Pháp luật chống định giá lạm dụng của EU, hoa kỳ, việt nam – so sánh và kinh nghiệm áp dụng cho việt nam

Luận văn

Table of Contents

PREFACE 5

List of Abbreviations 7

1 INTRODUCTION 9

1.1 Background 9

1.1.1 Relationship of competition and monopoly 9

1.1.2 Pricing in competition and monopoly 11

1.1.3 Monopoly control laws in US, EU and Vietnam 11

1.2 Purposes: 25

1.3 Definition and delimitation 26

1.4 Methods 29

1.5 Value of the research: 31

1.6 Outline 31

2 REGULATIONS AGAINST ABUSIVE PRICING UNDER EU AND US LAW 33

2.1 Basic rules and concepts on abusive pricing in EU and US 33

2.1.1 Basic rules 33

2.1.1.1 EU Competition Law and US Anti-Trust Law are directed against abusive conduct, which includes abusive pricing 33

2.1.1.2 Laws against abusive pricing in the EU and the US protect Competition, not Competitors 45

2.1.2 Concept of Dominant position, Market power and Monopoly power 48

2.1.2.1 General approach: 48

2.1.2.2 Identification: 51

2.1.3 The Relevant Market concept 57

2.1.3.1 The relevant product market: 59

2.1.3.2 The relevant geographic market: 62

2.2 Specific forms of abusive pricing 64

2.2.1 Excessive pricing: 64

2.2.1.1 Excessive pricing on the selling side 65

2.2.1.2 Excessive pricing on the buying side 73

2.2.1.3 Remarks 75

2.2.2 Predatory pricing 76

2.2.2.1 EU test of predatory pricing 83

2.2.3 Price Squeeze 86

2.2.3.1 Price squeeze in the US 88

2.2.3.2 Price squeeze in the EU 92

2.2.4 Price Discrimination 98

2.2.4.1 Price discrimination in the US 99

2.2.4.2 Price discrimination in the EU 102

2.2.5 Discount or rebate schemes 104

2.2.5.1 Bundled discounts 105

2.2.5.2 Single-product royalty discounts 110

2.2.6 Remarks 116

2.3 Remedies to abusive pricing in EU and US laws 117

2.3.1 Conduct and Structural Remedies 118

2.3.1.1 Termination of infringement 119

2.3.1.2 Behavioural remedies 120

2.3.1.3 Structural Remedies 121

2.3.2 Monetary Remedies 125

2.3.2.1 Fines and penalties 126

2.3.2.2 Compensation 128

2.3.2.3 Legal Fees 133

2.3.3 Criminalization and Incarceration: 134

2.3.4 Remarks 134

3 ABUSIVE PRICING IN VIETNAM COMPARED WITH EU AND US 137

3.1 Background, basic rules and concepts 138

3.1.1 Gradual development of legislation and enforcement capacity 138

3.1.1.1 Development of Vietnamese laws 138

3.1.1.2 Competent Authorities for regulating abuses of dominance 146

3.1.2 Recent practices related to of abuse of dominance 150

3.1.2.1 Vinapco case 151

3.1.2.2 Megastar case 153

3.1.2.3 K+ issue 154

3.1.2.4 “Electric pole war” 157

3.1.2.5 Medicine and milk prices 161

3.1.3 Basic rules 165

3.1.3.1 Abusive conducts including abusive pricing 165

3.1.3.2 Vietnamese Competition Law protects competition and competitors 170 3.1.4 Concepts 171

3.1.4.1 Dominance and monopoly position 171

3.1.4.2 Relevant market: 175

3.2 Specific forms of abusive pricing in Vietnamese laws 177

3.2.1 Excessive pricing: 178

3.2.1.1 Excessive pricing on the selling side 178

3.2.1.2 Excessive pricing on the buying side 180

3.2.1.3 Fixing a minimum re-selling price 182

3.2.2 Predatory Pricing: 184

3.2.3 Price Discrimination: 186

3.2.4 Foreclosing competitors 187

3.2.5 Remarks 189

3.3 Remedies to Abusive Pricing 190

3.3.1 Conduct and Structural Remedies 191

3.3.1.1 Conduct remedies 191

3.3.1.2 Structural remedies 192

3.3.2 Monetary remedies 192

3.3.2.1 Fine 192

3.3.2.2 Compensation 193

3.3.3 Remarks 194

4 SUGGESTIONS FOR IMPROVING VIETNAMESE

REGULATIONS ON ABUSIVE PRICING AND CONCLUSIONS 195

4.1 Suggestions for improving the presentation and communication of competition matters 196

4.1.1 Publication of VCAD and VCC decisions 196

4.1.2 Categorize abuses of monopoly position along with abuse of a dominant position 197

4.1.3 Determination of a dominant position 198

4.1.3.1 Single firm dominance 198

4.1.3.2 Collective dominance 199

4.1.4 Determination of a relevant market 199

4.2 Suggestions on regulations on abusive pricing 200

4.2.1 Excessive pricing 200

4.2.2 Predatory pricing 202

4.2.3 Price discrimination 203

4.2.4 Market foreclosure 203

4.2.5 Price squeeze 203

4.2.6 Discount and rebate schemes 204

4.3 Suggestions on remedies for abusive pricing 205

4.4 Conclusion 206

5 Annexes 208

1 - Extract of the VLC 208

2 - Extract of the VLC – With suggested amendments 212

3 - Extract of Decree 116/2005 216

4 - Extract of Decree 116/2005 – with suggested amendments 222

Table of Cases 228

Official Documents 233

List of websites 235

BIBLIOGRAPHY 236

of Law and Ho Chi Minh City University of Law, supported by SIDA’s

“Strengthening legal education in Vietnam” project The research focuses on laws against abuse of a dominant position in the EU, the US and Vietnam utilizing a comparative law approach

This dissertation would not have been accomplished without the help and contribution of several individuals, to whom I would like to express my deepest appreciation

First, it was my great honour to be supervised by Professor Hans Henrik Lidgard and Associate Professor Le Thi Bich Tho Professor Lidgard has given me invaluable guidance, advice and encouragement from the very first

to the final steps of the research He spent a great deal of his precious time reading and commenting my writing, and discussing the issues raised in my drafts Associate Professor Le Thi Bich Tho provided me not only with warm encouragement throughout the whole process, but also with insightful comments, especially with regard to the approach to Vietnamese law in my dissertation I would like to express my deep gratitude to Prof Lidgard and Asst Prof Le Thi Bich Tho for being my teachers and supervisors throughout both my masters and doctoral degree programs I am indebted to them for much of the professional legal content of my dissertation Any remaining errors are entirely my own

Second, I would like to send my special thanks to Mr Robert Schwartz, who helped me to improve my writing in the English language Moreover,

he provided me with many practical comments and relevant and valuable information Without his help, my dissertation would not reach the standard for international academic writing

Third, I would like to thank Dr Nguyen Thanh Tu, Professor Katarina Olsson, and all the other professors, doctors who were opponents or members of examining boards of annual prolongation seminars, during the course of which they gave me many meaningful comments and feedback on the content of drafts of this dissertation

Fourth, one thing I will never forget is the support and encouragement of the Lund University Faculty of Law and Ho Chi Minh City University of Law during my research I would like to express my gratitude to Prof Christina Moell, Prof Bengt Lundell, Prof Traskman, Asst Prof Mai Hong Quy, Dr Bui Xuan Hai, and many other professors, lecturers, administrative staff and librarians of the two universities In addition, I also would like to

send my thanks to Suffolk Law School, where I was aided in US antitrust law research In particular my thanks go to Professor Stephen C Hicks, Mr Jonathan D Messinger and Suffolk’s administrative staff and librarians Finally, I would like to thank my parents, my children, my friends and

my students for their warm support, encouragement, care and love

Ho Chi Minh City, August 31, 2011

Tran, Hoang Nga

List of Abbreviations

ASEAN Associations of South East Asian Nations

AAC Average avoidable cost

ATC Average total cost

AVC Average variable cost

CJEU Court of Justice of European Union

DOJ Department of Justice (US)

EVN Electricity of Vietnam Group

FTAIA Foreign Trade and Antitrust Improvements Act (US)

ICN International Competition Network

LRAIC Long run average incremental cost

MoF Ministry of Finance (Vietnam)

MoIT Ministry of Industry and Trade (Vietnam)

MPC Minimum – per – cap policy

SOEs State owned enterprises

UNCTAD United Nations Conference on Trade and Development

VCA Vietnam Competition Authority

VFF-FAN Vietnam football supporters association

VSTV Viet Nam Satellite Digital Television

VTV Vietnam National Television

WTO World Trade Organization

1 INTRODUCTION

Competition and monopoly are integral issues to deal with in a market economy While many other countries have long experience in dealing with these issues, Vietnam only commenced the process of transitioning from a planned to a market economy a little more than two decades ago Thus, Vietnam currently faces many theoretical and practical challenges involved

in protection of effective competition Due to its own unique circumstances, abuses of dominance are one of the most serious problems for the Vietnamese market Research in this field, therefore, has a significant potential for improving the Vietnamese economy This part of the dissertation presents different perspectives on the relevant issues, in order to explain the importance of the subject It begins with a discussion on relationship between competition and monopoly Then a description of economic theories on relationship of prices and competition is briefly presented in order to describe the influence of pricing by enterprises on various kinds of market It concludes with a description of the legal and practical situation of Vietnam in order to demonstrate the importance of research into the regulation of abusive pricing for the country

