COMPETITION POLICY IN THE TRANS PACIFIC PARTNERSHIP AND THE IMPLICATIONS FOR IMPROVING COMPETITION LAW AND POLICY OF VIETNAM

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
---------o0o---------

DISSERTATION

COMPETITION POLICY IN THE TRANS-PACIFIC
PARTNERSHIP AND THE IMPLICATIONS FOR
IMPROVING COMPETITION LAW AND POLICY
OF VIETNAM

Major: International Trade Policy and Law

Full Name: Ngo Hoang Quynh Anh
SUPERVISOR: Prof. Dr. Tang Van Nghia

Ha Noi - 2017


DECLARATION
I hereby declare that this master thesis is the scientific research of my own
which made on the basis of theoretical studies, field surveys and under the direction
and supervision of Prof. Dr. Tang Van Nghia. The research contents and results of
this thesis is completely honest. These data and documents for the analysis, review
and evaluation were collected from various sources which are fully listed in the
reference list.
I am fully responsible for the content of this master thesis as well as this
declaration.
Hanoi, 4 December 2016
Author

Ngo Hoang Quynh Anh


TABLE OF CONTENTS
ACKNOWLEDGEMENT ................................................................................. i
LIST OF ABBREVIATIONS ........................................................................... ii
LIST OF TABLES ........................................................................................... iii
LIST OF FIGURES.......................................................................................... iii
CHAPTER 1: INTRODUCTION ..................................................................... 1
1.1. Research Rationale ................................................................................. 1
1.2. Literature Review ................................................................................... 2
1.3. Research objectives ................................................................................ 5
1.4. Research questions ................................................................................. 5
1.5. Scope of research ................................................................................... 5
1.6. Research methodology ........................................................................... 5
1.7. Thesis outline ......................................................................................... 6
CHAPTER 2: THE PRINCIPLE OF COMPETITION, COMPETITION
LAW AND POLICY......................................................................................... 7
2.1. The concept of Competition ................................................................... 7
2.2. Fundamentals of Competition Policy ..................................................... 8
2.2.1. Competition Law and Competition Policy ..................................... 8
2.2.2. Generalization of Competition Policy ............................................ 9
2.2.3. Main objectives of Competition Policy ........................................ 10
2.2.4. Benefits of Competition Policy ..................................................... 12
2.2.5. Contents of Competition Policy .................................................... 13
2.3. International Competition Law and Policy .......................................... 14
2.3.1. Similarities between competition law regimes around the world . 15
2.3.2. Differences between competition law regimes around the world 19
2.3.3. The involvement of international bodies and organizations in the
field of competition law and policy ........................................................ 22

CHAPTER 3: COMPETITION POLICY IN THE TRANS-PACIFIC
PARTNERSHIP (TPP) ................................................................................... 28
3.1. Introduction to TPP .............................................................................. 28
3.1.1. Overview of TPP ........................................................................... 28
3.1.2. Timeline of TPP negotiations ....................................................... 29


3.1.3. Outline of TPP............................................................................... 30
3.2. Potential macroeconomic implications of the TPP .............................. 34
3.2.1. Member countries impacts ............................................................ 34
3.2.2. Non-member countries impacts .................................................... 37
3.3. Competition policy in the TPP ............................................................. 39
3.3.1. Overview of competition policy in the TPP ................................. 39
3.3.2. Contents of competition policy in the TPP ................................... 40
CHAPTER 4: POTENTIAL IMPACTS OF COMPETITION POLICY OF
THE TPP TO VIETNAM ............................................................................... 48
4.1. Vietnam‟s membership of the TPP ...................................................... 48
4.1.1. Position of Vietnam in the TPP..................................................... 48
4.1.2. Vietnam‟s Commitments on Competition Policy under the TPP . 48
4.2 Competition Policy in Vietnam............................................................. 49
4.2.1. Overview of Vietnam Competition Legislation ............................ 49
4.2.2. Sources of Competition Law in Vietnam...................................... 51
4.2.3. Coverage of Vietnam Competition Law ....................................... 53
4.2.4. Enforcement of Competition Policy in recent years ..................... 58
4.2.5. Support activities of law enforcement of Competition Policy in
recent years .............................................................................................. 61
4.3. Impact of the TPP Competition Policy and issues raised in reforming
competition policy, law and its enforcement in Vietnam ........................... 62
4.3.1. About reforming competition law and policy in Vietnam ............ 62
4.3.2. About reforming competition law and policy enforcement in

