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CRITERIA FOR RELEVANT MARKET DEFINITION IN SOME COUNTRIES EXPERIENCES FOR VIETNAMESE LAWS ON COMPETITION

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HO CHI MINH CITY UNIVERSITY OF LAW
FACULTY OF COMMERCIAL LAW

BACHELOR THESIS

CRITERIA FOR RELEVANT MARKET DEFINITION
IN SOME COUNTRIES –
EXPERIENCES FOR VIETNAMESE LAWS
ON COMPETITION

STUDENT:
COURSE:
STUDENT CODE:
SUPERVISOR:

LÊ TRUNG NHÂN
32
3260111
LL.M. TRẦN HOÀNG NGA

HO CHI MINH CITY - 2011
1


I hereby affirm that this thesis is my own study under the supervisor’s guidance.
All of the information other than my idea to be used or quoted has been
acknowledged by means of complete references. I would bear
full responsibility for my protest.

July 14th, 2011


Lê Trung Nhân


TABLE OF CONTENTS
INTRODUCTION .............................................................................................................. 1
CHAPTER I......................................................................................................................... 1
OVERVIEW OF COMPETITION REGULATIONS
AND SOME FUNDAMENTAL CONCEPTS OF RELEVANT ................................. 9
1.1. Introduction of “market” and “relevant market” concepts and
paramount role of relevant market definition in competition law ........ 9
1.1.1. Introduction of “market” and “relevant market” concepts ............... 9
1.1.2. Paramount role of relevant market definition in competition law.......
....................................................................................................................... 10
1.1.2.1. European.............................................................................. 10
1.1.2.2. The United States of America ............................................ 11
1.1.2.3. Vietnam ............................................................................... 12
1.2. Overview of regulations governing the relevant market definition in
some countries ............................................................................................... 13
1.2.1. European ............................................................................................ 13
1.2.2. The United States of America .......................................................... 15
1.2.3. Vietnam .............................................................................................. 16
1.3. Concept of relevant market definition in competition law ...................... 17
1.3.1. The “relevant market definition” concept in EU regulations ......... 17
1.3.2. The “relevant market definition” concept in US regulations ......... 18
1.3.3. The “relevant market definition” concept in Vietnamese regulations
....................................................................................................................... 19
1.4. Remarks ........................................................................................................... 20
CHAPTER II ..................................................................................................................... 22
FOREIGN REGULATIONS ON THE CRITERIA
FOR RELEVANT MARKET DEFINITION ............................................................... 22

2.1. Relevant product market .............................................................................. 22
2.1.1. Overview ............................................................................................ 22
2.1.2. Hypothetical monopolist test process............................................... 23
2.1.3. Assessing substitution under the hypothetical monopolist test ...... 25


2.1.3.1. Demand-side substitution ................................................... 25
2.1.3.2. Supply-side substitution ..................................................... 29
2.2. Relevant geographic market ........................................................................ 32
2.2.1. Overview ............................................................................................ 32
2.2.2. Basic analytical process .................................................................... 34
2.2.3. Defining relevant geographic market in practice ............................ 35
2.3. Remarks ........................................................................................................... 38
CHAPTER III ................................................................................................................... 40
VIETNAMESE COMPETITION REGULATIONS
ON THE CRITERIA FOR RELEVANT MARKET DEFINITION
AND RECCOMMENDATIONS FOR IMPROVEMENT ........................................ 40
3.1. Vietnamese regulations on the criteria for relevant market definition ......
.................................................................................................................................. 40
3.1.1. Defining the products’ substitutability ............................................. 40
3.1.2. Defining the geographic region in which the products can be
interchangeable to each other...................................................................... 47
3.2. Some recommendations to improve Vietnamese regulations on the
criteria for relevant market definition ..................................................... 51
3.2.1. The consumers’ reaction in response to a price increase ................ 51
3.2.2. Time factor in relevant market definition ........................................ 52
3.2.3. Small but significant non transitory increase in price (SSNIP) test ....
....................................................................................................................... 53
3.2.4. Relevant market definition without depending on traditional habit....
....................................................................................................................... 55

3.3. Remarks ........................................................................................................... 56
CONCLUSION ................................................................................................................. 57