1.1.1.Relationship of competition and monopoly Competition is an essential feature of a market economy Fair competition benefits society Within the overall framework of an intense struggle among suppliers for resources and economic benefit, competition motivates them to improve their performance at all times Practical benefits are the result, such as the improvement of goods and the quality of service, with consumers getting more reasonable prices day by day However, competition in the long run may also lead to another result, because, as is

often said, “competition sows the seeds of its own destruction”.1Competition encourages the economic development, but there are always winners and losers, and when winners are too successful and grow in strength beyond a certain limit, they may achieve monopoly positions whereby they are able to prevent others from competing and damage the process as a whole Especially, monopoly positions contain ability of independently decide, or even govern, prices

From a philosophical perspective, competition and monopoly are considered to be two dialectically connected sides of a perfect whole.2

Monopoly is the opposite pole of competition: where monopoly exists, competition does not Like other economic phenomena, monopoly has advantages and disadvantages When monopoly is the reward for successful competition, it motivates competitors, thus encouraging the development of production and the economy Enterprises approaching monopoly size by way of successful competition usually have financial and technical strengths, and are often leaders in researching and applying advanced techniques Their size and economies of scale may help to minimize the fixed costs of each unit, and the monopoly enterprise can satisfy market demand at a low price, fulfil market demand with less waste and free the otherwise wasted resources for other uses However, once monopoly exists stably and firmly, the market may lose its ability to motivate Customers are forced to depend on the monopoly enterprise, so any element of balance may be lost This leads to the enterprise becoming over-confident, ignoring the demands and interests of customers Furthermore, monopolists may be attempted to abuse their monopoly position by keeping output at a level lower than demand in order to push prices up and maximize profit In the long term, monopoly may deny consumers and society the ability to choose from among the best alternatives for their demands Personnel and financial allocation will not be able to maximize efficiencies resulting in serious

1 See e.g European Commission’s Ninth Report on Competition Policy, Ninth Report on Competition Policy (1979) p.10 ("It is an established fact that competition carries within it

the seeds of its own destruction.") Available at

http://ec.europa.eu/competition/publications/annual_report/index.html : ; See also Edward

Cattermole, The Development and Implications of 'Collective Dominance' in EC Competition Law, Lund University Centre for European Studies Working Paper No 14

(2002) p 14 Available at http://www.cfe.lu.se/publikationer/cfe-working-papers-series : ;

and Marco Lankhorst, Increasing the Requirements to Show Antitrust Harm in Modernised Effects-Based Analysis: An Assessment of the Impact on the Efficiency of Enforcement of Art 81 EC, (2010) (Ph.D dissertation University of Amsterdam Center for Law &

Economics) p.20 ("Yet, competition carries within it the seeds of its own destruction.") Available at http://dare.uva.nl/document/159558

2 Dang, Vu Huan, Regulations on monopoly control and anti-unfair competitive activities

in Vietnam [Pháp luật về kiểm soát độc quyền và chống cạnh tranh không lành mạnh ở Việt Nam], National Politics Publisher, Hanoi, 2004, p 18, in Vietnamese

damage to consumers and society

1.1.2.Pricing in competition and monopoly

In a market economy, prices are one of the most important signs of the state of competition Prices are established and exercised by economic rules

In a market economy prices are the result of competition In a comparative metaphor, if demand – supply relationship is considered as the “material bones”, prices are considered to be the “face” and competition is the “soul”

of the market.3 Most basic economic concepts are relevant to prices For example, the market demand curve represents the relationship between price and supply; elasticity of demand measures the relationship between the price of the product and the demand for it; the relationship between prices and costs is used to describe perfect competition as well as monopoly The question of whether sellers are price-takers or price-makers is applied to identify whether the market is competitive, monopolistic, or oligarchic In a competitive market, prices are decided by objective economic rules, especially by the interrelation between supply and demand So sellers must obey the rules and charge the most appropriate prices in the framework of the rules which serve their competition target Otherwise, they cannot to exist in the long run and will be driven from the market

Prices are also important tools used by competitors in their struggle for existence and for a position in the market Pricing is an extremely important job in every enterprise in a market economy It is the basis for the realization

of business targets In competition, pricing is utilized at the first instance Strategies applied to other elements of production such as quality, functions,

or guarantees, after-sales care, etc., are, after all, of indirect relevance to prices Pricing can be used for pro-competitive or anti-competitive purposes

In a monopoly market, the power to govern prices is in the hands of the seller There is a great tendency to exploit that power to extract benefits and maintain the monopolist’s position Therefore, it is necessary that the power

of regulation be in the proper “hands” in order to curb this danger to a competitive market

1.1.3.Monopoly control laws in US, EU and

Vietnam

The market and its self-correcting mechanisms will erode monopoly

3 Nguyen, Nhu Phat, Market and Competition [Thị trường và Cạnh tranh], Forum for

discussion about Draft of the Law on Competition, in Vietnamese, available at

http://www.vibonline.com.vn/vi-VN/Forum/TopicDetail.aspx?TopicID=839

power and eventually it will be eliminated The extra profit (economic rent) available to a monopoly is an attraction Thus, if the barriers are low enough, many competitors will enter or re-enter the market A firm which attempts to enjoy the fruits of monopoly power by increasing prices and lowering output, will lose its monopoly power to others, since over time, its customers will switch to more efficient firms, which undercuts prices and eventually provides welfare benefits through better quality products and services Consequently, competition does come back to life However, the problem is that the monopolist is well aware of this threat; and will try his best to find ways of preventing potential competitors from entering the market There are many situations in which the market mechanism by itself

is unable to or inefficient in checking the unfair activities of a monopolist, who wants to maintain his position and nullify the efforts of potential competitors This creates a role for government intervention in the market to ensure the operation and development of fair competition, and deal with anti-competitive activities and abuse of monopoly power In a nutshell, government intervention is necessary if free competition is not to destroy itself

There is another aspect of the process, which we should also not neglect:

If markets are permitted to compete without any restraint this will also lead

to unfair competitive activities This is due to the fact that there are many ways to win and competing fairly is more difficult and requires more from the competitor’s talents, morals, will, patience, and many other factors, while unfair activities are easier to carry out, helping these competitors to reach their objectives with less expense and time and more profit Thus, if there is no one with sufficient power to point out which activities are wrong and take steps against them, many competitors will act unfairly regardless of morals because of the lure of profit “The person” with sufficient abilities and power to ensure the benefit of society and protect market participants cannot be other than the Government In conditions of model market economies, the “invisible hand” - self-correcting mechanism is, admittedly

at work but it cannot rule absolutely; the “State’s hand” is needed alongside the “invisible hand”

Generally, in a market economy, free competition is accepted, but the State utilizes suitable measures to ensure the healthy development of competition and to eliminate the disadvantages of monopoly Measures usually fall into two groups Group one includes administrative and economic measures such as taxation policies, price control, monopoly adjustment, and nationalization Group two include laws regulating competition Laws on competition include two main areas: anti-unfair competition laws and monopoly control laws In fact, many countries have

an act or laws bearing the name “Anti-Monopoly” However, no country forbids monopoly in all cases Monopoly can be the positive result of fair

competition (economic monopoly), arise from objective conditions (natural monopoly), or be established by the State to serve its purposes (state monopoly) Therefore, even if they are titled “Anti-Monopoly Acts”, these laws usually focus rather, on controlling the ways in which monopoly arises and the activities of existing monopolies Monopoly control laws normally regulate three kinds of economic activity: (i) cartels, (ii) mergers, and (iii) abuses of dominant position

Cartels and mergers are activities that aim at association and unity (no matter whether temporary or permanent, secret or open, loose or tight) in order to create an aggregation of market power which can, under certain conditions, overwhelm, constrain or eliminate rivals Thus, laws on cartels and mergers aim at preventing the dangers of this type of monopoly formation and of the way it can constrain free competition

The investigation of the concept of “dominant position” is one of the central tasks of this dissertation and will be presented and analysed more deeply in the next chapter Understand it in shorthand, common sense way it signifies an entity having enough market power to constrain the market This can, in most cases, also be called monopoly power The majority consensus is to permit undertakings to hold dominant positions in a market, while strictly prohibiting abuses by them Laws on abuses of dominant position aim to regulate the activities of existing monopoly power and prevent the elimination of competition and the harm of general consumers’ welfare

Looking at the negative side of things, we can see that where a monopoly power is abused to restrain competition, more harm is done than when mere unfair competitive activities are at issue Therefore, the role of monopoly control laws is as important as anti-unfair competition laws Abuse of market power not only harms a competitor or some particular customers, but impact consumers and society as a whole Some even regard monopoly control laws as a higher order in the hierarchical development of anti-unfair competition laws.4 If a constitution is a tool to master political power and force the government to heed the public, then monopoly control laws are tools to master economic power and force that power to obey competitive pressure Monopoly control laws could thus be considered as one of the main components of the “Economic Constitution”.5