Vietnam ................................................................................................... 64
CHAPTER 5: IMPLICATIONS FOR REFORMING COMPETITION LAW
AND POLICY IN VIETNAM IN ACCORDANCE WITH THE
COMMITMENTS IN THE TPP ..................................................................... 68
5.1. Improving provisions in Competition Law in accordance with
regulations of TPP ....................................................................................... 68
5.1.1. General provisions ........................................................................ 68
5.1.2. Provisions on competition law enforcement ................................. 71
5.1.3. Provisions on the model of competition authority ........................ 72
5.2. Introducing the competitive neutrality to the competition law and
policy ........................................................................................................... 73


5.2.1. Creating a level playing field for enterprises ................................ 74
5.2.2. Limiting abuse of market power of SOEs..................................... 75
5.2.3. Enhancing competitive capacity of enterprises ............................ 75
5.3. Raising awareness of competition law and policy ............................... 75
5.3.1. Enhancing knowledge of competition law and policy .................. 75
5.3.2. Improving dissemination of competition law and policy through
means of communication ........................................................................ 76
5.4. Improving the skilled human resources in the field of competition law
and policy .................................................................................................... 77
5.4.1. As regards human resources of competition authorities ............... 77
5.4.2. Education and training of competition law and policy at graduate
and undergraduate level .......................................................................... 77
5.5. Setting a fair, transparent and accountable competition environment . 78
5.6. Improving Competition Law Enforcement and authorities ................. 79
5.6.1. Solutions for improving the effectiveness of competition law
enforcement ............................................................................................. 79
5.6.2. Solutions for improving law enforcement capacity of concerning

authorities ................................................................................................ 80
5.7. Protecting consumers‟ rights ................................................................ 81
5.8. Promoting cooperation and technical cooperation in competition policy
..................................................................................................................... 83
5.9 Raising corporate awareness and corporate compliance of competition
law and policy ............................................................................................. 84
CHAPTER 6: CONCLUSION........................................................................ 86
REFERENCES ................................................................................................. iv


i

ACKNOWLEDGEMENT
During the completion of this master thesis, I received the guidance and
valuable help from the lecturers, siblings and friends. With great respect and deep
gratitude, I would like to express sincere thanks to:
Prof. Dr. Tang Van Nghia, Dean of Faculty of Graduate Studies of the Foreign
Trade University (FTU) who wholeheartedly helped, supported and encouraged me
from the initial to the final level of this dissertation. He provided me with
comprehensive guide from choosing the topic, outlining the thesis and editing this
research.
Professors and lecturers from FTU as well as World Trade Institute in the
Master of International Trade Policy and Law Intake Three, who not only spread
profound knowledge and information in the fields of economy and law but
generated strong motivation for me while I was taking this course as well.
Last but not least, I would like to express my sincere thanks to my family, my
colleagues and my friends, who have always by my side encouraging, supporting,
contributing valuable ideas and giving me favourable conditions for me to complete
this scientific research.

ii

LIST OF ABBREVIATIONS
Abbreviation
ASEAN

Full name
Association of Southeast Asian Nations

EU

European Union

FDI

Foreign Direct Investment

FTA

Free Trade Agreement

GDP

Gross Domestic Product

ICN

International Competition Network

JICA

Japan International Cooperation Agency

NAFTA

North American Free Trade Agreement

OECD

Organization for Economic Cooperation and Development

SME

Small and Medium – Sized Enterprises

SOE

State – Owned Enterprises

TPP

Trans – Pacific Partnership

TRIPS

Trade – Related Aspects of Intellectual Property Rights

UNCTAD

United Nations Conference on Trade and Development

U.S

United States of America

VCA

Vietnam Competition Authority

VCC

Vietnam Competition Council

WTO

World Trade Organization


iii

LIST OF TABLES
Table
Table 4.1: Statistics of competition restriction cases during the period
of 2009-2015
Table 4.2: Number of the unfair competition investigations initiated
in the year 2015

Page
59

60

LIST OF FIGURES
Figure
Figure 2.1: Four elements of competition policy must be
considered to promote a market oriented economy