INTRODUCTION
1. The necessity of doing research
Competition plays an important role in the economy, serving as a driving force of
economic growth, especially in developing countries.1 On December 03rd 2004,
Vietnamese Competition Law2 (herein after referred to as “the VCL”) was passed after
lots of argument and revision. Pursuant to regulations stipulated in this law, Vietnam
keeps two main sections of competition regulations in one act including restraint of
competition and unfair competition. At that time, there was an urgent demand to
control the restraint of competition especially towards State-owned enterprises.
Although Law on State Enterprises3 was terminated, State-owned enterprises still exist,
many of which possess dominant or monopoly position in Vietnam, i.e. this demand
also remains. Furthermore, controlling the restraint of competition nowadays,
especially when Vietnam has just joined the World Trade Organization is considered as
a means of ensuring the equal comparative environment for all sectors of the economy
in Vietnam. In other words, the role of controlling restraint of competition is more and
more important day by day.
Restraint of competition comprises three concepts including agreements in restraint of
competition, abuse of dominant market position and monopoly position; and economic
concentration, which all related to the concept “relevant market”. The more important
to control the restraint of competition is, the more necessary and pressing to define the
relevant market becomes.
Pursuant to the VCL, market share element plays a paramount role in determination of
dominant position. Examples are the VCL provisions on prohibited agreements in
restraint of competition (Article 9); enterprises and groups of enterprises in dominant
1


Vietnam Competition Authority - Ministry of Industry and Trade (2010), A summary of competition assessment
report on ten sectors in Vietnam, p. 1.
2
Law No. 27/2004/QH11 dated December 03rd 2004 of the National Assembly on Competition.
3
The law No. 14/2003/QH11 dated November 25 th 2003 of the National Assembly on State Enterprises
(hereinafter referred to as “Law on State Enterprises”) shall not be applied after July 01st 2010 (According to
Article 166 of Law No. 60/2005/QH11 dated November 29th 2005 of the National Assembly on Enterprises
(hereinafter referred to as “Law on Enterprises”)).


market position (Article 11) and prohibited cases of economic concentration (Article
18), as follows:
“The agreements in restraint of competition stipulated in clauses 1, 2, 3, 4 and 5
of article 8 of this law shall be prohibited when the parties to the agreement
have a combined market share of thirty (30) per cent or more of the relevant
market.”4
“1.

An enterprise shall be deemed to be in a dominant market position if such

enterprise has a market share of thirty (30) per cent or more in the relevant
market or is capable of substantially restraining competition.
2.
A group of enterprises shall be deemed to be in a dominant market
position if they act together in order to restrain competition and fall into one of
the following categories:
(a)

Two enterprises have a market share of fifty (50) per cent or more

in the relevant market;

(b)

Three enterprises have a market share of sixty five (65) per cent or
more in the relevant market;

(c)

Four enterprises have a market share of seventy five (75) per cent
or more in the relevant market.”5

“Any economic concentration shall be prohibited if the enterprises participating
in the economic concentration have a combined market share in the relevant
market of more than fifty (50) per cent…”6
How to define relevant market is a main process in any investigation of abusive acts
inasmuch as only after we know the sphere of relevant market can the market share be
identified.7 In case the relevant market is incorrectly defined, all of the next analyzing
4

Sub-article 9.2 of VCL.
Article 11 of VCL.
6
Article 18 of VCL.
7
Robert O’ Donoghue and A Jorge Padilla (2006), The Law and Economics of Article 82 EC, Hart Publishing –
Oxford and Portland Oregon, p. 63.
5



and discussing steps depending upon the market shares or market structure are useless.
Nowadays, competition laws of many countries have been making effort on finding out
the criteria as well as the effective methods to define relevant market exactly.8
Generally, the regulations for relevant market definition stipulated in Decree No.
116/2005/NĐ-CP9 have shown the legislature’s effort in forming lots of objectively
reflexive situations which can make influence on defining the relevant market. These
regulations, however, are not specific enough to apply for practice. Meanwhile, in
some well-known legal systems on this field, they suggest not only clear regulations
but also survey methods called professional tests including lots of complex steps to
find out whether two candidate enterprises are in the same relevant market or not.
With more than seven years of establishment and development, Vietnamese
competition laws on the criteria for relevant market definition is regarded as much
younger than many other foreign countries around the world. Therfore, studying
valuable experiences of such foreign countries in order to propose suitable suggestions
to improve Vietnamese competition laws in this issue has significant meanings and
value.
For above reasons, the topic “Criteria for relevant market definition in some
countries – Experiences for Vietnamese laws on competition” is chosen for the
author’s graduation thesis. Because of time and experience limitations, this thesis is not
able to introduce an ideal comprehensive research on the relevant market definition.
Therefore, all of comments and pieces of advice from all readers are always received
by the author, which will encourage the author to develop the analysis with the purpose
of contributing to make the Vietnamese laws not only on competition but also on the
relevant market definition become more and more applicable, ensuring the pure
competition environment as well as protecting the legitimate rights and interests of
both suppliers and consumers.

8

TS. Lê Danh Vĩnh, Hoàng Xuân Bắc, ThS. Nguyễn Ngọc Sơn (2006), Pháp luật cạnh tranh Việt Nam, Nxb. Tư

Pháp, Hà Nội, p. 239.
9
Decree No. 116/2005/NĐ-CP dated September 15th 2005 of the Government on providing detailed regulations
for implementation of a number of articles of the Law on Competition (hereinafter referred to as “Decree
116/2005/NĐ-CP”).


