REGULATIONS AGAINST ABUSIVE PRICING a COMPARISON OF EU, US AND VIETNAMESE LAW AND AN APPLICATION OF ITS RESULTS TO VIETNAM

LUND UNIVERSITY HO CHI MINH CITY
FACULTY OF LAW UNIVERSITY OF LAW

TRAN HOANG NGA

REGULATIONS
AGAINST ABUSIVE PRICING
-A COMPARISON OF EU, US AND
VIETNAMESE LAW
AND AN APPLICATION OF ITS
RESULTS TO VIETNAM

Field of Study: International and Comparative Law
Code: 62.38.60.01
A SUMMARY OF THE DOCTORAL
DISSERTATION OF LAW
HCMC-2011

2
This research was done at:
LUND UNIVERSITY, FACULTY OF LAW
HO CHI MINH CITY UNIVERSITY OF LAW

SUPERVISORS:
PROF. HANS HENRIK LIDGARD
ASST.PROF. LÊ THỊ BÍCH THỌ

Discussant 1:
Discussant 2: ……………………………………………
Discussant 3:

This dissertation will be defended at the Ho Chi Minh City
University of Law
Date and time:

This dissertation may be found at following libraries:
- Vietnam National Library
- Library of Ho Chi Minh City University of Law
- Library of Lund University Faculty of Law

3
Chapter 1
INTRODUCTION
1.1. Background
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.
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. Most basic economic concepts are relevant to prices.
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,

4
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.
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 US. After the Sherman Act, the US enacted in
turn the Clayton Act (1914), the Federal Trade Commission Act
(1914), the Webb-Pomerene Act (1918), the Robinson Patman Act
(1936), the Wheeler-Lea Act (1938), the Celler Kefauver Antimerger
Amendment (1950), the Hart-Scott-Rodino Antitrust Improvements
Act (1976), which all constituted the anti-monopoly laws (in the US
called “Anti-Trust Laws”). In those Acts, Section 2 of the Sherman

Act, Sections 2 and 3 of the Clayton Act, and the Robinson – Patman
Act regulate abuses of a dominant position (in the US usually called
a “monopoly power”). In the European Union, monopoly control
laws came to life at the same time, and as part of, the establishment
of the Community. Provisions on competition principles appeared in
Articles 3 (f), 85 and 86 of the Treaty of Rome 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 Act, and, the Treaty of Maastrichtestablishing the
European Union in 1992. This Treaty entered into force from 1

5
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 Amsterdam and the Treaty of Nice. Then, on 13 December
2007, the EU member states signed the Treaty of Lisbon, 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).
Articles 81 and 82EC now become Article 101 and 102 of TFEU
(Article 101TFEU and Article 102TFEU). Nowadays, EU
competition law and US antitrust law have become popular models
of competition law in the world.
Based on theory, and Vietnam‟s specific situation, 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.
However, after 6 years from the date Vietnam Law on
Competition (VLC)came into force, 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 Tan Hiep Phat Ltd. v. Vietnam Brewery
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) 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

6
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. The second case, which has reached a final result –
a decision made by the Competition Case Handling Council (CCHC)
– is the Vinapco case. 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. 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. 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.
Relevant materials regarding the laws of developed countries
such as the US and the EU are plentiful. a comparative law approach

7
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. Meanwhile, 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. Purposes
This research has two purposes.
The first purpose 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.

8
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.
1.3. Definition 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,
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.
As the title of this dissertation states, I have selected for
examination only the laws of three legal systems: The EU, the US

9
and Vietnam. The EU and the US are the most important and
characteristic legal systems, which deal with the issues concerned in
this thesis. 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 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.
This dissertation uses case law from the EU and US to
illustrate issues under discussion. 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

10
guidelines of EU and US competition authorities and includes
references made therein even if I have not studied everything myself.
1.4. Methods
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.

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 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

11
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, Dialectics,
Synthetics, Comparisons, and Analytics.
1.5. Value 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

12
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. Outline
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.

13
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.

Chapter 2
REGULATIONS AGAINST ABUSIVE PRICING UNDER
EU AND US LAW
2.1. Basic rules and concepts on abusive pricing in EU and
US
2.1.1. Basic rules
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.
2.1.2. Concept of Dominant Position, Market Power
and Monopoly Power
In the EU and the US, the term “market power” is favoured.
The term “dominant position” in EU law has similar meaning as the
term “monopoly power” in US law. The basic requirements of a
“dominant position” (or “dominance”) in the EU and “monopoly
power” in the US are the same: “substantial market power” in a
“durable period of time”. Generally, in determining dominant
position/monopoly power, the EU and the US use the same two basic
factors, i.e. market share and entry barriers. The EU goes further,
however, to take into account countervailing buyer power.
2.1.3. The Relevant Market concept
Although there is no a general fixed formula for determining
dominant position (or monopoly power), both the US and the EU

14
consider the first essential step is to define the relevant market.