Page
9

Figure 3.1: Change in GDP of TPP Members by 2030

35

Figure 3.2: Change in GDP of TPP Non-Members by 2030

37

Figure 3.3: Change in exports of TPP Non-Members by 2030

38

Figure 3.4: Impact of TPP on sectorial output by 2030

39


1
CHAPTER 1: INTRODUCTION

1.1. Research Rationale
Negotiating Trans-Pacific Partnership (TPP) has been developed from TransPacific Strategic Economic Partnership Agreement (or P4) – a Free Trade Agreement
which was signed on 03 June 2005 and became effective from 28 May 2006 between
04 countries including Singapore, Chile, New Zealand and Brunei. In September
2008, US announced its decision to take part in the P4‟s expansion. Two months
later, Australia, Peru and Vietnam expressed their concerns in TPP negotiation which
brings about the increase in the number of members of P4 to 8 nations in 2010. From
then on, TPP members have experienced 19 official negotiations, 5 ministerial
negotiations and finished negotiating in October 2015 with 12 country members
including Canada, Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore,
Australia, US, Japan and Vietnam. The main target of TPP is to eliminate tariff and
barriers to goods and service in importation and exportation among members.
On 04 February 2016, in Auckland city, New Zealand, Minister of Trade and
Economics of 12 country members of TPP together signed on TPP Agreement,
marking the official completion of TPP negotiations. This Agreement consists of 30
chapters and regulates not only traditional issues like goods, service, investment but
also relatively new matters such as state-owned companies, E-commerce and
competition policy. As for competition policy, TPP spends a whole chapter
controlling this matter with detail and practical regulations. It synchronizes anti-trust
law of member countries and elevates them to provide the most useful environment
for competition to develop in the whole organization.
With the socialist-oriented market economy, competition environment in
Vietnam should bring about the best conditions for enterprises to grow, for
consumers to benefit and for social welfare to gain. In almost developed countries in
the world, competition policy serves as an instrument to “encourage industrial
efficiency, the optimal allocation of resources, technical progress and the flexibility
to adjust to a changing environment” (Massimo Motta, 2004, p.15). Nonetheless,
competition policy in Vietnam remains various obstacles. Accessing to the WTO and

2
especially in the TPP not only marks a crucial effort of Vietnam in integration to
international law but brings out numerous benefits to Vietnam‟s economy as well.
In compliance with TPP regulations in the fields of competition policy, legal
framework on competition law and policy of Vietnam should gradually be modified
and improved. From the above reasons, the topic “Competition policy in the Trans Pacific Partnership and the implications for improving competition law and policy of
Vietnam” is chosen. This thesis shall give information about general theory of
competition policy and deepens its analysis of competition policy in the TPP. After
that, based on the current status of competition policy in Vietnam, the thesis shall
give several implications for Vietnam‟s competition policy.
In November 2016, the U.S President-elect Donald J. Trump has issued a video
outlining his policy plans for his first 100 days in office in which announced his
intent to U.S withdraw from the Trans-Pacific Partnership “from day one”. This is a
really serious challenge for other members of the TPP. However, in the framework
of this dissertation, competition policy in the TPP and implications for Vietnam shall
be analyzed in the condition that TPP is fully ratified by all its member countries.
1.2. Literature Review
While a significant amount of researches have been conducted in the fields of
competition law and policy, there are not many researches focusing on competition
policy in the TPP. The main reason is that TPP only finalized its negotiations at the
beginning of this year. Thus most of the researches on competition policy in the TPP
done before that time were prediction. However, researches on international
competition law and policy as well as competition policy in Vietnam are really huge
collection. This section shall make a general assessment on several typical and
prominent researches.
First of all, Competition Policy: Theory and Practice (Motta, 2004) is a book
dealing with both theory and practice of competition policy. This is really a musthave textbook in economics of lecturers, students, economists and lawyers. It draws
on the literature of industrial organizations, and on original analyses, to explain the
likely effects that firms‟ practices have on welfare and formulate policy