2. The purpose of the thesis
First of all, the thesis focuses on introducing concepts of “market” and “relevant
market” as well as the important role of relevant market definition, thereof clarifying
and comparing certain concepts of relevant market not only in Vietnamese but also in
foreign competition regulations10 so that we can figure out the similar and different
fundamental characteristics of these concepts. Such similarities and differences shall be
used to form a unified basement upon which the author as well as other researchers can
draw systematic comparisons of relevant market definition between competition
regulations of Vietnam and those of other foreign countries.
After that, the thesis will research the competition laws of some countries on relevant
market definition. Completing this step, we have an opportunity to clarify the general
characteristics of these regulations as well as consider the effective criteria for relevant
market definition.
Subsequently, Vietnamese competition regulations on criteria for definition of relevant
market shall be carefully analyzed so that we can figure out its lack of specification and
reasonableness in regulations. Discovering such weak points can help us improve the
remedies upon dealing with them.
Finally, after achieving the experiences of foreign regulations, the thesis shall suggest
several recommendations suitable for the circumstances in Vietnam so as to develop
Vietnamese competition laws on criteria for relevant market definition.
3. Delimitation
The author has certain limitation in some following points which are the study’s
objects because of time and material limitation:

Firstly, the thesis shall focus on analyzing the concept of relevant market as well as the
criteria for relevant market definition under the legal respect of competition
10

Two foreign legal systems are chosen to analyzed are those of European and the United States of America,
which will be introduced in the next section.


regulations. Thus, within the scope of the thesis, other relevant general issues of market
such as market power, how to develop market, etc… shall not be discussed.
Secondly, although relevant market plays an important role in laws on restraint of
competition field, the thesis only focuses on discussing and analyzing the criteria for
definition of relevant market. It does not concern other general legal issues of restraint
of competition area including (i) agreements in restraint of competition, (ii) abuse of
dominant market position and monopoly position and (iii) economic concentration.11
And finally, with regards to selection of foreign laws for comparison, the thesis shall
focus on analyzing the competition regulations of two legal systems. They are
European Union (hereinafter referred to as “EU”) and The United States of America
(hereinafter referred to as “US”). These two legal systems have advanced legislative
experiences of building competition law generally and defining relevant market
particularly.
4. Methodology
For the thesis’s objective mentioned above, the author shall combine various kinds of
legal methods as follows:
The main purpose of the thesis is considered as a comparison between Vietnamese and
foreign competition laws on criteria for relevant market definition, therefore,
comparative method, no doubt, becomes the main method to be used for doing
research. This is an effective method to find out the similarities as well as the
differences between two or more legal systems whenever we analyze them.
Furthermore, that comparative method is applied for distinguishing Vietnamese

regulations from other foreign countries’ regulations always helps to propose
improvement recommendations.
In addition, several traditional methods are also referred such as analytical method and
inductive method, which are really popular methods applied by lots of researchers.
They still play pretty important roles in this thesis.


Moreover, some case study shall be applied in the thesis so as to give some examples
and situations in the practice of defining relevant market not only in Vietnam but also
in the researched foreign countries.12
And last but not least, one method by which necessary information would be mainly
exploited from both legal and academic materials including books, legal journals and
even from websites on internet is called synthetic method. The author as well as other
analysts can use this method to collect the relevant information from different sources
and then make the remarkable conclusion.
5. The literature review of the research
Since Vietnamese Competition Law was passed in 2004, there have been a large
number of research works not only on unfair competition but also on restrain of
competition. According to the author’s research, these following researches including
books and academic articles are considered remarkable in relation to the matter
concerned:
(i)

“Regulations on Competition in Viet Nam” by Prof. PhD. Le Danh Vinh,
Hoang Xuan Bac, LL.M. Nguyen Ngoc Son (2006)13: Prof. PhD. Le
Danh Vinh, the Chairperson of Drafting Boards of Competition Law as
well as the Deputy Minister of Ministry of Industry and Trade, is the
general director of this book, which makes this research become a
profound and thorough analysis. Up to now, this book has been stated to
be probably one of the most valuable materials for Vietnamese

competition legislation.

(ii)

“Analyzing and interpreting the principles of competition law on abuse
of dominant market position and monopoly position in restraint of
competition” by Assoc. Prof. PhD. Nguyen Nhu Phat, LL.M. Nguyen

11

Chapter III of VCL on control of practices in restraint of competition.
Using cases in EU and US is considered as an important source because such countries are in common law
system while cases in Vietnam are introduced as practical examples for the thesis.
13
TS. Lê Danh Vĩnh, Hoàng Xuân Bắc, ThS. Nguyễn Ngọc Sơn (2006), Ibid.
12


Ngoc Son (2006)14: This book focuses on the restraint of competition
area and arranges the first section to introduce the definition of relevant
market. Nevertheless, this section is nearly the same as that in the book
mention in (i) inasmuch as LL.M. Nguyen Ngoc Son is the co-author of
both research works.
(iii)

“Concept of essential facilities or bottleneck and recommendations for
the decree providing detailed regulations for implementation of a number
of articles of the Law on Competition (“Decree 116/2005/NĐ-CP”)”15 by
PhD. Le Net – Ho Chi Minh City University of Law. This academic
article was published on Ho Chi Minh City Legal Science Magazine No.