Relevant market includes relevant product market and relevant
geographic market. Analyses and methods used by the EU and the
US in identifying relevant market are basically similar to each other.
2.2. Specific forms of abusive pricing in EU and US laws
2.2.1. Excessive pricing
Excessive pricing is not itself an offense under US law.
Legitimate monopolists are free to set prices at profit-maximizing
levels. This is because US Courts consider that, on one hand, profit is
a reward for successful competition, and on the other, excessive
pricing is a mechanism for the restoration of a competitive structure.
Whilst, EU competition law regulates against excessive pricing due
to its identification of the popular conception of the evils of
monopoly, accepts that excessive pricing can constitute an abuse and
that charging a price which has no reasonable relation to the
product‟s „economic value‟ would be excessive. The CJEU has
applied a two-stage test to assess excessive prices. This test requires,
first, a comparison of actual costs and prices, and, second,
determining whether a price is excessive in itself or by comparison to
competitors' products. In theory, a dominant firm can violate Article
102(a)TFEU not only by charging excessively high prices as a seller,
but also by imposing excessively low prices through the exercise of
monopsony purchasing power. There are, however, no reported cases
in which a violation of Article 102 TFEU has been found on the
basis of a dominant buyer applying excessively low purchase prices.
2.2.2. Predatory pricing
Although there is not universal definition, predatory pricing
is generally referred to as an activity undertaken by dominant firms
where they price their products at a very low level in order to drive

15

competitors out of the market. After the competitors are excluded,
the dominant firms are able to increase prices to monopoly levels in
order to recoup their losses. In US, there are two combined tests for
predatory pricing: (1) Whether the firm actively makes loss in short
term (Price-Cost test), and (2) Whether the firm has probability of
recoupment its loss (Recoupment test). In practice, US courts apply
recoupment test as major premise for determining predatory pricing.
The price-cost test is used only when the recoupment test gives a
positive result, i.e. market structure and conditions guarantee the
firm‟s recoupment feasibility. Unlike the approach under US law, in
EU, price-cost test is used as major premise for determining
predatory pricing. When consider a claim of predatory pricing, EU
courts always apply price-cost test at first. When this test shows that
prices are below certain level of costs, then, depending on particular
cost level prices below, the additional proof - predatory intent - may
be required. Moreover, while in US there is no predation if prices are
above average variable cost (AVC), in EU prices above AVC but
below average total cost (ATC) may be condemned as predation.
Theories and case law in both two systems consider AVC as
a benchmark for any presumption of predatory behviour. Recently,
economic theories and discussions of competition agencies in both
EU and US have suggested another benchmark – average avoidable
cost (AAC).
2.2.3. Price squeeze
In some industries, the dominant firm may find itself to be
both the supplier in the upstream and the competitor of another firm
in the downstream market. If the dominant firm is in possession of an
essential facility or is the sole supplier of an intermediary, or
accessory product, the pricing of such a product may create a price
squeeze for the competitors.

16
In both the US and EU, the “price squeeze” (or,
interchangeable “margin squeeze”) is considered to be a variation of
the refusal to supply/deal situation. There are also the same approach
to form and nature of price squeeze in the two systems. Generally
speaking, a „margin‟ or „price‟ squeeze occurs where a vertically
integrated firm subjects its competitors in the downstream market to
a pricing policy whereby it raises the prices of key inputs in the
upstream market so high and/or lowers its prices to customers in the
downstream market, in order to injure its competitors in downstream
market.
Theories on this practice in the EU and US are similar.
However, in presently in the US there is no direct and specific
mechanism for condemnation of a price squeeze. Firms should and
can only base complaints of abuse on a predatory pricing test to
establish antitrust liability for retail pricing in “price squeeze”
situations. In contrast, EU competition law has constructed a system
of conditions, or in other words, a system of analyses applied to
identify a price squeeze. Based on EU courts‟ rulings in recent
margin squeeze cases, a system of conditions is necessary before a
price squeeze abuse can be established including such factors as: (1)
the firm is a dominant supplier in the wholesale input market and is
vertically integrated; (2) the input in question is indispensable for
downstream competition; (3) the vertically integrated dominant
firm's practice would produce an anti-competitive effect, at least
potentially, on the retail market; and (4) the practice is not in any
way economically justified.
2.2.4. Price discrimination
Both EU and US law on price discrimination are constructed

to directly regulate only secondary line injury. Price discrimination
with primary line injury affect is regulated by other legal theories,

