its
investigation of the anti-competitive agreements considering
the stricter regulation under the Competition Law 2018. A
leniency programme newly introduced under the Competition Law
2018 may also give rise to a new trend in enforcement
Anti-competitive agreement is just one of the areas to which
changes have been made under the new Competition Law 2018.
Other areas such as the abuse of dominant market position and
economic concentration, have also been subject to substantial
changes under the Competition Law 2018. Market practice in
Vietnam, however, is not yet well established and the old
habits/customs of local companies may expose foreign investors
(including offshore investors, as the Competition Law 2018
clearly provides its extraterritorial application) to the risk
of unconscious/unintended violation of these new regulations.
It is a key to success in a developing market like Vietnam to
consult with experts and adequately manage these risks.
Accordingly, we hope that our article will be of some help to
you in being aware of such potential risks.
||Cao Bao Tran