4 Dang, Vu Huan, supra note 2, pp 77-78,

5 See e.g Pham, Duy Nghia, Professional References for Economic Law [Chuyên khảo Luật Kinh Tế], The Hanoi National University, Hanoi, 2004, p 796, in Vietnamese ; see also, U.S.v Topco Associates, Inc 405 U.S 596,610 (1972)"Antitrust laws in general, and

the Sherman Act in particular, are the Magna Carta of free enterprise They are as important

to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms And the freedom

The point in time which is largely regarded as the birth of monopoly control laws is the year 1890 with the passage of the Sherman Act in the

United States of America (US).6 After the Sherman Act, the US enacted in turn the Clayton Act7 (1914), the Federal Trade Commission Act8 (1914), the Webb-Pomerene Act9 (1918), the Robinson Patman Act10 (1936), the Wheeler-Lea Act11 (1938), the Celler Kefauver Antimerger Amendment12(1950), the Hart-Scott-Rodino Antitrust Improvements Act13 (1976), which all constituted the anti-monopoly laws (in the US called “Anti-Trust Laws”) guaranteed each and every business, no matter how small, is the freedom to compete-to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster Implicit in such freedom is the notion that it cannot be foreclosed with respect to one sector of the economy because certain private citizens or groups believe that such foreclosure might promote greater competition in a more important sector of the economy.")

on conviction thereof, shall be punished by fine or by imprisonment "

7 15 U.S.C § 15 "Except as provided in subsection (b) of this section, any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee "

8 15 U.S.C §§ 41-58 Section 45 gives the FTC the authority to identify and condemn unfair methods of competition

9 15 U.S.C §61, permitting cartels to set prices for exports

10 15 U.S.C.§ 13

11 Pub L No 75-447, 52 Stat 111 (1938) This act was an amendment to the Federal Trade Commission Act that added the phrase "unfair or deceptive acts or practices in commerce are hereby declared unlawful" to the Section 5 prohibition of unfair methods of competition, in order to provide protection for consumers as well as competition

12 15 U.S.C §§ 18, 21, Amending Section 7 of the Clayton Act to prohibit mergers or acquisitions that may substantially lessen competition or create a monopoly

13 Public Law 94-435, known commonly as the HSR Act, is a set of amendments to the antitrust laws of the US, principally the Clayton Antitrust Act 15 U.S.C § 18a, requiring parties to file a Notification and Report Form with the DOJ describing the transaction in order to assess whether the proposed transaction (over $252 Million) violates the antitrust laws and permits States to sue companies for antitrust violations parens patriae

In those Acts, Section 2 of the Sherman Act14, Sections 2 and 3 of the Clayton Act15 and the Robinson – Patman Act16 regulate abuses of a dominant position (in the US usually called a “monopoly power”)

In the European Union (EU)17, monopoly control laws came to life at the same time, and as part of, the establishment of the Community.18 It resulted from an awareness of the role of competition in the economy and the potential dangers of monopolies Moreover, monopoly control laws were essential to the building and consolidation of a united common market, preventing monopolies from fragmenting the market and imposing unreasonable burdens on consumers.19 Therefore, provisions on competition principles appeared in Articles 3 (f)20, 8521 and 8622 of the Treaty of Rome

14 Prohibits monopolisation or attempted monopolisation

15 Section 2 prohibits price discrimination, Section 3 prohibits restrictions on purchasers

16 15 U.S.C §13a This is an extension of the provision of Section 2 of the Clayton Act on price discrimination:

“It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them.”

"By its terms, the Robinson-Patman Act condemns price discrimination only to the extent

that it threatens to injure competition." Brooke Group Ltd v Brown & Williamson Tobacco Corporation, 509 U.S 209, 220 (1993)

17 In this paper, the terms “EU”, “European Community”, “European Communities” or

“EC” are used interchangeably

18 “Initially the antitrust provisions were inserted into the Treaty in view of their role in the process of market integration The antitrust rules were no more than the private counterpart to the rules, enshrined in Articles 28-30EC…Subsequently, in the second period, antitrust policy was employed to establish a broader Community industrial policy…The momentum created by the Commission’s “1992 programme’ provided the occasion for expanding the scope of Community antitrust policy even further…” R

Wessling, The Modernisation of EC Antitrust Law, (Hart 2000) pp.48-49 (Quoted in Paul Craig, Grainne de Burca, EU Law Text, Cases and Materials , 4th Edition, Oxford Press,

2008, at p 951.)

19 The objectives of EU Competition law are 1 To enhance efficiency in the sense of maximizing consumer welfare, 2 To protect smaller firms and consumers from large aggregations of economic power whether in the form of monopolistic dominance by a single firm or through agreements whereby rival firms coordinate their activities Paul Craig, Grainne de Burca, Id at pp 950-951

20 "For the purposes set out in Article 2, the activities of the Community shall include, (f) the institution of a system ensuring that competition in the common market is

of 25 March 1957 which established the European Economic Community

To an extent, both Articles 85 and 86 of Treaty of Rome are monopoly control laws since Article 85 prohibits cartels and Article 86 prohibits abuses of a dominant position The Treaty of Rome was amended by the Single European Act23 and, the Treaty of Maastricht24 establishing the European Union in 1992 This Treaty entered into force from 1 November

1993 and became the EC Treaty Articles 85 and 86 became Articles 81 and

82 of the EC Treaty and used to be called as Article 81EC, Article 82EC The Treaty was further amended by the Treaty of Amsterdam25 and the Treaty of Nice.26 Then, on 13 December 2007, the EU member states signed the Treaty of Lisbon27 (initially known as the Reform Treaty), which entered

into force on 1 December 2009 The Lisbon Treaty amends all of the prior Treaties In this process, the original Treaty establishing the European Economic Community from 1957 became the Treaty on the Functioning of the European Union (TFEU).28 Articles 81 and 82EC now become Article

101 and 102 of TFEU (Article 101TFEU and Article 102TFEU) EU

not distorted; " (Article 3 (f) was renumbered to Article 3 (g) EC and repealed and replaced

by Protocol 27 to the Treaty of Lisbon “ON THE INTERNAL MARKET AND COMPETITION and amended to read "CONSIDERING that the internal market as set out

in Article 3 of the Treaty on European Union includes a system ensuring that competition is not distorted, "

21 "1 The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decision by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, "

22 "Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States "

23 Signed in Luxembourg 17 February 1986

24 Treaty on European Union signed in Maastricht 7 February 1992.to enter into force 1 January 1993, provided that all the instruments of ratification had been deposited.,

25 TREATY AMENDING THE TREATY ON EUROPEAN UNION, THE TREATIES ESTABLISHING THE EUROPEAN COMMUNITIES AND CERTAIN RELATED ACTS signed in Amsterdam 2 October 1997 in effect 1 July 1999

26 Treaty Amending the Treaty on European Union, the Treaties establishing the European Communities and certain related Acts signed at Nice 26 FEBRUARY 2001, effective 1 February 2003

27 Treaty on European Union and the Treaty on the Functioning of the European Union,

as modified by the Treaty of Lisbon, with all Protocols and Declarations as signed in Lisbon on 13 December 2007

28 Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union O J C 83 of 30.3.2010 Available at http://eur- lex.europa.eu/JOHtml.do?uri=OJ:C:2010:083:SOM:EN:HTML

competition law learned a great deal from the US experience, coming into life as it did after more than sixty years of U.S antitrust experience There is

a correlative article in the EU legislation for every section in the anti-trust laws of the US.29 However, there are differences between the two systems, which make them competing models for the rest of the world Nowadays,

EU competition law has become a popular model not only for EU member states, but also for other European countries30 as well as many countries in Africa and Asia

Countries may adopt anti-unfair competition law and monopoly control law in separate acts, for example Germany31, China32, or adopt one act covering all areas of regulations, such as has Vietnam

In recent years, awareness of the importance of competition law has grown throughout the world Economic globalization, involving zone and world economic integration has had a positive influence on most countries

in relation to drafting and enacting competition laws International trade and investment transactions to a great extent depend on the competition laws of the country in question In the process of drafting and improving competition laws, each country wants to succeed on two issues The first is the fit between the laws and social-economic conditions, as well as its development level The second is to make the best use of the experiences of countries with competition laws In order to meet these needs, the United Nations Conference of Trade and Development (UNCTAD) has, since

1998, drafted and issued a Model Law on Competition This is a research

29 Le, Net, Anti-trust law in the US and Competition law in EU, Ministry level

Researching Project of Vietnamese Competition Law, Hochiminh City University of Law,

2002, p.45, in Vietnamese, not published

30 Eastern European countries, countries of the Commonwealth of Independent States

(CIS) After having thoroughly studied the EU model, the CIS countries signed the

Intergovernmental Treaty on the Implementation of a Coordinated Competition Policy on

24 December 1993 On this basis, the CIS adopted the Model CIS law on Protection of Economic Competition in 1996 and every other CIS state adopted its own competition laws covering both anti-unfair competition law and monopoly control laws containing regulations on abuse of a dominant position

31 The German Act against Restraints of Competition - Gesetz gegen Wettbewerbsbeschränkungen was enacted in May 1998 and came into force in January

1999 The 7 th amendment to the Act came into force from 1 July 2005 The German Act against Unfair Competition - Gesetz gegen den unlauteren Wettbewerb vom 3 Juli 2004 (BGBl I 2004 32/1414) It entered into force the day after its publication in the Official