17
such as predatory pricing, price squeeze, discounts and rebate
schemes. Current US regulation on price discrimination has some
shortcomings. While US law does not condemn applying the same
prices for dissimilar transactions, EU law does.
2.2.5. Discount and Rebate Scheme
Both the EU and the US legal systems have a great deal of
case law experience concerning this form of abusive pricing. There
are many similarities among the theory, and tests for bundled
discounts (i.e., tests for predatory and tying features of the practice).
There are differences in tests for single product loyalty discount, but
both the two systems apply the same theory for determining it, i.e. it
discriminates against purchasers who did not buy exclusively from
the dominant firm and it excludes competitors from entering the
market because they are unable to offer a low enough price to
compensate the customers for the loss of their whole year‟s rebate.
2.3. Remedies to abusive pricing in EU and US laws
2.3.1. Conduct and Structural Remedies
This group of remedies includes termination of infringement,
requiring to take affirmative behaviours, prohibition of some specific
behaviours, dissolve the violator, split it into two or more entities, or
require divestiture of assets to a new owner.
2.3.2. Monetary Remedies
This group of remedies includes:
- Fines and penalties: While in the EU fines for abuses are
provided based on percentage rate of the violator‟s turnover of a
fiscal year (up to 10%), in the US they are absolute amounts under

the framework stipulated by law (fines to corporations of up to $100
million and to individuals of up to $1 million). The difference leads

18
to ability of higher actual amounts of fines in EU than in US. So it
seems that deterrence impacts of EU fines are higher those of the US.
- Compensation: In the US, private parties who have been
injured by an act forbidden by the antitrust laws are entitled to bring
civil action for “treble damages”. This compensation may be up to
three times the actual amount of the damages. In EU there is not a
mechanism of treble damages like in US.
- Legal fees: Where the normal rule in Europe is that the
losing party will have to cover the procedural costs including
attorneys fees, this is not necessarily so in the US which follows the
“American Rule” of each party bearing to cost of its own attorney‟s
fees. However, Section 4 of the Clayton Act provides that successful
plaintiffs are to be awarded “reasonable attorney's fees”, in addition
to the treble damages award.
In sum, in another respect, the US system of remedies
contains other measures that improve deterrence impacts and also
encourage private enforcement of antitrust law: treble damages
claims and attorney‟s fee awards for successful plaintiff.
2.3.3. Criminalization and Incarceration
In the EU, competition law infringements are not
criminalized.
In the US, the Sherman Act provides not only criminal fines
to corporations and individuals, but also the possibility of
imprisonment for a period of up to ten years on each count of the
indictment.
Chapter 3

ABUSIVE PRICING IN VIETNAM COMPARED WITH
EU AND US
3.1. Background, basis rules and concepts

19
3.1.1. Gradual development of legislation and
inforcement capacity
This part of dissertation presents two contents:
- Development of Vietnamese laws before and after the
VLC enactment; and
- Competent Authorities for regulating abuses of
dominance.
3.1.2. Recent practices related to abuses of dominance
In particular, they are Vinapco, Megastar, K+, “eclectric
pole war” between EVN and VNPT, medicine and milk price
increases.
3.1.3. Basic rules:
Generally, Vietnamese competition law also has two basic
rules that are similar to those of the EU and the US: (1) against all
abusive conduct, which includes but is not limited to abusive pricing,
and (2) mandate to protect competition, however, in several
particular cases, it seems that there is a trend to protect also
competitors.
3.1.4. Concepts
3.1.4.1. Dominant position and Monopoly position
One finds squarely in the caption in of Section 2, Chapter III
of the VLC the title “Abuse of dominant position, monopoly
position”. This demonstrates that, on one hand, Vietnamese
Competition Law follows the model of EU competition laws, and on
the other hand, wishes to emphasize cases of absolute monopoly.