03/2005, which describes the definition of market, market power and
recommends some additional principles for Chapter II of Decree
116/2005/NĐ-CP on the basis of the United State of America Antitrust
Law and EU Competition Law. Furthermore, another article on June 04th,
2003 by this author was introduced before Vietnamese Competition Law
was passed, which is considered as a relevant reference so as to give
some suggestions of relevant market definition for Vietnamese
Competition Bill.16

Such researchers, nevertheless, just state the important role of relevant market
definition without discussing so thoroughly on the specific and detailed criteria to
identify this concept. Consequently, this thesis shall focus on the foreign regulations on
definition of the relevant market which have not been gotten much consideration by
Vietnamese legislators, which helps to acquire effective methods as well as valuable
experiences of foreign legislation in order to improve Vietnamese competition
regulations on this matter.

14
PGS. TS. Nguyễn Như Phát, ThS. Nguyễn Ngọc Sơn (2006), 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, Nxb. Tư Pháp, Hà
Nội.
15
TS. Lê Nết (2005), “Khái niệm kiểm sốt kết nối thị trường và đóng góp ý kiến cho nghị định hướng dẫn thi
hành một số điều của luật cạnh tranh.”, Tạp chí Khoa học pháp lý Tp. Hồ Chí Minh (03).
16
Competition Law needs to accurately define the concept of market – See more in (Last visited as of June 26th,
2011)


6. The structure of the thesis

The thesis is divided into three main chapters, as defined below:
Chapter I:

Overview of competition regulations and some fundamental concepts of
relevant market definition.

Chapter II:

Foreign competition regulations on the criteria for relevant market
definition.

Chapter III: Vietnamese competition regulations on the criteria for relevant market
definition and recommendations for improvement.


CHAPTER I
OVERVIEW OF COMPETITION REGULATIONS
AND SOME FUNDAMENTAL CONCEPTS OF
RELEVANT MARKET DEFINITION

1.1. Introduction of “market” and “relevant market” concept and paramount role
of relevant market definition in competition law
1.1.1. Introduction of “market” and “relevant market” concepts
Generally, concepts of market nowadays have been provided by lots of sources. For
instance, market may be “the people who might want to buy something or a part of the
world where something is sold”17, “an occasion when people buy and sell goods; the
open area or building where they meet to do this”18 or “the total amount of trade in a
particular kind of goods”19. Basically, “market” is a concept which is understood as “a
place for people to buy and sell product”20. In other words, market in general is a place
in which a buyer and a seller (or a consumer and a supplier) are directly or indirectly

able to exchange their products or services. So when a supplier would like to sell a
certain product or service and a consumer would like to buy such product or service,
they will meet each other in the market. Nowadays, in an active economy, market may
be any situation where buyers and sellers are in contact with each other. Markets may
be local, regional, national, or international in scope and do not necessarily require
buyers and sellers to meet or communicate directly with each other any longer.21
Narrowly, market is considered as a place for selling and buying a certain kind of
product or service such as rice market, coffee market, securities market, capital market,
17
18
19
20
21

(Last visited as of July 24th, 2011)
(Last visited as of July 24 th, 2011)
(Last visited as of July 24 th, 2011)
Ban biên soạn chuyên từ điển New Era (2005), Từ điển tiếng Việt, Nxb. Văn hóa thơng tin, Hà Nội, p. 1838.
(Last visited as of July 24th, 2011)


etc… Sometimes, this concept will also be regarded as a certain place where many
kinds of products and services are bought and sold such as Ha Noi market, southern
market, etc… On the other hand, should the concept of market be broadly analyzed in
economics, in the market a large number of people will buy and sell goods in
competition with each other not only every time but also everywhere, which comprises
product-service market, labor market and currency market.22
Nevertheless, in competition field, there is a new concept of market called “relevant
market”. This concept is explained and applied differently from the above
explanations. For example, enterprise A produces sport shoes while enterprise B

produces casual shoes. So, all of trade in relation to these product of both firms will
establish the “shoes market” with general meaning. However, these kinds of products
are considered not to be in the same relevant market in competition field because they
cannot be substitutions for each other. In other words their characteristics; use purposes
or prices are not the same and for that reason both firms supplying such products are
not regarded as competitors of each other. Relevant market definition really plays an
important role in competition law, which will be discussed in detail below. Pursuant to
competition regulations of some countries all over the world, especially EU and US
systems, to define the relevant market will help the agencies to identify the market
share and then make the final conclusion of whether the enterprise in question abuses
its dominant market position, or must be controlled by regulations on agreement to
restrain competition or merger or not.23
1.1.2. Paramount role of relevant market definition in competition law
1.1.2.1. European
Market definition is considered as a vital concept to all aspects of competition law
since competition has to be thought of in relation to the relevant market. The purpose
of defining the relevant market is to identify which product and services are such close
substitutes for one another that they operate as a competitive constraint on the behavior
of the suppliers of those respective products and services.