3
recommendations, which are of practical use for antitrust authorities. The interaction
between theory and practice is one of the main features of the book, which contains
numerous references to competition policy cases (mostly from the EU and the US)
and a few fully developed case studies.
International and Comparative Competition Law (Dabbah, 2010), from an
international and comparative perspective, covers the role of different international
organizations active in the area, the significance of multinational enterprises and, in
particular, the differences between US and EU systems. Taking examples from
regions such as Africa, the Middle East and Asia, Dabbah looks at the law and policy
in developing countries and at a regional level, the internationalization of
competition law and the doctrines of extraterritoriality, bilateral cooperation and
multilateral cooperation, as well as the relationship between competition and trade
policy.
David J. Gerber, through Global Competition: Law, Markets and Globalization,
examines competition law on the global level and reveals it is often complex and
little-understood dynamics. It focuses on the interactions between national and
international legal regimes (WTO, Europe and the US) that are central to these
dynamics and a key to understanding them. According to the book, national
experiences will continue to shape the dynamics of transnational cooperation and
coordination relating to the global economy, just as they are shaped by those efforts
and by the global economy itself. With three parts namely: sovereignty as the
framework for global competition; domestic experience and global competition law;
competition law as a transnational project, the book provides up-to-date analyses of
practical competition law and policy in the global economy.
Besides these above mentioned books focusing on competition policy, there have
been a number of papers specialized in international competition policy and that of
Vietnam. Competition Law Enforcement of Vietnam and Necessity of a Transparent
Regional Competition Policy by Phan Cong Thanh in December 2015 is one of those

papers. The paper discusses the enforcement of Vietnam‟s competition law and
argues for the need for a regional competition policy for ASEAN and the East Asia


4
area which enhances an individual country‟s competition policy and prevents
conflicts of interest among countries. To conclude, it suggests several
recommendations for Vietnam governments and competition authorities to adopt for
a competition policy.
More detail, Brief Review Report of Vietnam Competition Legislation in 2012 by
Vietnam Competition Authority is a more specialized research in this field. After
raising and analyzing issues emerging from enforcing competition law of Vietnam, it
gives recommendations to rebuild a set of provisions in the Competition Law of
Vietnam in conformity with the context of Vietnamese economy, common practice
and customs of doing business.
International competition law and policy is also a topic of great concern of
researchers. In E15 Expert Group on Competition Policy and the Trade System,
Robert D. Anderson and Anna Caroline Muller issues the think piece namely
Competition Law/Policy and the Multilateral Trading System: A Possible Agenda for
the Future in September 2015. This paper has been produced under the E15 Initiative
which is implemented jointly by the International Centre for Trade and Sustainable
Development (ICTSD) and the World Economic Forum. The paper reviews the past
work of WTO Working Group on the interaction between trade and competition
policy, competition policy in WTO Agreements, the treatment of competition policy
in recent regional trade agreements and ongoing negotiations. The final purpose of
the paper is to give a possible agenda for future work on competition policy in the
WTO.
In its publication namely Global Economic Prospects on January 2016, the World
Bank Group raised a topical issue: Potential Macroeconomic Implications of the
Trans-Pacific Partnership. This analysis, as its name, discussed the features of new

generation free trade agreements and TPP, and then specially traced out potential
macroeconomic implications for member and non-member countries of TPP.
According to this paper, TPP will reduce tariffs and restrictiveness of non-tariff
measures as well as harmonize a range of regulations to encourage the integration of


5
supply chains and cross-border investment. Competition policy is also a field
influenced by TPP a lot.
1.3. Research objectives
The research aims to clarify the issue of international competition policy in
general and competition policy in framework of TPP in particular. The research also
aims at giving recommendations for reforming competition law and policy in
Vietnam in accordance with commitments in the TPP.
1.4. Research questions
The objectives of the research are derived from the research questions as follows:
 What are the characteristics of international competition law and policy?
 What are the contents of competition policy in the TPP?
 How does competition policy in the TPP influence economy of member
countries?
 How has competition policy in Vietnam been implemented?
 How can Vietnam‟s competition law and policy be improved towards
commitments in the TPP?
1.5. Scope of research
Regarding the content of the dissertation, it focuses on the real situation of
competition policy enforcement of Vietnam and competition policy in the TPP. The
scope of this thesis is as follows:
As for geographical scope, the research is intended to conduct a depth practical
view concerning impacts of competition policy in the TPP to several member
countries. Then, the research deepens its study by a case of Vietnam.

As for time scope, the research focuses its analysis and synthesis on the period of
TPP negotiations and finalization (mainly from 2005 to 2016) and also makes some
prediction of potential impacts of TPP‟s competition policy in the future.
1.6. Research methodology
During the research process of this thesis, the author has combined different
research methods as follows:


6
-

Theoretical research methods:
The thesis will collect legal documents, economic information through
historical research method and then classify and systematize them. Moreover,
the thesis also analyze and synthesize all data and documents.