This is a difference between Vietnamese law and other countries‟
policies. US antitrust laws and EU competition laws use terms such
as “dominant position” and “monopoly power” with a relatively
similar meaning. “Monopoly position” in the EU and US laws is not

20
separated from “dominant position” or having “monopoly power”.
The VLC stipulates that an enterprise shall be deemed to be in a
monopoly position if there are no enterprises competing in the
goods and services in which such enterprise conducts business.
The VLC does not provide any definition of dominant
position. It just lists two situations where an enterprise is considered
to possess dominant position. The first situation is having a market
share from thirty per cent and upward in the relevant market. The
second situation is having the capability of substantially restraining
competition. These two situations are separated, i.e., if an enterprise
has a market share from thirty per cent upward, it is considered to
possess a dominant position, without the need to assess any other
condition; and if an enterprise has a market share below thirty per
cent, but has the “capability of substantially restraining competition”,
it is also considered to possess a dominant position.
There are several differences between the VLC and US and
EU law on the identification of dominance. While US and EU law
pay attention to two elements: “significant market power” and the
“durable” feature of the power for an appearance of dominance, the
VLC looks only at market power. There is no word or phrase
referring to time in the provisions on dominance and monopoly
position in the VLC. Thus, the single element of market share, as low
as thirty per cent, for determining dominance in the VLC, while
simple and convenient for the state authorities to apply, may bring

enterprises without real dominance into the ambit of allegations of
abuse. The VLC does not refer to entry barriers and their role in the
establishment of dominance.
In addition to the dominant position of a single enterprise,
the VLC regulates the dominant position of a group of enterprises.
This is also based on only on market share criteria.

21
3.1.4.2. Relevant Market
This concept is constructed from the common experiences of
other countries. Therefore it is not significantly different to those
used in the EU and US. In Vietnam, relevant market also includes
relevant product market and relevant geographic market. However,
in details of analyses there are some differences which make
Vietnamese tests not appropriate or unclear. For example, they are
provisions on the level of price increase and period of time in the
SSNIP test for substitution product analysis
3.2. Specific forms of abusive pricing in Vietnamese laws
3.2.1. Excessive pricing
3.2.1.1. Excessive pricing on the selling side
While EU competition law describes excessive pricing in
terms of imposing “unfair” prices, i.e. charging a price which has no
reasonable relation to the product‟s „economic value‟, the VLC
defines it as imposing “unreasonable” prices, thereby causing loss to
customers. The VLC‟s rationale in defining it in terms of pricing
causing an “unreasonable” loss to customers is similar to the concept
of “unfair” pricing in EU. However, the basis to determine excessive
of pricing under Vietnamese competition law focuses on the conduct
of “unreasonably increasing price”, and not on any definition of how
the price charged is to be considered excessive. In comparison with

EU competition law, the interpretation of Decree 116/2005 skips
over several benchmarks used in EU law to determine the
excessiveness or unfairness of the price. It only applies one type of
measurement, a comparison of prices over time. Moreover, through
elaborating details in relevant provisions of Decree 116/2005, several
shortcomings are revealed. They may make the regulation on
excessive pricing unable to be applied in practice.

22
3.2.1.2. Excessive pricing on the buying side
Similarly, there are some unclear points in provision of
excessive pricing on the buying side. Decree 116/2005 does not use
ATC, but producing cost as benchmark to test this abuse. Since
producing cost is just a part of total cost, imposing purchase price
equivalent to producing cost may also cause loss to the sellers.
Moreover, every seller has his own producing costs of the goods or
service. ATC in the test of excessive selling price is the cost of the
product produced by the dominant or monopoly enterprise, which the
enterprise should be able to calculate precisely. Producing costs in
the test for excessive buying is the cost the sellers encounter for their
input materials and their costs in turning input materials into
products.
The crucial question is how a buying enterprise can calculate
these costs in order to set the buying price to cover the seller‟s
producing costs? Furthermore, the result may also be
counterproductive. Enterprises which produce at higher cost than
others are less efficient and less competitive and should not be
protected by rules requiring that their producing costs are always
covered. Under normal market conditions these less efficient
enterprises will be forced out of the market as a consequence of the

operation of the market. Competition laws should not protect
inefficient competitors by a regulation requiring the dominant or
monopoly enterprise to set its buying prices higher than the cost of
inputs of a more efficient seller.
3.2.1.3. Fixing a minimum re-selling price
The conduct of fixing a minimum re-selling price thereby
causing loss to customers has an aspect similar to a vertical
agreement in restraint of competition. (Vertical agreements to