22

(Last visited as of June 26th, 2011)


The EU Community Courts have stated that it is only by defining the relevant market
that the competitive constraints affecting the firm or firms on that market can be
identified. In other words, the definition of a relevant market is necessary prerequisite
for the assessment of dominance because market shares can only be measured when the
boundaries of the relevant market have been accurately determined.24 The scope of the

relevant market defined makes influence on whether a firm enjoys a dominant position
or not, thus both errors in defining the relevant market including narrow definition and
broad definition are costly.25 An overly narrow definition will be under-inclusive and
lead to the imposition of obligations on a firm that are unjustified while an excessively
broad definition will be over-inclusive and allow unilateral conduct that threatens
effective competition to escape scrutiny.26
1.1.2.2. The United State of America
In US, the relevant market definition plays two roles27. Firstly, market definition helps
specify the line of commerce and section of the country in which the competitive
concern arises. In any merger enforcement action, the Agencies will normally identify
one or more relevant market in which the merger may substantially lessen competition.
Secondly, market definition allows the Agencies to identify market participants and
measure market shares and market concentration. Although the measurement of market
shares and market concentration is not an end of itself, it is useful to the extent it
illuminates the merger’s likely competitive effects
Similar to EU Competition regulations, the principles stipulated in the Horizontal
Merger Guideline also mentions the cases of broadly defined market and narrowly
defined market, which may cause misleading market shares. Defining a market too
broadly includes pretty far product and geographic substitutes. At that time, the
competitive significance of distant substitutes is likely not to get balanced with their
23

See DG Competition discussion paper on the application of Article 82 of the Treaty to exclusionary abuses,
Brussels, December 2005, para. 11 as quoted in Robert O’ Donoghue and A Jorge Padilla, Ibid, p. 63.
24
Robert O’ Donoghue and A Jorge Padilla, Ibid, p. 63.
25
See an example on case of K+ in section 1.1.2.3.
26
Robert O’ Donoghue and A Jorge Padilla, Ibid, p. 64.

27
Horizontal Merger Guidelines of US Department of Justice and the Federal Trade Commission dated August
19 th, 2010, p.7. (hereinafter referred to as “Horizontal Merger Guidelines”).


shares in an expanded market. In the other hand, market shares of various products in
narrowly defined markets are more likely to capture the relative competitive
significance of these products as well as often more accurately reflect competition
between close substitutes. Furthermore, defining the relevant market like this usually
exclude several substitutes to which some customers might switch to upon facing with
a price increase though such substitutes provide interchanges for those customers. For
the purpose of solving this problem, the hypothetical monopolist test is designed to
ensure that candidate markets are not overly narrow in this respect.28
1.1.2.3. Vietnam
As introduced above, restraint of competition according to Vietnamese competition
regulations comprises three concepts including (i) agreements in restraint of
competition, (ii) abuse of dominant market position and monopoly position and (iii)
economic concentration, which all depend upon definition of the relevant market. The
importance of market definition increases day by day whenever the agencies would
like to control the restraint of competition. Again, to determine the relevant market is a
main process in any investigation of abuse acts because of the same reason as that
given by foreign competition regulations. Consequently, if the relevant market is not
accurately identified (too broadly or too narrowly), all of the next analyzing and
discussing steps depending upon the market shares or market structure shall become
errors. For example, in the case of K+ recently29, how wide was the relevant market in
this case taken into consideration? It may be a market of supplying entertainment
programs such as sports, cultural, music, game show, etc…. Narrowly, it can be a
market of supplying sports programs in which the programs of many kinds of sports
such as tennis, swimming, boxing, marathon, etc… would become the competitors. In
the narrowest way, i.e. for soccer programs only, the relevant market of K+ may

comprise soccer programs for Championship of other countries such as Germany, Italy,
Spain, etc… 30

28

Horizontal Merger Guidelines, p. 8.
This is a case in relation to supply the Premier League programs monopolistically.
30
GS. TS. Nguyễn Vân Nam (2010), “Vụ K+ nhìn từ Luật Cạnh Tranh”, Thời báo Kinh tế Sài Gòn online,
(16/8/2010).
29