-

Practical research methods:
The thesis will observe the real situation of enforcement of competition
law and policy all over the world and base on particular experiences from
several countries, giving recommendations for Vietnam by professional
solution method.

1.7. Thesis outline
Chapter 1: Introduction
Chapter 2: The principle of Competition, Competition Policy and International
Competition Law
Chapter 3: Competition policy in the Trans-Pacific Partnership (TPP)
Chapter 4: Impacts of competition policy in the TPP to Vietnam

Chapter 5: Implications for reforming Competition Law and Policy in Vietnam in
accordance with the commitments in the TPP
Chapter 6: Conclusion


7
CHAPTER 2: THE PRINCIPLE OF COMPETITION, COMPETITION
LAW AND POLICY
2.1. The concept of Competition
Competition is a very broad concept which appears in almost every area of
social life, from everyday life activities to more specific field like economics,
politics, and culture and so on. Therefore, there are varied different views of
competition. According to the English language dictionary, competition is an event
or a contest in which people fight for superiority or supremacy. According to
Competition Law by Richard Whish and David Bailey, competition means a struggle
or contention to superiority; and in the fields of commercial, competition means a
striving for the custom and business of people in the market place (Richard Whish
and David Bailey, 2009, p.3). The UK Office of Fair Trading and Competition
Commission defined competition as a process of rivalry between firms seeking to
win customers‟ business over time by offering them a better deal (Merger
Assessment Guidelines, UK Office of Fair Trading and Competition Commission
2010). In economic sciences, researchers seem not to be satisfied by any concept of
competition. Because, competition is an economic phenomenon that only exists in
the market economy, in all fields and all periods of business process and for all
business subjects participating on the market. As a result, competition concept is
viewed under the purpose and research approach of business researchers. Although
being regarded and considered under different views and there is a number of
definition of competition, in economy, the concept of competition is based on the
characteristic that a rivalry or struggle to win the supremacy or predominance of the
subject compared to another one.

At the heart of the concept of competition stands the freedom to compete. This
means that market operators must have the freedom to compete for a process of
competition. In practical terms, this means that a free-market economy must exist:
competition is the flywheel of a free economy (Maher M. Dabbah, 2010, p.20-21).
Competition continuously evolves and is a highly dynamic process, which is
conditioned by wider developments and circumstances both within and outside the
marketplace. One of the most remarkable ways in which competition has evolved


8
over the years has been in its becoming a „global‟ concept. This has been facilitated
by the „adoption‟ of the concept by important international organizations, including
the Organization for Economic Cooperation and Development (OECD), the United
Nations Conference on Trade and Development (UNCTAD), the World Bank, the
International Monetary Fund (IMF) and to a large extent the World Trade
Organization (WTO), as well as by the process of market globalization and the
process of trade liberalization, which has been sweeping through different countries
around the world (Maher M. Dabbah, 2010, p. 21).
2.2. Fundamentals of Competition Policy
2.2.1. Competition Law and Competition Policy
Being one of the core policies for economic development, competition policy
contributes to formulate competition legislation of each country. Competition policy
orientates contents of competition law and together with competition law, creating
legal environment on competition. Final target of competition policy is economic
growth and consumer welfare through their rights to choose which suitable on the
market they want.
In particular, the concept of competition policy is considerably wider than that of
competition law. According to Maher M. Dabbah in International and Comparative
Competition Law, “competition law is a body of legal rules and standards which aim
at protecting the process of competition: dealing with market imperfections and

restoring desirable competitive conditions in the market”. Competition policy is
concerned with the formulation of a competition law and its enforcement. In
particular, competition law is an element of competition policy:


