The new Vietnam Competition Law that takes effect in July 2019 updates the country's antitrust regulations. Key changes include expanding coverage to entities with impacts on Vietnam's market, creating a new competition agency to centralize enforcement, adding prohibited anticompetitive agreements, reforming dominance regulations, and introducing a leniency policy for violators that cooperate with investigations. The new law aims to strengthen antitrust enforcement while offering incentives for self-reporting of violations.

1. VIETNAM – THE NEW COMPETITION LAW – PRAGMATIC PROGRESS – WHAT YOU
MUST KNOW:
The National Assembly on 12 June 2018 passed the Law on Competition No. 23/2018/QH14
(“Law on Competition 2018”). Effective from 1 July 2019, the new law replaced old Law on
Competition No. 27/2004/QH11 (“Law on Competition 2004”).The new law has made progressive
reforms from the previous law. Significantly, the Law on Competition 2018: (i) expands scope of
application; (ii) creates and holds the new competition agency accountable for its duties; (iii) adds
new types of prohibited anti-competitive agreements;(iv) reforms the concept of enterprise
dominance); and (v) introduces the leniency policy to violators of the law.
Expansion scope of application: the new law shall govern activities by Vietnamese or foreign
entity or individual which have or may have the “competition restraining impact” to Vietnam
market. The competition authority of Vietnam has the authority to deal with offshore activities and
transactions having impact on Vietnam market. In addition, the new law is applicable to apply to
non-enterprises entities, which are public service units such as hospitals, or schools.
Accountability of the new competition agency: the Law on Competition 2018 has created a new
governmental body namely National Competition Commission (“NCC”). NCC is a body of the
Ministry of Industry and Trade, NCC replaces the dual agency system under the Law on
Competition 2004 which it shall exercise discretion to investigate and adjust the cases involving
restraint of competition and unfair competitive practice. However, as a body of MOIT, NCC’s
independence and impartiality is controversial when there is an involvement of state-owned-
enterprises. The NCC is accountable for its failure to adjust the case during the prescribed time by
paying compensation where there is loss or damage suffered by the enterprise. Anti-competitive
agreements: the Law on Competition 2018 has provided four new types of prohibited anti-
competitive agreements namely: (i)agreements to share customers; (ii) agreements not to engage
in transactions with enterprise which is not a party to the agreement; (iii) agreements to limit the
product sale market or sources of supply goods and services of parties not participating in the
agreements; and (iv) other agreements which have or may have significant competition restraining
impact. The new law replaces the threshold of 30% combined market share when determining the
anti-competitiveness of the agreements. The Law on Competition 2018 imposes the significant
competition restraining impact assessment to determine whether the agreement is prohibited.

2. The assessment shall take into account the: (i) market share ratio of enterprises participating in the
agreement;
(ii) the barriers to market access or expansion; (iii) restriction of research, development and
renovation of technologies or restriction of technological capacity; (iv) reduction of the ability to
access or possess essential infrastructure; (v) increase of costs and time of customers in purchase
of goods or services from enterprises participating in the agreement or when changing to purchase
other relevant goods or services; and (vi) hindering competition in the market via the control of
special factors in industries and sectors relating to the enterprises to the agreement. The restraint
of competition agreements are applied to horizontal agreements between parties in the same related
market or vertical agreements between parties in the same supply chain. The agreement in restraint
of competition might be exempted for up to five years.Reform of abuse of dominance: the Law on
Competition 2018 upholds the market share presumption under the old law. However, the new law
replaces the concept of “substantially restrain competition” test by “significant market power” test
to identify enterprises dominance in the market.The identifying factors are:(i) market share
between enterprises in the relevant market; (ii) financial strength and scale of enterprise; (iii)
barriers to another enterprise to enter or expand the market; (iv) capability of holding, accessing
and controlling the market for distribution and sale of goods or services or the supply of goods and
services; (v) advantages of technologies, technical infrastructure; (vi) ownership and right to
possess and access infrastructure; (vii) ownership and right to use objects of intellectual property
rights; (viii)the ability to switch to sources of supply and demand of other relevant goods or
services; and (ix) special factors in the industry or sector in which the enterprise is conducting
business. In terms of group dominance, the new law additionally stipulates that five enterprises
with total market share of 85% or more in the relevant market is a group of enterprises with
dominant market position.
Enterprise with market share of less than 10% in the relevant market is not a member of the group
dominance. Previously, the law prohibits an economics concentration transaction only (e.g., a
merger, consolidation or buy-out) if the combined market share of enterprises is more than 50%
of the relevant market. However, under the new law, this condition is replaced by factors as to
whether an economic concentration has or may have significant competition restraining impact.
Leniency policy: the Law on Competition 2018 for the first time stipulates the lenient approach as
to reduce or exempt penalties for enterprises which voluntarily report their violation of the law to
the competition authority prior to the investigation. The leniency does not apply to enterprises
forcing or organizing other parties to participate to the agreement. Three applicants to leniency

3. shall be entitled to an exemption of up to 100%, 60% and 40% of penalty accordingly. It remains
to be seen how this Leniency approach is handled in practice by the authorities but it is the first
step in the right direction.
If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann
under omassmann@duanemorris.com or any other lawyer listed in our office listing. Dr. Oliver
Massmann is the General Director of Duane Morris Vietnam LLC. Thank you very much!