Since Vietnam became a member of the World Trade Organization in 2007, our
government has been building a market economy in accordance with other countries’
standards all around the world. This means that the role of Vietnamese competition
regulations, generally, as well as the role of relevant market definition, specifically, is
more and more appreciated. This fact is again confirmed once the case of Megastar, a
recently remarkable case, occurred.31 The more competition cases appear, the more
practical principles guiding on market definition need to be applied. So, day in day out
Vietnamese competition regulations for this matter had better be developed so that they
can satisfy almost all of the continuously changing relationships in our society.
1.2. Overview of regulations governing the relevant market definition in some
countries
1.2.1. European
First of all, the EU Commission assesses market definition in the three main areas of
EU Competition Law (i.e., Articles 101, 102 TFEU32 and the EU Merger Regulation
No. 139/2004 dated January 20th, 2004 on the control of concentrations between
undertakings). In general, Article 102 TFEU plays a paramount role of market
definition. This article only applies to the conduct of firms that are dominant at the

time the alleged abuse is committed, i.e., firms can act with a degree of independence
from their competitors, customers, and consumers.33
Although the approach to market definition under Article 102 TFEU is broadly suitable
with the regulations applied in merger cases and Article 101 TFEU, the methods how
to define the relevant market under Article 102 TFEU are slightly different from those
of EU Merger Regulation. In other words, in spite of the doctrinal equivalence of
market power under both Article 102 TFEU and EU Merger Regulation, a number of
differences between two regulations should be mentioned, as specified below:34

31

This case will be introduced in sub-section 1.2.3. and 3.1.
Both articles are formerly Articles 81 and 82 of the EC Treaty. See the application of Articles 101 and 102
TFEU - (Last visited as of July 25 th,
2011)
33
Robert O’ Donoghue and A Jorge Padilla, Ibid, p. 63.
32


(i)

The objective of market definition under Article 102 TFEU and that
under the EU Merger Regulation are not the same as each other. So,
market definition under Article 102 TFEU is believed to be more difficult
to be made than in merger control; and

(ii)

EU Merger Regulation is considered to use much more quantitative

techniques such as co-integration analysis and regression studies in order
to test the degree of substitution among products for purposes of defining
the relevant market than Article 102 TFEU.

Beside, lots of market analysts think that economics also plays an important role in
market definition35 because economic thinking almost certainly provides a more
reliable indicator of current and future policy on market definition than older cases
under Article 102 TFEU.
Therefore, in October 1997, the European Commission, which plays the key role in
enforcement of the EU competition rules, publicized a notice36 on relevant market
definition for the purposes of Community competition law, which provides a
framework for determining the relevant market which is base on economic principles
and has been appreciated as a progressive and realistic approach to the matter.
Especially, two main objectives of this Notice have been focused in paragraphs 1 and
2, as follows:
(i)

The Notice provides guidance as to how the Commission applies the
concept of the relevant product and geographic market in its ongoing
enforcement of Community competition law; and

(ii)

Market definition is a tool to identify and define the boundaries of
competition between firms, so the Notice serves to establish the
framework within the Commission applies competition policy.

34

Robert O’ Donoghue and A Jorge Padilla, Ibid, p. 65-66.

See more the paramount role of economic in market definition in Robert O’ Donoghue and A Jorge Padilla,
Ibid, p. 67.
36
Alison Jones and Brenda Sufrin (2001), EC Competition Law – Text, Cases and Materials, Oxford University
Express, p. 41-42
35


However, the European Court of Justice or the European Court of First Instance does
not completely depend on this Notice when giving the interpretation inasmuch as it is
not binding as well as not legislation. In brief, Commission’s Notice is used for vitally
important reference since it sets out the Commission’s current approach to the criteria
for relevant market definition in EU competition regulations particularly and
competition regulations of other countries all over the world generally.
1.2 2. The United States of America
The legal documents which are applied to define the relevant market in the US are the
Horizontal Merger Guidelines,37 which describe how the Agencies will determine the
relevant market in merger cases. These Guidelines was updated on August 19th, 2010,
replacing the Horizontal Merger Guidelines issued in 1992, revised in 1997.
According to the explanation in the overview section, these Guidelines outline the
principal analytical techniques, practices, and the enforcement policy of the
Department of Justice and the Federal Trade Commission (hereinafter referred to as
“the Agencies”) with respect to mergers and acquisitions involving actual or potential
competitors under the federal antitrust laws. The relevant statutory provisions include
Section 7 of Clayton Act, 15 U.S.C 18, sections 1 and 2 of the Sherman Act, 15 U.S.C
1,2, and Section 5 of the Federal Trade Mission Act, 15 U.S.C 45. Most particularly,
Section 7 of the Clay Act prohibits mergers if “in any line of commerce or in any
activity affecting commerce in any section of the country, the effect of such acquisition
may be substantially to lessen competition or to tend to create a monopoly.”38
These Guidelines are revised from time to time as necessary to reflect significant

changes in enforcement policy, to clarify existing policy, or to reflect new learning.
They also define markets exclusively for the purpose of analyzing horizontal mergers,
in which the chief concern is not exercises of market power by a single firm, but rather
increased likelihood of collusion. In the updated version in 2010, there are total thirteen
37