9

Competition
law

Trade
liberalization

Deregulation

Privatization

Figure 2.1: Four elements of competition policy must be considered to
promote a market oriented economy
Source: Frederic Jenny, Competition law and competition policy: lessons from
developing and transition economies, 17 April 2007
2.2.2. Generalization of Competition Policy
Competition policy can be defined as a governmental policy that promotes or
maintains the level of competition in the market, in conformity with political, socioeconomy target of the government. Competition policy also includes governmental
measures that directly affect the enterprises and the structure of industry and market.
Basically, competition policy consists of two elements (ASEAN Regional Guidelines
on Competition Policy 2010, 2.1.1):
The first, competition policy comprises of a set of policies that promote
competition in local and national markets such as introducing an enhanced trade
policy, eliminating restrictive practices and reducing unnecessary governmental

interventions.
The second, competition policy is expressed through issuing and enforcing
competition law aimed at preventing anti-competitive business practices, abuse of
market power and anti-competitive mergers. It generally focuses on controlling
restrictive trade practices and anti-competitive mergers, or unfair trade practices.
In an economy, having an effective competition policy shall help the government
maintain a fair and equal competition environment and promote enterprises‟


10
competition capability which goes together with the common benefit of the society.
The ability and opportunity of accessing the market as well as competition capability
of enterprises indicate the essence and contents of that country‟s competition policy.
Competition policy should be established based on theories of modern economics in
the framework of an international economic integration with government‟s active
role. That is why competition policy fulfills trade policy, promotes trade
liberalization and contributes to eliminate trade restrictiveness and trade barriers on
global market.
Competition policy, on the basis of market economy, is still sustained and
enforced differently between economies and countries. In full market economy, free
competition policy and encouraging competition policy are operated in the most
suitable way with the economy. Meanwhile, in transition economies, competition
policy is kept together with market entry barriers in several fields directly managed
by the government. Basically, opening market, maintaining equal and fair
competition regime for all subjects, preventing restrictive competition are core issues
of planning and implementing competition policy of each economy.
2.2.3. Main objectives of Competition Policy
A number of objectives have inspired competition policy. In this research,
objectives of competition policy are summarized in four main things as follow:
2.2.3.1. Establishment of economic competitiveness regime

Competition policy introduces a “level-playing field” for all market players that
will help markets to be competitive. Competition policy not only is the basis of legal
framework for competition activities in one economy but also establish competition
law and policy enforcement institutions. This, in turn, heightens enterprises‟
awareness of competition law compliance, protects rights and benefits of consumers
and fosters their sense of self-protection against risks of the drawbacks of
competition. Therefore, competition in the market is always kept in control and in
line with the whole benefit of the society.


11
2.2.3.2. Economic efficiency
Economic efficiency refers to the effective use and allocation of the economy‟s
resources. Firms are often put under pressure on producing at the lowest possible
cost so as to have a competitive advantage. This will benefit the consumers. In the
event of no market entry barriers, even when a monopoly, firms are subject to quote
a competitive price (relatively low price) for product and service, because if they set
a high price, potential competition subjects shall have chances to access the market
(Tang Van Nghia, 2013, p. 55). This is also a motivation for firms to undertake
research and development to meet diversified customer needs. As a result,
competition has a tendency to bring about enhanced efficiency in both static and
dynamic sense.
In economic theory, when other things being equal, an increase of the price at
which goods are sold reduces consumer surplus and increases producer surplus. It
turns out that in general, as the price increases, the increase in profits made by the
firms does not compensate for the reduction in the consumer surplus. Hence, total
surplus (economic welfare) is lowest when the market prices equal the monopoly
price (Massimo Motta, Competition Policy: Theory and Practice, 2004, p.18). When
following a competition policy, there is hardly existence of monopoly price in the
market for all fields of the whole economy. That is why one of objectives of

competition policy is to help the economy gain total surplus. If economic welfare
increases, there is more likelihood that new products should be introduced, in turn,
innovations would be made and consequently the quality levels of goods and services
would be improved.
2.2.3.3. Economic growth and development
Economic growth which is defined as the rise in the value of goods and services
produced by an economy. This is a key indicator of economic development.
Economic development is a broader term including employment growth, literacy,
mortality rates and other measures of quality of life. Competition policy may lead to
economic growth and sustainable development through improvements in economic
efficiency and the decline in wastage in the production of goods and services. The


12
market is, as a result, able to more rapidly reallocate resources, improve productivity
and achieve a higher level of economic growth. Finally, sustained economic growth
tends to bring about enhanced quality of life and better economic development
(ASEAN Regional Guidelines on Competition Policy 2010, 2.2.1.2).
In addition, in Competition Policy: Theory and Practice (2004), Massimo
Motta analyzed and proved other objectives of competition policy related to
economic growth and development through theoretical model such as: promoting
market integration, economic freedom, fighting inflation and fairness and equity.
2.2.3.4. Consumer welfare
Competition Policy benefit consumers in terms of better choice, better quality
and lower prices. Consumer welfare protection may be required so as to equalize a
perceived imbalance between the market power of consumers and producers which
may derive from market failures such as information asymmetries, the lack of
bargaining position towards producers and high transaction costs. Competition policy
may serve as a complement to consumer protection policies to address such market
failures (ASEAN Regional Guidelines on Competition Policy 2010, 2.2.1.3).