Journal (Bundesgesetzblatt) on July 8, 2004, and replaced to the old act dating from 1909

32 The People’s Republic of China enacted their Anti-Unfair Competition Law on 2 September 1993 and commenced drafting an Anti-Monopoly Law in 1994 After 13 years

of drafting, China enacted its Antimonopoly Law on 30 August 2007 which became effective 1 August 2008

tool which has not only model articles but also syntheses and analyses, examples and records from the practical experiences of many countries and international organizations This material is amended and supplemented every year but, generally, the model articles evidence the strong influence of

to set up and develop a competitive environment for business The Vietnamese Constitution 1992 (as amended in 2001) recognized the freedom

of business and established a legal foundation providing for competition among business entities Article 15 provides for the construction and development of a commodity economy comprised of many sectors and a market regime managed by the State with a socialist orientation The State also recognizes and ensures the right of its citizens to engage in business33

on the basis of equal treatment of all business entities in all economic sectors.34 The State undertakes to “protect rights and benefits of producers and consumers” in Article 28 Under these principles, regardless of the economic sector a business entity belongs to, it will be dealt with should it engage in activity contrary to the laws, violates the right to compete of other business entities, or harms consumer benefit

A significant character of the Vietnamese economy is the imbalance of market power between state and non-state sectors This is a typical character

of countries transitioning from centrally planned economies The Vietnamese economy was dominated by state owned enterprises (SOEs).35

Although, the State has been re-arranging SOEs, privatizing a large number

of SOEs, and the number of non-state Vietnamese enterprises and foreign owned enterprises (FOEs) has increased rapidly in recent years, the state

nowadays, People’s Police Publisher, Hanoi, 2001, p 27, in Vietnamese

sector still has overwhelming market power in the majority of sectors of the economy The market power of SOEs originates from three basic sources36 : (i) Continuation of their size and high market share from the period of Vietnam’s planned economy; (ii) Enjoying privileges and government sponsored policies even where they do not have a large market share which enhances their market power in some areas; (iii) Large corporations established according to administrative decisions of State authorities, particularly General Corporations created under Decisions No 90 and 91 of the Prime Minister on 7 March 1994

One of the biggest obstacles to the privatisation and development of competition in Vietnam was the difficulty of State authorities in distinguishing between a “decisive role of a state sector” and a “state monopoly” Many state agencies supported directly or indirectly restraining other economic sectors from entering into markets under the view that an absolute monopoly or at least market constraints provided by the state sector was necessary for regulating the economy This attitude led to monopolization by SOEs On the other side, local bias by some officials hindered open competition Some local authorities gave consumers directions or required that they buy only local goods or tried to hinder enterprises from other areas from selling goods in their regions Some ministries appointed particular parties to transact the business of certain enterprises.37

Recognition of competition also means being aware of the negative effects of monopoly The realities of life in Vietnam provided clear evidence for this problem Almost all business fields monopolized by SOEs and supported by the State were sluggish or inefficient Many SOEs had not been pressed by outside competition from their establishment and notwithstanding their receiving privileges in the form of investment and credits, their efficiency and business acumen accordingly had not improved correspondingly.38 The State’s target of setting up state sectors as leaders in technology and business effectiveness, in order to best serve the people’s interests had not been achieved Conversely, these SOEs had abused their

36 Dang, Vu Huan, supra note 2, p 151,

37 UNDP and CIEM, Legal and regulation issues on competition and monopoly control policies [Các vấn đề pháp lý và thể chế về chính sách cạnh tranh và kiểm soát độc quyền kinh doanh], Project VIE/97/016, Transportation Publisher, 2002, p 80-81, in Vietnamese

38 See Le, Hong Hanh, supra note 35, pp 26-27 (“SOEs occupy almost all key economic industries, use approximately 80% investment capital from National budget and 85% labour force with high scientific - technical level and practical skills contribute 42% GDP of the whole country there are 5467 SOEs, only 39,7% of which gets interest in business, whilst owe 102,000 billion dongs i.e equivalent to 138% State capital invested into SOEs.”)

monopoly position and harmed consumers’ welfare Not only had they not assisted the State in developing the economy, they had caused instability and sudden market fluctuation They have, instead, hindered the development of Vietnam’s economy

Statistics demonstrated that the prices of goods were “much higher than the real costs, the average income of population and those prices in other countries, even in developed countries.”39 Unreasonably high prices for essential goods such as electricity, and petrol, with higher raw material and service costs for the all sectors Ironically, the result had been high prices but poor quality In the end, consumers had been the losers They had to bear the cost when water, electricity were cut off; air service was delayed or cancelled All of which were without advance notice, compensation or even

an apology Meanwhile, the same suppliers or producers were permitted to terminate supply contracts when customers do not pay on time Many SOEs were not only inefficient, produced poor quality goods or services, and unfairly exploited their customers, they also abused their dominant positions

to restrict competition Abuses of dominant position by SOEs were sometimes obvious (e.g through excessive pricing, price discrimination), and sometimes accomplished through more sophisticated means such as demanding unreasonable contract conditions, discrimination, or engaging in

a refusal to deal.40

Meanwhile, Vietnam is relying on its “Open door” policy to integrate the nation into the world economy41 The economic transition process whose polices encourage foreign investment has led to new competitors entering the Vietnamese market The foreign-investment-friendly policies of Vietnam

39 UNDP and CIEM, supra note 37, p 77

40 See, for example, Statement No 0067/TM-PC sent to the Government on the project of Competition Law [Tờ trình số 0067/TM-PC gửi Chính phủ về Dự án Luật Cạnh Tranh ,

Hanoi, dated January 6, 2004, p 2, in Vietnamese (“ abusive conducts of enterprises dominating market are happening but not regulated by laws yet For example, monopoly enterprises on buying side impose low prices (such as buying agriculture products from peasants), monopoly enterprises on selling side impose high prices or retain prices to get huge profit, or fix selling prices below prime costs to exclude competitors Imposing unreasonable tying conditions in business, such as compelling to buy or to sell, buying or selling tying with unnecessary products, services happen between processing factories or buying companies and peasants, is raised by press many times but can not be dealt with.”),

see also Government, Proposal to Assembly on project of Competition Law, No 487/CP-PC

dated April 4, 2004, p 3

41 On July 17, 1995 Vietnam – EU Cooperation Agreement was signed Then, Vietnam

officially became a member of the Association of South East Asian Nations (ASEAN) on July 25, 1995; ASEAN Free Trade Area (AFTA) on January 1, 1996 On December 10,

2001, Vietnam – US Bilateral Trade Agreement was ratified and came into effect Vietnam has entered into more than 60 bilateral trade agreements Vietnam officially became the 150th WTO member on 11 January 2007

have received a positive response from many foreign investors The influence of the foreign owned sector has created a more competitive marketplace in Vietnam In fact, FOE’s with their financial strength, advanced technology, modern business methods and especially their depth

of business experience in the world market, have overtaken domestic enterprises in fields where free competition exists The requirements of its international economic relationships require Vietnam to have functioning competition policies and a workable competition law These should both be harmonised with international normal practice and relate to and solve specific domestic problems to ensure freedom of market participants and stable development

Another danger, which has observed and warned of by many researchers42, are the activities of foreign investors While it may be said that many FOEs are themselves victims of unfair competitive activities or competition restraints by SOEs, some of them have abused their financial strength to unfairly acquire market share For example, between 1995-1998 there was a “race” of rebate campaigns between The Coca-Cola Company43and PepsiCo44 (in fact they were predatory conducts which had been condemned as one type of abuse if there had been Competition Law in Vietnam at that time), which eliminated not only their Vietnamese competitors but also their Vietnamese joint venture45 partners.46

Furthermore, a range of other activities in promotion, advertisement, distribution or agent agreements, registration of intellectual property etc demonstrate clearly that foreign businessmen have a depth of experience in competing in addition to access to large amounts of capital They are determined to win market share by means of market power, which they

42 See e.g., Pham, Duy Nghia, supra note 5, pp 837-840, in Vietnamese, see also Nguyen,

Nhu Phat and Nguyen, Ngoc Son, Analysis and discussion on provisions of Competition Law about abuses of a dominant position, or a monopoly position to restrain competition [Phân tích và luận giải các quy định của Luật Cạnh Tranh về hành vi lạm dụng vị trí thống lĩnh thị trường, vị trí độc quyền để hạn chế cạnh tranh], Justice Publisher, Hanoi, 2006, p

55, in Vietnamese

43 Coca-Cola Indochina Pte Ltd

44 Pepsico International Vietnam

45 According to http://www.pepsicocareer.com.vn/en/jobseekers/news/cate/35A4E975 , Pepsico started out with 30% of the equity in February 1994 and obtained a 100% equity position by April 2003

46 To get more information about these events, see Nguyen, Nhu Phat and Nguyen, Thi

Hien, Realities of competition and neccessity of constructing anti-unfair competition laws

in Vietnam [Thực trạng cạnh tranh và sự cần thiết xây dựng pháp luật chống cạnh tranh không lành mạnh tại Việt Nam], Competition and constructing laws on competition in