See more section 3.8. on market definition in the Justice Department Mergers Guidelines in Herbert
Hovenkamp (2005), Federal antitrust policy the law of competition and its practice – Third edition, Thomson
West Publishing, p. 129.
38
Horizontal Merger Guidelines, p. 1.


sections with specific explanations and examples. Especially, the relevant market
definition is analyzed in section 4.
1.2.3. Vietnam
The Competition Law of Vietnam promulgated in 2004 is considered the first legal
document to directly and expressly regulate “the criteria for relevant market
definition”. Specifically, the definition of relevant market is mentioned in sub-article
3.1 of Competition Law. After that, several legal documents continued to be
promulgated for guiding and detailing the implementation of the Competition Law39
such as Decree 116/2005/NĐ-CP, Decree 120/2005/NĐ-CP, Decree 05/2006/NĐ-CP
and Decree 06/2006/NĐ-CP.
Of these legal documents, Decree 116/2005 NĐ-CP dated 15 September 2005 of the
Government on detailing the Implementation of a number of Articles of the
Competition Law plays an important role on guiding the criteria for definition of the
relevant market. The legislators arrange these kinds of regulations in section 1 of
chapter II in the decree including five articles, from Article 4 to Article 8.
These regulations, in general, are built by doing research on and receiving methods of
relevant market definition from competition regulations of developed countries.

Nevertheless, according to the author, these pieces of guidance are not specific and
detailed enough to be applied as a practical tool whenever the agencies would like to
define the relevant market, especially, when Vietnam is still a developing country with
a really young market economy. In order to clarify this statement, the case of Megastar
Media J.V Co., Ltd. is mentioned as a following practical example.

39

Such as:
Decree No. 116/2005/NĐ-CP dated September 15th 2005 of the Government on providing detailed
regulations for implementation of a number of articles of the Law on Competition (hereinafter referred to as
“Decree 116/2005/NĐ-CP”).
Decree No. 120/2005/NĐ-CP dated September 30th 2005 of the Government on Dealing with Breaches
in the Competition Sector.
Decree No. 05/2006/NĐ-CP dated January 9th 2006 of the Government on Establishment, Functions,
Duties, Powers and Organizational structure of Vietnam Competition Council.
Decree No. 06/2006/NĐ-CP dated January 9th 2006 of the Government on Functions, Duties, Powers
and Organizational structure of Vietnam Competition Administration Department.


“On May 12th, 2011, the administrative body for competition made a
decision of preliminary investigation for Megastar Media J.V Co., Ltd.
(“Megastar”) after having accepted jurisdiction over a complaint file of a
competition case which stated that Megastar abused the dominant market
position. These agencies, however, found it difficult to make the final conclusion
of whether Megastar has a market share of thirty percent (30%) or more in the
relevant or not. In other words, such agencies cannot define the relevant market
to make the correct calculation of Megastar’s market share thanks to the
current legal regulations. 40” In Vietnam, actually, there are a few cases in
competition field41, thus the relevant regulations in this field have not regularly

applied, which can make the competition authorities confused upon dealing with
the cases in relation to those regulations.
No doubt, to build the criteria for definition of relevant market for guiding current
Vietnamese legal documents in competition field become more urgent than ever
before.42 Consequently, the author hopes that this thesis will be able to support
Vietnamese legislators in their establishing a more effective guidance for this matter.
1.3. Concept of relevant market definition in competition law
1.3.1. The “relevant market definition” concept in EU regulations
EU regulations on competition have provided a detailed and specific definition of a
relevant market, which is considered as a standard concept in history of competition
legislation, as quoted below:
“A relevant market is defined according to both product and geographic
factors. In general terms, a relevant product market comprises all those
40

Megastar case in respect of competition field - (Last visited as of July 15th, 2011)
41
Beside case of Megastar, there are few other cases such as case of K+ and Vinapco.
42
Related market definition which comprises determining the geographic market and relevant product market
related to specific research areas is the first step in the third group of criteria – Evaluation of market structure.
See more in the section of A competition Assessment Framework applied to Vietnam, Vietnam Competition
Authority - Ministry of Industry and Trade, A summary of competition assessment report on ten sectors in
Vietnam, 2010, p.5-8.