2.2.4. Benefits of Competition Policy
As mentioned above, competition policy introduces a “level-playing field” for
all market players. The introduction of a competition law will provide the market
with a set of “rules of the game” that protects the competition process itself, rather
than competitors in the market.
In addition, competition policy is also beneficial to developing countries. Due
to worldwide deregulation, privatization and liberalization of markets, developing
countries need a competition policy, in order to monitor and control the growing role
of the private sector in the economy so as to ensure that public monopolies are not
simply replaced by private monopolies.
Besides contributing to trade and investment policies, competition policy can
accommodate other policy objectives (both economic and social) such as the
integration of national markets and promotion of regional integration, the promotion


13
or protection of small businesses, the promotion of technological advancement, of
product and process innovation, of

industrial

diversification, environment

protection, fighting inflation, job creation, equal treatment of workers according to
race and gender.
In particular, competition policy may have a positive impact on employment
policies, reducing redundant employment (which often results from inefficiencies
generated by large incumbents and from the fact that more dynamic enterprises are
prevented from entering the market) and favouring jobs creation by new efficient
competitors.

Competition policy complements trade policy, industrial policy and regulatory
reform. Competition policy targets business conduct that limits market access and
which reduces actual and potential competition, while trade and industrial policies
encourage adjustment to the trade and industrial structures in order to promote
productivity-based growth and regulatory reform eliminates domestic regulation that
restricts entry and exit in the markets. Effective competition policy can also increase
investor confidence and prevent the benefits of trade from being lost through anticompetitive practices. In this way, competition policy can be an important factor in
enhancing the attractiveness of an economy to foreign direct investment, and in
maximizing the benefits of foreign investment.
2.2.5. Contents of Competition Policy
For the purpose of ensuring the presence of competition relationships and
economic development, governmental competition policy is often established in line
with economic conditions and often comprises of contents as follows (Tang Van
Nghia, 2013, p.57):
-

Competition policy illustrates vividly the objectives of regulating competition
relationships of the whole economy. The condition of this regulation objective
is that economic system should be built based on suitable political-legal
regime. Competition policy shall explicitly show the free rights of entry or
exit from the market, the right of reforming the forms of business organization
and the right of free competition of business subjects.


14
-

Competition policy, on one hand, shall maintain the fair and equal
competition environment; on the other hand, shall oppose to anti-competitive
business practices due to abuse of market power, monopoly or anticompetitive mergers from any subjects within or out of its nations.

-

Having full of measures to ensure an effective implementation of competition
law and policy. Enforcement institutions of Competition Law shall have
favourable capacity and authorization in its specialization. Meanwhile,
subjects on the market shall be self-conscious and shall have appropriate
actions with regulations of competition law and policy.

-

Having proper, capable and competent institutions to enforce competition law
in practice in order for all subjects on the market to strictly obey competition
law. Therefore, there should have an independent and competent competition
regulatory body to solve competition issues. Competition policy makes sure
of cooperation mechanism of enforcement competition law bodies and
supervises activities of them.

-

Assuring the firms‟ right of unlimited access and non-discrimination in all
markets. In case there is existence of market entry barriers, competition is
restrained and market power is abused.

In the market economy, decisions of firms have a considerable influence on the
common economy operation. In order for the market to self-operate as its normal rule
as well as self-control through competition without any interventions, private
autonomy shall be ensured by the government by law. This also includes institutional
monitoring enforcement of competition law in preventing anti-competitive practices
on the market. As competition law is the essential factor in regulating the market

economy, competition law demonstrates competition policy. Competition law is not
only expression of competition policy, but legal instruments for competition policy
enforcement. That is why competition law and policy should adopt objective and
consistent regulations for firms and other business subjects.
2.3. International Competition Law and Policy
It is obvious that competition law and policy are highly international. Because
many nations, from developed to developing ones, have adopted similar forms of