Vietnam, People’s Police Publisher, Hanoi, 2001, in Vietnamese, pp 106-108 and Pham, Duy Nghia, supra note 5, p.782 (in Vietnamese)

attempt to acquire by fair and unfair means Once they did, they did not hesitate to commit unfair competitive activities to acquire a dominant position, it seems that, they would not hesitate to abuse it to maximize profits and eliminate all competition This is especially the case if they come from countries with strict monopoly control laws which give them experience in exploiting loopholes in Vietnamese competition laws and take full advantage of them

Many unfair competitive activities and restraints on competition practices have been utilised from the beginning of market competition A number of these activities involve abuse of a dominant position or of a monopoly position leading to serious economic consequences These activities may, on the one hand, help enterprises to reap significant profits, but, on the other hand, they damage consumers and the economy as a whole In recognition

of this, the National Assembly of the Socialist Republic of Vietnam enacted

the Vietnam Law on Competition (VLC)47 on 3 December 2004 This Law came into effect 1 July 2005 It set out a basic legal framework for controlling monopoly behaviour and abuses of dominant positions

Based on theory, and Vietnam’s specific situation as described above, the issue of legislation against abuse of a dominant position is a burning question of the day and strategic task of Vietnam’s monopoly control laws These regulations must be used to force all entities possessing monopoly power to respect legal rights and economic expectations of consumers and put an end to competition restraints Abuses of market power have the greatest influence and lead to most harm to society The greater the market power, the greater the damages resulting from its abuse Therefore, the Vietnamese State – a State “of the people, by the people, and for the people”48 , “guarantees and unceasingly promotes the people’s mastery in all fields, and severely punishes all acts violating the interests of the motherland and the people; strives to build a rich and strong country in which social justice prevails, ”49– and is naturally responsible for the control of abuses of dominant position by means of stricter measures than the measures used to control other types of unfair competitive activities and competition restraints

However, since the VLC’s introduction in 2005 it has not had much practical effect In fact, so far only three cases relating to abuse of a dominant or monopoly position have been dealt with by the authorities

under the VLC The first case is Vietnam Brewery Ltd v Tan Hiep Phat Ltd

(THP v VBL), commenced in the later part of 2003, and ultimately brought

in the form of an official complaint to the Vietnam Competition Authority (VCA)50 in the beginning of 2007, after its establishment and issuance of governmental decrees providing detailed guidance on the implementation of the VLC The VCA made its decision to investigate the case in October

2007, then concluded the investigation and referred the case to Vietnam

Competition Council (VCC) for final decision Based on proposals of the

VCA, the VCC decided to terminate handling the case because the alleged enterprise did not possess a dominant position in the relevant market.51 The second case, which has reached a final result – a decision made by the Competition Case Handling Council (CCHC) – is the Vinapco case.52 The

third case is the Megastar case, in which six companies in the movie

industry submitted a complaint on Megastar’s abuses of its dominant position to the VCA in May 2010, and the VCA has made an official investigation.53

In the meantime there are many other practices which have attracted arguments from enterprises, state agencies, researchers, and lawyers about whether they are abusive conduct such as increasing the prices of pharmaceutical products, milk products, and steel, “price wars” among mobile telecommunications providers, a price dispute between VNPT and EVN over electric grids and pole rental, complaints about the price increase relating to exclusive broadcasting rights of K+ to Sunday matches of the English Premier League in Vietnam.54 This real-world situation demonstrates two problems The first is that although the VLC has been established and a range of laws and guiding legal documents have been promulgated, Vietnamese society and especially its developing business community has not developed a unified concept of this issue The second is that abuses of a dominant position still exist under various forms yet are not effectively dealt with This phenomenon raises questions regarding the practical value of the Competition Law and with respect to what the Vietnamese State should do next if it is to construct comprehensive, clear, and consistent competition policies

50 It is also called Vietnam Competition Administration Department (VCAD) In this

dissertation, VCA and VCAD are used interchangeably.

51See a detailed description in Nguyen, Thanh Tu , Competition Law, Technology Transfer and the TRIPS Agreement - Implications for Developing Countries, U.K Edward Elgar Publishing Ltd., 2010, pp 238-242; see also VCA, Annual Report 2010, p 13, English

version available at http://qlct.gov.vn/Web/Content.aspx?distid=3941&lang=en-US

52 See Nguyen, Thanh Tu, Id., p 242; see also VCA, Id., pp 11-12

53 See part 3.1.2.2 infra

54 See parts 3.1.2.3 – 3.1.2.5 infra.,

Before the enactment of the VLC, control of monopolies where the issue was the abuse of a dominant position, had been referred to in several domestic research works55 However, these materials primarily considered abuses of dominant positions and monopoly from sociological and economic perspectives or else they briefly set out the requirements and approaches for such regulations as a part of the law on monopoly control in Vietnam Moreover, after the VLC was enacted, there has been a “quiet period” with respect to the publication of research explaining the contents

of, or expressing opinions or suggestions for amending or applying the Competition Law This does not satisfy the needs of state authorities, enterprises or even consumers for reference materials, which are not legal documents themselves but serve to explain and guide them in implementing the Vietnamese competition law56 Recently, some valuable reference books have been published.57 However, these few books are simply not an adequate to provide an understanding of the content, purpose and meaning

of such a complicated and important law as the VLC Many more academic treatments of the subject are required in order to supply updated information

55 (e.g Institute of Price - Market Science , Report on researching results of Project of Solutions to monopoly control and anti-unfair competition in the process of economic transition of Vietnam [Báo cáo tổng hợp kết quả nghiên cứu Đề án Các giải pháp kiểm soát độc quyền và chống cạnh tranh không lành mạnh trong quá trình chuyển đổi nền kinh tế ở Việt Nam], Hanoi, September 1996, in Vietnamese; Institute of State and Law, Competition and construction of competition law in Vietnam [Cạnh tranh và xây dựng pháp luật cạnh tranh ở Việt Nam hiện nay], People’s Police Publisher, Hanoi, 2001, in Vietnamese; Dang, Vu Huan, Regulations on monopoly control and anti-unfair competitive activities in Vietnam [Pháp luật về kiểm soát độc quyền và chống cạnh tranh không lành mạnh ở Việt Nam], National Politics Publisher, Hanoi, 2004, in Vietnamese; Tran, Dinh Hao, Laws on competition in the condition of transition to market economy in Vietnam nowadays [Pháp luật về cạnh tranh trong điều kiện chuyển sang nền kinh tế hàng hóa nhiều thành phần theo cơ chế thị trường ở Việt Nam hiện nay], State and Law Journal, No

11(151)/2000, pp 23-28)

56 See the August 9, 2005 speech by Mr Tran Huu Huynh, Chief of the legal department

of Vietnam Committee of Commerce and Industry (VCCI)[ Vừa thực thi Luật Cạnh Tranh, vừa rút kinh nghiệm],( We gain experiences while practicing Competition Law,) Available

at http://vibonline.com.vn ; or http://vietbao.vn ; see also tranh-chua-thuc-su-di-vao-cuoc-song/20099/122409.vov (Mr Tran Huu Huynh says that after more than 4 years applied, the VLC has not really come to life, since knowledge and understanding about it are limited in a small number of people, not spread in business entities.)

http://vovnews.vn/Luat-canh-57 Le, Danh Vinh; Hoang, Xuan Bac and Nguyen, Ngoc Son, Laws on Competition in Vietnam [Pháp luật Cạnh tranh tại Việt Nam], Justice Publisher, Hanoi, 2006, in Vietnamese ; and Nguyen, Nhu Phat and Nguyen, Ngoc Son, Analysis and discussion on provisions of Competition Law about abuses of a dominant position, or a monopoly position to restrain competition [Phân tích và luận giải các quy định của Luật Cạnh Tranh

về hành vi lạm dụng vị trí thống lĩnh thị trường, vị trí độc quyền để hạn chế cạnh tranh],

Justice Publisher, Hanoi, 2006, in Vietnamese

and provide analyses of the many perspectives concerning the provisions of the VLC to meet the theoretical and practical requirements of applying it in Vietnam

Relevant materials regarding the laws of developed countries such as the

US and the EU are plentiful However, such foreign materials mainly provide information on regulations as applied in their countries Notwithstanding that limitation a comparative law approach would aid in understanding current regulations of abuses of a dominant position, while referring to Vietnamese laws and Vietnam’s factual situation to derive practical solutions to existing problems would be useful and help fill gaps in theoretical and practical solutions

As a lecturer in commercial law at a University of Law, I researched and wrote a master thesis on abuses of a dominant position58 However, due to its small size and the limited time available for writing, the thesis was a preliminary treatment of the issues I wanted to have the opportunity for a more detailed study of this topic After studying the law on abuses of a dominant position, I became aware that many abusive activities, which had been identified and condemned by authorities, related to the pricing policies

of dominant enterprises I therefore decided to perform doctoral research

with the object of producing a thesis titled: “Regulations against abusive pricing – A comparison of EU, US, and Vietnamese laws and an application of its results to Vietnam”

The results of my research should provide useful ideas with respect to regulations which will be important to the development of the Vietnamese economy Referring to the experience of other countries’ laws from a comparative perspective may also permit me to make suggestions for improving Vietnamese competition law Furthermore, I hope that the results

of my research will be helpful in my teaching and be a further reference for others interested in this topic