23
restrain competition are not regulated by the VLC.) However the
conduct designed to accomplish such pricing is considered to be an
abuse. Decree 116/2006 defines the offending conduct as “fixing a
minimum re-selling price, thereby causing loss to customers. This
means price-compelling by not permitting distributors or retail sellers
to re-sell goods at a lower price than a pre-determined price.”
Features of such unilateral conduct intended to impose the will of the
dominant or monopoly enterprise on its customers is expressed by
use of the terms “price-compelling”, “not permitting” and “pre-
determined price”.
While the VLC only defines this conduct as “fixing a
minimum re-selling price, thereby causing loss to customers”,
Decree 116/2005 narrows the definition to only the resale of
“goods”. That means that prohibiting distributors and retailers to re-
sell “service” at prices lower than a pre-determined price is not
regulated. A pertinent example of this “hole” in Decree 116/2005
occurred in the Megastar case. Since screening films to customers is
a service, ticket prices are resale prices for that service. The cinemas
could not complain that Megastar had engaged in fixing minimum
resale prices for services.

3.2.2. Predatory pricing
Articles 13(1) and 14(1) of the VLC prohibit any enterprise
in a dominant position or monopoly position from selling “goods or
provid[ing] services at prices below average total cost aimed at
excluding competitors”. These provisions regulate predatory pricing.
Decree 116/2005 only provides elements for determining the
benchmark pricing, below which, if the enterprise in question sells
goods or services, it will be considered as engaging in predatory
pricing. There is no additional base requirement in VLC, Article 13
(1) to prove that the conduct is “aimed at excluding competitors”. In

24
spite of evidence of the aim or the ability of recoupment, Decree
116/2005 stipulates six objective situations, in which sales below
ATC is not considered as predatory pricing.
In comparison with EU and US law, the test of predatory
pricing in Vietnamese competition laws is simple. It concentrates
only on a price benchmark. Or in other words, the only evidence of
predatory pricing in Vietnamese laws on competition is supplied by
pricing below the benchmark without any objective reason. The price
benchmark harbour is a more severe test than those in EU and US
law, since the ATC is higher than AAC. ATC includes all costs, so
using it as benchmark may discourage competitive pricing by
enterprises in a dominant or monopoly position.
The statutorily defined situations that insulate low sales
pricing by dominant or monopoly enterprises from being held liable
for predatory pricing do not include protection in the case of a sales
price reduction for services.
3.2.3. Price discrimination
Articles 13(4) and 14(1) of the VLC prohibit any enterprise

in a dominant position or monopoly position from applying different
commercial conditions to similar transactions aimed at creating
inequality in competition”. Article 29 of Decree 116/2005 explains
this provision as an effort “to place one or more enterprises in a
better competitive position than other enterprises”. A number of
discriminatory pricing elements that an enterprise in a dominant or
monopoly position may use is referred to in Decree 116/2005.
Accordingly, under Vietnamese competition law, if a dominant or
monopoly enterprise charges different prices to its customers for the
purchase or sale of goods and services of similar value or nature,
the practice may be condemned as price discrimination. This
provision of Vietnamese competition laws is facially similar to

25
Article 102(c) TFEU, because it prevents dominant or monopoly
enterprise from creating secondary line injury.
This regulation only applies for the protection of competition
and competitors which are customers of the supplier. Therefore,
selective low pricing or other discriminatory pricing practices aimed
at excluding the enterprise‟s direct competitors, or unreasonably
disfavouring a group of consumers, is not regulated. Accordingly,
Vietnamese competition laws only regulate one form of general
discrimination, i.e. applying different prices to similar transactions.
A different form of price discrimination, which is regulated under
EU law, i.e. applying the same prices to different transactions is still
unregulated by Vietnamese competition law.
3.2.4. Foreclosing competitors
Articles 13(6) and 14(1) of the VLC prohibit any enterprise
in a dominant position or monopoly position from preventing
“market participation of new competitors”. Article 31(3) of Decree

116/2005 interprets this stipulation as the the practice of selling
goods at prices at a level sufficient to ensure that a new competitor is
not able to access the market, other than in the cases [of selling
goods or providing services at prices below ATC with the aim to
exclude competitors].
This provision deals with another form of abusive pricing -
market entry prevention. This is similar to but not the same as
predatory pricing. While predatory pricing has the aim of excluding
existing competitors, this type of abusive conduct aims at creating a
barrier against market entry by potential competitors. However, this
provision of the Decree merely provides a very general idea of the
practice. The definition is too general and vague for effective
application. What level of price is “sufficient” for such conduct to
create a price barrier? Article 31(3) of Decree 116/2005 separates