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competition law. Additionally, competition law enforcement has become
increasingly global through extraterritorial assertion of jurisdiction and bilateral
cooperation. International competition law and policy has two considerable
functions: first, it proves the rights and obligations of all entities in the global market
and second, it contributes to establish conduct norms for global market to not only
those engaging in but are affected by them as well. There are various ways to access
and analyze international competition law and policy by virtue of the diversification
of it, however, in the framework of this thesis, international competition law and
policy is examined in three modern aspects: similarities and differences between
competition law regimes around the world and the involvement of international
bodies and organizations in the field of competition law and policy.
2.3.1. Similarities between competition law regimes around the world
Although each country adopts a distinct competition law and policy, most of
the world‟s competition law regimes share varying common characteristics and
features. These include the prohibitions on collusion (cartel), prohibition on abuse
dominance or monopolization and regulating mergers.
2.3.1.1. Prohibition on collusion (cartel)
In terms of competition, collusion refers to agreements between two or more
parties in order to restraint open competition. In business practices, firms often agree
together and cooperate so as to achieve highest business efficiency on the market.

However, for the purpose of profit or business advantage, firms frequently find ways
to restraint the ability to participate in the market of business rivals or potential
competitors. Agreement in restraint of competition shall be demonstrated by mutual
agreements, decisions or activities among firms in order to cause disadvantages to
others or exert harmful effect to competition reality. There are two types of
agreement in restraint of competition (cartel) namely vertical cartel and horizontal
cartel. As horizontal cartel is cooperation between two or more actual or potential
competitors at the same level of business, it often includes agreements related to
price, market sharing, preventing other entities from participating on the market…
On the other hand, as vertical cartel is cooperation between companies operating at


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different levels of the production or distribution chain, it often comprises of price
fixing, exclusive distribution by territory. Although the two kinds of cartel do harm
to competition on the market, vertical cartel seems to bring about less negative effect
on the market than horizontal cartel.
It is essential for a competition law and policy to include a prohibition on
collusion between firms, particularly cartels aiming at market sharing, price fixing,
limiting production, collusive tendering and other important aspects of the firms‟
competitive interaction. Not only competition law regimes of countries on the world
have regulations for cartels but regulations of business organizations as well. For
example, according to Article 101(1) of the Treaty on the Functioning of the
European Union (TFEU) stated that: “The following shall be prohibited as
incompatible with the internal market: all agreements between undertakings,
decisions 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 internal market, and in particular
those which:
i.

directly or indirectly fix purchase or selling prices or any other trading
conditions;

ii.

limit or control production, markets, technical development, or investment;

iii.

share markets or sources of supply;

iv.

apply dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;

v.

make 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”.
These prohibitions are to ensure the open competition environment for business

subjects as well as to protect interests of enterprises not participating in the
agreements and to protect consumer benefit.


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2.3.1.2. Prohibition on abuse of dominance or monopolization

Abuse of a dominant position occurs when a dominant firm in a market, or a
dominant group of firms, engages in conduct that is intended to eliminate or
discipline a competitor or to deter future entry by new competitors, with the result
that competition is prevented or lessened substantially. Abusing a dominant or
monopoly position on the market is also a form of anticompetitive behaviour which
is generally addressed by international competition law and policy. The prohibition
on abuse of dominance assumes massive significance in practices and is considered
to be complementary to the prohibition on collusion. For instance, Article 14 of
Vietnam Competition Law 2004 stated that: “Any enterprise or group of enterprises
in a dominant market position shall be prohibited from carrying out the following
practices:
i.

Selling goods or providing services below total prime cost of the goods
aimed at excluding competitors;

ii.

Fixing an unreasonable selling or purchasing price or fixing a minimum
re-selling price goods or services, thereby causing loss to customers;

iii.

Restraining production or distribution of goods or services, limiting the
market, or impeding technical or technological development, thereby
causing loss to customers;

iv.

Applying different commercial conditions to the same transactions

aimed at creating inequality in competition;

v.

Imposing conditions on other enterprises signing contracts for the
purchase and sale of goods and services or forcing other enterprises to
agree to obligations which are not related in a direct way to the subject
matter of the contract;

vi.

Preventing market participation by new competitors”.

Similarly, Article 102 of the Treaty on the Functioning of the European Union
(TFEU) indicated that “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.