1.2 P URPOSES :

My research has two purposes The first is to investigate both theoretical and practical aspects of competition laws in combating abusive pricing by dominant enterprises in the EU, US and Vietnam It aims at finding

universally accepted relevant concepts, as well as commonalities in measures applied to prevent and deal with infringements It also aims at identifying differences among the laws of different countries and determining the conditions and consequences of these differences

The second purpose is to draw lessons for Vietnam This cannot be achieved without first attaining a clear and comprehensive awareness of Vietnam’s actual situation in this field My aim is to determine the contents and practical effects of current regulations on abusive pricing More importantly, I want to discover what if any deficiencies exist under Vietnamese competition law in this area and to propose solutions

In the light of the above mentioned purposes, this dissertation has the following particular tasks:

• Systematically research the theoretical bases evaluating the nature and influence of monopoly and abuses of a dominant position on the economy;

• Systematically research basic concepts relating to the practice of

“abusive pricing” and approaches to dealing with infringements

in selected legal systems to identify common problems and solutions, while also noting their differences with a view to finding useful data to apply in Vietnam;

• Examine the social and economic characteristics and the current competitive situation in Vietnam, with a focus on abuses of market power;

• Research current provisions of the VLC and other relevant legal documents on the abuse of dominant position to identify their strengths and weaknesses in relation to Vietnam’s markets;

• Propose improvements in the content and practical effects of regulations on dealing with abusive pricing by dominant enterprises in Vietnam

1.3 D EFINITION AND DELIMITATION

There is no interchangeable official definition of the term “abusive pricing”, or “pricing abuses” in the laws of any country that I have studied However, the term is popularly used in legal documents and academic legal works It appears to me that it is generally recognized as having one meaning: it refers to abuses of dominant or monopoly positions in respect of pricing Therefore, in the framework of this dissertation, I will use the term

“abusive pricing” with following definition: Abusive pricing is the abuse of

a dominant or monopoly position (in accordance with EU and Vietnamese competition law), or monopolise or attempt to monopolise (in accordance with US antitrust law), relating directly to pricing of goods or services of the infringing entity

This dissertation focuses on only laws against abusive pricing In other words, this dissertation’s contents are absolutely within the framework of unilateral pricing for restraint of competition It does not discuss collusion, i.e., joint conduct for restraining competition such as agreements and concerted practices,59 even when they relate to pricing It also does not discuss other abuses not directly related to pricing effects.even if they relate

to pricing It also does not discuss other abuses not directly relating to pricing

This work investigates the provisions of relevant laws and clarifies their justifications and values through case studies and the posing of new as yet unregulated problems In my view, there are four essential elements that are common to the comprehensiveness and effectiveness of competition law in general, and regulation against abusive pricing in particular The first element consists of the provisions setting out the basic rules to be applied The second element consists of laws and regulations required to ascertain the relevant facts in every particular case in order to provide a reliable basis for the determination of infringing conduct The third element consists of provisions on proceedings and the construction of institutions capable of enforcing rules fairly and effectively The fourth element consists of legal remedies for infringements This dissertation will not address the third element since it belongs to the broad area of litigation procedure, which also differs among legal systems such that can be the object of a separate study

As the title of this dissertation states, I have selected for examination only the laws of three legal systems: The EU, the US and Vietnam The EU and the US are the most important and characteristic legal systems, which deal with the issues concerned in this thesis US antitrust law is considered

to be the first and is still a model in this field The first antitrust laws were adopted more than 100 years ago Next comes the competition law of the

EU Enacted long after the US antitrust law, but still more than 50 years ago,

EU competition law is considered to have many advantages These two legal systems have had a great deal of experience in addressing abusive pricing,

in addition to of other forms of competition abuses The relevant authorities

in both systems have issued guidelines on abusive pricing Studying these two legal systems’ experiences in the field of fighting against abusive

59 Under EU law, regulated by Article 101TFEU; under US law, regulated by Section 1 Sherman Act

pricing is a good approach to applying their experiences and answers to relevant issues in Vietnam All basic rules, provisions and regulations on forms and remedies of the Vietnamese legal system on abusive pricing will

be analysed This dissertation will concentrate on clarifying weaknesses in the current provisions of Vietnamese law in order to develop and propose meaningful solutions

This dissertation utilises facts and legal theory obtained from many different sources, such as statutes, regulations and official guidance, decisional law from courts, administrative authorities, sources of academic thought found in books, empirical studies, legal journals, forum or conference reports, official reports, statistics from state bodies, and reports found in mass media All of the websites referred to in this dissertation were visited and double-checked for the last time on 30 June 2011 I will use my best efforts to ensure that the information used is trustworthy, reliable and updated

This Dissertation uses case law from the EU and US to illustrate issues under discussion Cases have been selected for their ability to demonstrate the state of the law in each jurisdiction and are current to 31 March 2011 With such a long development and history, the extent of sources in EU and

US law is enormous This provides huge diversified views on and practical experience for this Dissertation’s research issues However, on the other hand, this presents difficulties in performing comparisons at the macro level

in order to discover typical similarities and differences between the two systems Thus, in some instances when presenting the historical development of EU and US case law or theoretical arguments under discussion, this Dissertation relies primarily on official reports and guidelines of EU and US competition authorities and includes references made therein even if I have not studied everything myself

Several difficulties regarding Vietnamese competition law face researchers which hamper their ability to find information and update their discussions of legal issues First, is the lack of published and current information relating to Vietnamese cases The VCA and VCC websites and publications do not provide detailed information regarding cases in process, but also do not report such information for cases that have been adjudicated for some time Complete decisions of the VCA and VCC are not published Consequently, facts, participants’ arguments, and the analyses and conclusions of agencies cannot be evaluated In order to overcome these problems, information has been collected from many unofficial and indirect sources Information from a variety of sources is compared in order to weed out incorrect information These information resources are compared and selected in the following order of priority Official reports and publications from relevant state agencies are given first priority Journal articles and speeches at academic conferences are given secondary priority Where there

is no information from these sources, general information found in the mass media is used Second, it is difficult to compare the economic terms found

in English versions of Vietnamese legal documents with economic terms commonly used in the EU and US In order to resolve this issue suitable common economic terms are used to replace economic terms found in official translations of the legal documents when their use would create ambiguities

In order to fulfil the above-mentioned purposes, I use a combination of study methods for legal research To wit: the traditional legal (dogmatic) method and a comparative legal method I will also apply a historical and law and economics perspective in my research.60

Traditional legal method (or Legal Dogmatics): This method is used to

interpret and evaluate the content and systematize specific valid provisions

of concerned legal systems Sources such as laws, case law, preparatory work and doctrine are assigned value and analysed in such a way as to shed light on the given problem and find the answers to the question posed The ultimate aim of using this method is to investigate current applicable law against abusive pricing in selected legal systems It not only describes the applicable law and answers the question why the law is as it is, but also targets reaching certain rules and legal/technical significance in legislation

of the concerned law This method will be presented in my dissertation in two parts: descriptive and analytical The first part presents the area of law

to which the current problem belongs The second part scrutinizes the legal problem in terms of its components and finally it is brought together and analysed as a whole This method is used in Chapters 2, 3, and 4 of this dissertation

Comparative legal method: I use this method for discovering and dealing

with similarities and differences between the US, the EU, and Vietnamese legal systems regarding abusive pricing The interdependence and

60 See general theory of these methods in the Article “Methods in legal research” of Professor Hans Henrik Lidgard and his master students in the collection of “Research Methodology Articles” published by Lund University Faculty of Law for Doctoral Course

in Research Methodology and Legal Writing, 2006; see also Nguyen, Thanh Tu, Competition Law in Technology Transfer under the TRIP Agreement – Implications for developing countries, Doctoral Dissertation, printed and bound in Sweden by Intellecta

Infolog, Goteborg, May 2009, pp 11-20.

disparities of the systems are analysed At a macro level, I compare the spirit, style, and method of these systems At a micro level, this method is used for studying the similarities and differences between solutions provided by these systems for solving the abusive pricing problems This method is utilized in Chapters 2, 3, and 4

The law will be examined in the context of its relationship with historic conditions under which it developed Knowledge of the historic sources and statutes is a necessary foundation to the description and analysis of current provisions Analysing historic changes and their influences on the development of the law increases understanding Moreover, since this research concentrates on abusive pricing, an issue which has a large economic component, it is necessary to investigate the applicable law from

a purely economic perspective, by using economic analyses to explain, describe, construct, reconstruct, and predict legal issues Economic analyses provide insights into the market-based issues of competition law, especially pricing It requires study of economic theories in analysing rationales of norms and vice versa to examine how the functions of norms affect the economic sphere However, this is a legal dissertation only applying economic analyses and theories sufficient to provide assistance for solving

legal issues, i.e only general ideas of economic analyses or theories that are

commonly recognized are presented, not mathematical models or equations

In the process of applying above mentioned methods, the thesis will benefit from tools, such as:

• Descriptions: Where what the issues concern historical events or

practical truths, I attempt to provide a clear, concrete and exact description in words and provide basic information from all perspectives;

• Dialectics: Linking the issues in relation to historical, economic,

cultural and traditional conditions to discover and test truths by discussion and logical argument;

• Synthetics: With respect to all materials, information, doctrines

and sources of laws, I provide a general overview and try to extract objective rules and ideas;