products and/or services which are regarded as interchangeable or
substitutable (substitutability) by reason of product characteristics, prices and
intended use. Products and/or services that could readily be put on the market
by other producers without significant switching cost or by potential

competitors at reasonable cost and within a limited time span also need to be
taken into account. The relevant geographic comprises the area in which the
undertaking concerned are involved in the supply and demand of products or
services, in which the conditions of competition are sufficiently homogeneous
and which can be distinguished from neighboring areas, because the conditions
of competition are appreciably different in those areas.”43
According to this concept, the relevant market is typically defined along a product
dimension and a geographic dimension. In its product dimension, the relevant market
includes those products regarded as substitute or interchangeable products that compete
with each other to satisfy customers’ demands. A question given is how the
substitution is most accurately measured. To recommend the solution for this problem,
the analysts suggest the following method:
Firm A intends to increase its product‘s price. A research shall be done on the extent to
which customers of firm A’s product would not mind deciding to switch to use other
firm’s product with nearly the same characteristic, intended use and price (firm B’s
product, for instance), which is called the effect on demand of non-trivial price
increases. In case firm A do not get any profit from increasing its product’s price, or in
other words, the value of the sales lost to firm B or any other rival firms exceeds firm
A’s profit from the price rise, it shall be stated that firm A’s product and its rival
products are likely to be in the same relevant product market. Besides, unless
quantitative analysis of this kind can be performed, the qualitative criteria such as
product characteristics may be applied to define the relevant product market.
1.3.2. The “relevant market definition” concept in US regulations

43

Commission Notice on the definition of the relevant market for the purposes of Community competition law
[1997] OJ C372/5 [1998] 4 CMLR 177.



Section 4.1 of the Merger Guidelines provides the principles applying to product
market definition as well as gives guidance on how the Agencies most often apply
these principles. Similarly, section 4.2 describes how the same principles are applied to
geographic market definition. The legislators analyze two elements separately in order
to discuss and explain the matters more simply. Nevertheless, the principles introduced
in Sections 4.1 and 4.2 are combined to describe the definition of the relevant market,
which has both a product and a geographic dimension. In other words, according to the
principles described in both sections, the hypothetical monopolist test shall be applied
to a group of products along with a geographic region to define a relevant market.
The Justice Department Merger Guidelines define a product relevant market as a
product or group of products and a geographic area in which it is produced or sold such
that a hypothetical profit maximizing firm, not subject to price regulation, that was the
only present and future producer or seller of those products in that area likely would
impose at least a “small but significant and non-transitory” increase in price
(“SSNIP”), assuming the terms of sale of all other products are held constant. A
relevant market is a group of products and a geographic area that is no bigger than
necessary to satisfy this test.44
Upon determining geographic relevant market without the price discrimination, the
Agency tries to identify the region in order that a hypothetical monopolist would
profitably impose at least a “small but significant and non-transitory” increase in price,
holding constant the terms of sale for all products produced elsewhere. The
hypothetical monopolist in this case was the only present or future producer of the
relevant product at locations in that region.
1.3.3. The “relevant market definition” concept in Vietnamese regulations
Built thanks to doing research on many countries’ legislation all over the world, the
“relevant market” concept in Competition Law of Vietnam is indirectly defined by
listing the components instead of directly defined, i.e. relevant market consists of

44


Herbert Hovenkamp, Ibid, p. 129.


relevant product market and relevant geographic market.45 VCL also provides the
explanation of these concepts, as defined below:
(i)

Relevant product market means a market comprising good or services
which may be substituted for each other in terms of characteristic, use
purpose and price.

(ii)

Relevant geographic market means a specific geographic area in which
goods or services may be substituted for each other with similar
competitive conditions and which area is significantly different from
neighboring areas.

So, only when the relevant product market and the relevant geographic market are
accurately and effectively defined is the relevant market definition clarified. In other
words, steps in the definition of the relevant market essentially stem from the methods
how to define the relevant market components including relevant product market and
relevant geographic market.
These concepts are introduced again in Decree 116/2005/NĐ-CP 46. Thereof, as
mentioned above, articles 4, 5, 6, 7 and 8 in section 1 chapter II of Decree
116/2005/NĐ-CP are specified in a detailed way to become the criteria for relevant
market definition in Vietnamese Competition Law.
1.4. Remarks
In brief, the important role of the criteria for relevant market definition in competition
regulations is undeniable. The Vietnamese authorities nevertheless have had lots of

difficulties in dealing with this matter due to the lack of specific and detailed guidance
up to now. Consequently, this kind of guidance including effective principles had
better be established as soon as possible, especially when Vietnam joined the World
Trade Organization with the market economy and when there are more and more cases
in relation to competition field.
45
46

Sub-article 3.1 of VCL.
Sub-articles 4.1 and 7.1 of Decree 116/2005/NĐ-CP.


According to the overview of EU and the US competition principles discussed above,
the relevant market is typically defined along a product dimension and a geographical
dimension. Therefore, upon analyzing foreign regulations on the criteria for the
relevant market definition in Chapter II of this thesis, the author shall approach the
objective thanks to focusing on these both dimensions. By this methodology, the thesis
can find out the similarities and differences between EU and the US competition
regulations on definition of the relevant market, which helps to evaluate the strong and
weak points of these legislation systems and recommend the logical solutions to build
the needed guidance for Vietnam in a near future.


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