• Comparisons: With regard to the laws of the legal systems under

review I identify their similarities and differences Furthermore, I explain their various backgrounds and explain the reasons for similarities and differences;

• Analytics: I use my own reasoning to assess the data at its true

worth to deduce or infer solutions suitable to the problems I have identified

1.5 V ALUE OF THE RESEARCH :

Academic value: In Vietnam, it will be one of the first pieces of research

on abuse of dominant position using Comparative Law methods A comparison of law methods is expressly presented The dissertation provides

a significant amount of valuable information on theoretical issues relevant

to regulations against abusive pricing by dominant enterprises, and hopefully will become a reference work in the field for studying and teaching Competition Law and Comparative Law in Vietnam Furthermore,

I hope that this dissertation will be a starting point for foreign researchers who wish to understand the activities within the Vietnamese legal system as

it endeavours to control monopoly in the first years of integration into the world market economy

Practical value: This dissertation may also help to satisfy the demands of

both enterprises and consumers who wish to understand the concepts and forms of a large group of abuses of dominant position, i.e abusive pricing, and discover ways of avoiding to do and/or defending against such infringements It will also endeavour reach conclusions and/or propose solutions for dealing with the demands of the Vietnamese legal system as it fights against abusive pricing by dominant enterprises

1.6 O UTLINE

In addition to Chapter 1, which has briefly introduced the research, this Dissertation has three main parts Part I comprises a comparison between

EU and US laws on dealing with abusive pricing The main content of Part I

is contained in Chapter 2 The chapter presents an examination of measures for dealing with abusive pricing, after setting out theoretical issues such as the basic rules of laws, concepts and forms of abusive pricing For every issue, I correlate and analyse information regarding the relevant EU and US laws

Part II, located in Chapter 3, focuses on an introduction to the same issues as addressed by the Vietnamese legal system, and makes a comparison through the same logical process to identify similarities and differences among relevant Vietnamese, EU and US relevant laws

Part III focuses on proposals for application to Vietnamese competition law drawn from the experiences obtained from the comparative research into EU and US laws This part is presented in Chapter 4, together with final conclusions of this Dissertation

2 REGULATIONS AGAINST ABUSIVE PRICING UNDER

2.1.1.Basic rules

Basic rules are prerequisites that must be set up in law at the initial step

to orient and build a framework for all provisions and decisions on the matter in the legal system Therefore, they must be examined with a view to

a clear and precise understanding before approaching and evaluating the appropriateness and effectiveness of any particular regulation EU and US laws relating to abusive pricing have two similar basic rules First is direction against all abusive conduct, which includes but is not limited to abusive pricing Second is a mandate to protect competition, not competitors This section will clarify these two rules

Law are directed against abusive conduct, which includes abusive pricing

(a) Elements of barred conduct

In the EU currently, the central provision on the abuse of a dominant position is Article 102 TFEU1 This article states: “Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices

or other unfair trading conditions;

(b) limiting production, markets or technical development to the

prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with

other trading parties, thereby placing them at a competitive

disadvantage;

(d) making the conclusion of contracts subject to acceptance by

the other parties of supplementary obligations which, by their nature

or according to commercial usage, have no connection with the

subject of such contracts

Under the first sentence in Article 102 TFEU in order for the article to be applied, three basic conditions must be met: (1) the undertaking has a dominant position in a relevant market, (2) the undertaking abuses that position, and (3) the abuse affects trade between Member States There is no statutory definition of “abuse” in Article 102 TFEU, which merely lists four categories of abusive conduct Nevertheless, the concept of “abuse” is generally considered to refer to anti-competitive business practices in which

a dominant firm engages in order to maintain or increase its position in the market.2

Under US Anti-Trust Law, Section 2 of the Sherman Act (hereinafter

1 Ex Article 82 EC This dissertation, from now on, applies following rules for citing articles of EC and EU Treaties: (i) To references to the post-Lisbon situation when the TFEU makes no change to the previous EC Treaty Article, use e.g Article 102TFEU; (ii)

To refer to a pre-Lisbon factual situation covered by the EC Treaty where Lisbon makes no change to the previous Treaty Article, it uses e.g [Article 102TFEU]

2See UNCTAD, Model Law of Competition, New York and Geneva, 2007, available at

http://www.unctad.org/en/docs/tdrbpconf5d7rev3_en.pdf , p 35, Box 8 – Abuse of

dominant position and abuse of market power, para 1; see also O'Donoghue, Robert and Padilla, A Jorge, The Law and Economics of Article 82 EC, Hart Publishing, Oxford and

Portland, Oregon, 2010, p 174, (“The term “abuse” broadly covers exclusionary or other strategic acts that are designed to extend or maintain the dominant firm's market power, to the detriment of consumers.”)

Section 2 Sherman Act) is considered to be the corresponding provision and

equivalent, in broad terms, to Article 102 TFEU Section 2 Sherman Act states:

“Every person who shall monopolize, or attempt to monopolize, or

combine or conspire with any other person or persons, to monopolize

any part of the trade or commerce among the several States, or with

foreign nations, shall be deemed guilty of a felony.”

Section 2 Sherman Act establishes three offenses: “monopolization”,

“attempt to monopolization”, and “conspiracy to monopolization” This is a typical style of common law legislation, where a provision is short enough

to present key terms, leaving their interpretation to the courts Looking at the 120-year development of antitrust law the US Supreme Court presently construes Section 2 as containing the following three offenses, which each have certain constituent elements:

The offense of “monopolization” under Section 2 Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the wilful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.3 It means that monopolization is defined as anti-competitive conduct, which accompanies the possession of monopoly power Monopolization has two forms: monopoly acquisition (conduct used to acquire monopoly unlawfully) and monopoly maintenance (conduct used to maintain monopoly unlawfully)

“Attempt to monopolize” has three elements: (1) a predatory or competitive conduct, (2) a specific intent to monopolize, and (3) a dangerous probability of achieving monopoly power.4

anti-“Conspiracy to monopolize” also has three elements: (1) a proof of conspiracy, (2) a specific intent to acquire monopoly power, and (3) an ability to do so.5

Section 2 Sherman Act and Article 102 TFEU are similar in style The two provisions indicate the basic rules behind the law The development, interpretation and application of the provisions’ terms have been left to the respective authorities and courts.6 Article 102 TFEU goes one step further in

3 United States v Grinnell Corp., 384 U.S 563, 570-71 (1966)

4 Spectrum Sports, Inc v McQuillan, 506 U.S 447, 456 (1993)

5 American Tobacco Co v United State, 328 U.S 781, (1946) at 809-810

6 The EU legal order is governed primarily by a series of treaties, to which all Member States have acceded Secondary legislation may be enacted under the authority of these treaties EU competition law is often enforced by way of decisions, which are a form of secondary legislation (Article 249EC, now Article 288TFEU) Case law of the European

that it gives examples of abuses, but in explaining the term EU law also relies on case law and implementing documents of competent agencies The advantage of this is that the law can be constantly updated in accordance with changes in commercial reality

Market power

The second similarity of the two provisions is in their basic conditions, or

in other words, basic elements, of conduct to which laws are applied Any person who has a particular market power (dominant position in EU/monopoly power in US) and carries out prohibited activities will be condemned under Article 102 TFEU or Section 2 Sherman Act When a person who has market power engages in anti-competitive conduct, he is held to have carried out an “abuse” or offense of “monopolization” or

power” In American Tobacco Co v United States, the US Supreme Court

stated that it is unlawful “ for parties, as in these cases, to combine or conspire to acquire or maintain the power to exclude competitors from any part of trade or commerce among the several states or with foreign nations, provided they have power that they are able to exclude actual or potential competition from the field and provided that they have the intent and purpose to exercise that power.”7

Here, in discussing basic conditions on the application of these laws, we note a difference Article 102 TFEU condemns only the “abuse” of a dominant position, the mere holding of such a position, or the actions of undertakings seeking to attain a dominant position when they do not yet have one, are not outlawed.8 Whilst, in US, anti-trust law is also designed to oppose “attempt to monopolize”, so Section 2 Sherman Act also controls the practices whereby firms attempt to unfairly obtain such monopoly power In order to establish the offense of “attempted monopolization”, it is not necessary that the firm already possess monopoly power, merely that a

"dangerous probability" that it may achieve it exists To assess this element,

US courts rely on the same factors used to ascertain whether a defendant

Courts forms the third plank of EU law The fourth plank includes the general principles of Community law

7 American Tobacco Co v United State, supra note 5, at 809-810

8 Europemballage Corp and Continental Can Co Inc v Commission, case 6/72 [1973]

CMLR 199, para.26

charged with monopolization has monopoly power, while recognizing that a lesser quantum of market power can suffice.9 Therefore, we can understand the element “dangerous probability of achieving [monopoly power]” as possession of considerable market power, falling short of full monopoly level market power

Both laws also provide against collective infringement Article 102

TFEU refers to “one or more undertakings of a dominant position”, and Section 2 Sherman Act refers to “every person… combine or conspire with

any other person or persons” In the EU, when a group of undertakings has,

in combination, market power, or in other words, collective dominance, it may be condemned under Article 102 TFEU if it carries out a prohibited activity

Extraterritoriality

Another similarity between the two provisions relates to the sphere of

influence of the condemned conduct Section 2 Sherman Act refers to “any

part of the trade or commerce among the several States, or with foreign nations” It means that in order for federal antitrust laws to apply, the

condemned activity must have a link to Interstate or Foreign Commerce.10

Article 102 TFEU refers to “affect trade between Member States” So, both

provisions apply to alleged conduct having influence as largely as border of states or members.11 This can be explained by the fact that they are all laws adopted by inter-country States (United States and Union) If the alleged conduct does not have such influence, it will be regulated by internal competition laws of the affected member state However, in the US, the interstate commerce requirement places little limitation on the reach of the Sherman Act Even indirect effect is deemed sufficient to establish

9 See, Rebel Oil Co v Atl Richfield Co., 51 F.3d 1421, 1438 (9th Cir 1995) "[T]he

minimum showing of market share required in an attempt case is a lower quantum than the minimum showing required in an actual monopolization case."

10 Sherman Act Section 3 describes more in details the scope of condemned affect: “ restraint of trade or commerce in any Territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, ”

11 Please note that the States in the United States are different than the nation states which are members of the EU so there is only an analogy, not an identical application The United States is one country consisting of 50 States while the EU is one Union consisting of 27 countries One is national in scope and the other is international For example the State of New York is not a sovereign nation which may enter into international relations while the member state of Germany is

jurisdiction.12 The US antitrust laws apply to any activity that is either in the flow of, or else which affects interstate commerce The scope of activities which may be deemed to affect interstate commerce is very broad Abusive activities in intrastate markets may affect interstate commerce.13 Even citywide abusive conduct may be within the jurisdiction of the Sherman Act, because it may, for instance, affect sales within a State, thus affecting purchases from out-of state suppliers “Today only a few highly localized activities, such as intracity trash collection, are even arguably out of reach of the antitrust laws.”14

A small difference between languages of the two provisions is that Section 2 of the Sherman Act is applied to infringing conduct affecting not only trade or commerce among the States, but also “with foreign nations”, whereas Article 102 TFEU does not state such a requirement However, an examination of the extraterritorial application of the two provisions demonstrates that EU competition laws use the same doctrine as the US On basis of this statute, the US courts find Sherman Act jurisdiction “even upon persons not within a state’s allegiance, for conduct outside its borders that has consequences within its borders”15, at least where those effects were intended16, and “the activities of the defendants had an impact within the United States and upon its foreign trade.”17 The import and export of goods

to and from the US is clearly “foreign commerce” within the jurisdictional reach of the antitrust laws Federal antitrust laws have likewise been held to reach activities abroad that do not involve imports to or exports from the

US, but which have an adverse effect on American foreign commerce US courts have formulated the ‘effects doctrine’ whereby US antitrust laws apply to conduct having a direct, substantial and reasonably foreseeable effect in the US, regardless of whether the conduct was carried out inside or outside the borders, or whether the alleged person has US nationality or not

In 1945, the ‘effects doctrine’ was laid down the first time in the Alcoa

case18 Here, the Second Circuit Court of Appeals held that the Sherman Act

12 Areeda, Phillip and Kaplow, Louis and Edlin, Aaron, Antitrust Analysis – Problems, Text and Cases, 6th Edition, ASPEN Publishers, 2004, pp 97-98

13 See Hovenkamp, Herbert, Antitrust, 2nd Edition, Black Letter Series, West Publishing

Co., 1993, p 269

14 Ibid

15 United States v Aluminum Co of America, 148 F.2d (2d Cir 1945) at 443

16 In order to remove themselves from Sherman Act condemnation, defendants have the burden of proof to disprove effects within the US See, Areeda, Phillip and Kaplow, Louis

and Edlin, Aaron, supra note 12, p 99

17 Continental Ore Co v Union Carbide, 370 U.S 690, (1962) at 705

18 United States v Aluminum Co of America, supra note 15, at 416

applied to a Canadian corporation because its conduct was intended to affect

US imports and did actually affect them, although its conduct concerned was just to agree with European aluminium producers to stay out of the US market In 1982 the Foreign Trade Antitrust Improvements Act19 (FTAIA)

amended the Sherman Act The FTAIA requires that as regards foreign commerce other than import commerce the antitrust laws will not apply unless the conduct has a direct, substantial, and reasonably foreseeable effect on US commerce or on US exports and such effect gives rise to a claim under the Sherman or FTC Acts The primary purpose of the FTAIA was to exempt export transactions from the Sherman Act unless they injure the American economy This provision has inevitably come to be seen as the statutory formulation of the effects doctrine The approach of some US courts in recent cases, however, has been to apply not a per se ‘effects doctrine’ but rather a ‘rule-of reason’ approach embodying conflicts of law principles as well as considerations of international comity20, foreign sovereign compulsion21, and foreign sovereign immunity22 In the EU,

19 96 Stat 1246, 15 U.S.C Section 6(a) (1982)

20See Joelson, Mark R and Griffin, Joseph P., from Washington D.C., Enforcing antitrust against foreign enterprises – Procedural Problems in the Extraterritorial Application of Antitrust laws, Report submitted to Committee C – Antitrust Law and Monopolies during

the IBA Berlin Conference, August 1980, p.7 The principle of comity and the Act of State doctrine hold that when adjudication of an antitrust complaint would require an American court to pass judgment on or become entangled in the public policy of another state, the court should not proceed However, the Act of State doctrine does not require a US federal court to dismiss a complaint merely because the litigation might embarrass the foreign sovereign; it applies only when the court is required to pass on the legality of a foreign

sovereign act (The Supreme Court so held in W.S Kirkpatrick & Co v Environmental Tectonics Corp., 493 U.S 400, 110 S Ct 701 (1990)) The US Court did not refuse to

assert jurisdiction in the interests of comity, but merely held that jurisdiction should not be exercised where the interests of the US in asserting jurisdiction are outweighed by the interests of international comity In the light of the effects doctrine the court should first decide whether it had jurisdiction Then it may determine whether jurisdiction should be

declined on comity grounds.(See Timberlane Lumber Co v Bank of America, 549 F.2d 597

at 613 (9th Cir 1976))

21 As a general rule, no one will be held liable under the American antitrust laws if the activity alleged to constitute a violation has been compelled by a foreign sovereign The defence generally applies only if the foreign power had the authority to compel the activity when the activity was carried on within the territory of the foreign sovereign Furthermore, the activity must actually be compelled by the foreign sovereign, not merely approved or tolerated In 1993 the Supreme Court, by a majority, held that the Sherman Act could be applied to the acts of the British insurers, on the ground that the foreign conduct ‘was meant to produce and did in fact produce some substantial effect in the United States' Although the UK allowed the insurers’ conduct, it did not compel it There was therefore no conflict between British and American policy, and no reason for comity concerns to

override the effects doctrine (See Hartford Fire Insurance Co v California, 509 US 764,

796, (1993))

Article 102 TFEU is silent on the question of whether or not it applies territorially However, in practice, restrictions on competition and abusive conduct which affect trade between Member States may originate outside the Community Foreign firms established outside the Community may hold dominant positions in the common market and may engage in behaviours which are abuses under Article 102 TFEU In 1972, the question whether

extra-EU competition law had an extraterritorial application was raised for the

first time in the Dyestuffs case23 In paragraph 28 of the appealed decision24

the EU Commission stated: “ The competition rules of the Treaty are, consequently, applicable to all restrictions of competition which produce within the Common Market effects There is therefore no need to examine whether the undertakings which are the cause of these restrictions of competition have their seat within or outside the Community.” Thus, the EU Commission applied a doctrine, which was roughly similar to the ‘effects’ doctrine of the US Then in its judgment the European Court of Justice –

now it is the Court of Justice of EU (hereinafter CJEU)25 - upheld the EU Commission’s decision on the basis of what has become known as the single economic entity doctrine.26 The Court imputed the conduct of the subsidiary

to the parent to hold that the EU Commission had jurisdiction over a UK company27 The Court held that the subsidiary did not have ‘real autonomy’ but acted on its parent’s instructions, so that the infringing conduct in the

EC could be treated as having been committed by the subsidiary as an agent

of the parent

The EC’s single economic entity doctrine has brought many foreign

22 Applied to a foreign sovereign which is itself an antitrust defendant, i.e the defendant is

a foreign government or a corporation wholly or partially owned by that government Today the liability of foreign sovereigns and their agents or instrumentalities under the federal antitrust laws is governed by the Foreign Sovereign Immunities Act of 1976, which generally recognizes foreign sovereign immunity only for non-commercial activities As a general rule, if a foreign sovereign makes a profit from an activity alleged to violate the antitrust laws, the American court will find the activity to be commercial, and refuse to

grant immunity See Hovenkamp, Herbert, supra note 13, p.270

23 Case 48/69 Imperial Chemical Industries Ltd v Commission, [1972] ECR 619 The

case was also an important early decision on concerted practices

24 Re the Cartel in Aniline Dyes [1969] OJ L195/11, [1969] CMLR D23

25 The European Court of Justice becomes Court of Justice of European Union under Articles 251-253 TFEU

26 EU law has developed this doctrine by which parents and subsidiaries are considered to

be one undertaking for the purposes of the application of the competition rules

27 At that time (1972), the UK had not yet become a Member State It acceded to the EU

on 1 January 1973 See http://europa.eu/abc/history/index_en.htm