The establishment of the national competition committee – The enforcement authority of the competition law

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The establishment of the national competition committee – The enforcement authority of the competition law

Competition is a particular character of the market economy; it is also the soul and driving force for the development of the market. Therefore, when transforming from a centrally planned economy to a market economy, we have to be familiar with it; and to ensure to follow an actual market economy, we need an appropriate mechanism to protect the competitive environment. Accordingly, the 2004 Competition Law was issued, which regulated the organization and apparatus of the competition law enforcement agencies include: the Competition Administration Department (whose name was later changed to the Competition and Consumer Protection Department) and Competition Council (including the assisting body of Competition Council Office).

During the operation, the Competition Administration Department and Competition Council have existed many inadequacies and specific problems that cannot be solved and require changes. Therefore, the Law on Competition 2018, approved by the 14th National Assembly in the 5th session on June 12th, 2018 and be officially effective from July 1st, 2019, has regulated the establishment of the National Competition Committee on the basis of reorganizing the competition law enforcement agencies in the content of the 2004 Law on Competition. This is a new and important point aimed to enhance the operational efficiency of the enforcement agency of the competition law.

1. The legal status of the competition law enforcement agency 

According to Clause 1 – Article 46 – Law on Competition 2018, the National Competition Committee has the following characteristics: (1) Being an agency of the Ministry of Industry and Trade; (2) Membership structure includes Chairman, Vice-Chairmen and members; and (3) The organizational structure including the Competition Investigation Agency and other assisting bodies.

Moreover, based on the content specified in Paragraph 2 – Article 46 – Competition Law 2018, the duties and powers of the enforcement agency of the competition law can be generalized as follows: (1) Advising and assisting the Minister of Industry and Trade in performing the function of State management over the competition; (2) being the agency has the function of conducting competition litigation proceedings; (3) being the authority to waive competition restriction agreements; and (4) being the agency responsible for resolving complaints against competition cases and performing other duties under relevant laws.

Accordingly, the enforcement agency of the competition law under the Competition Law 2018 has the following characteristics:

First, the National Competition Committee will be organized as an agency under the Ministry of Industry and Trade; this means that this agency’s functions nearly the same as an assisting body of the Minister of Industry and Trade in competition management matters.[1] Along with that, compared to the Law on Competition in 2004, the legal position of the competition management authority in the Law on Competition in 2018 is somewhat reduced when it becomes an agency under the management of the Ministry of Industry and Trade; this regulation is completely different from the provisions of Competition Council established by the Government in the Law on Competition 2004 and other related statutory documents. This may partly affect the settlement proceedings of competition cases when the National Competition Committee needs the coordination and support of other agencies in the system of State management.

Second, considering the provisions on the duties and powers of the National Competition Committee under the Law on Competition 2018, this agency operates as a “semi-judicial” agency; this means it has both the responsibility to carry out the State management of competition and the responsibility of investigating to handle and resolve competition complaints and sanction violations related to competition regulations; however, the Competition Law 2018 also allows this agency to be responsible for resolving complaints related to its own decision to handle competition cases. Such provisions that allow the National Competition Committee to make decisions to handle competition-related cases and settle complaints related to decisions on handling competition disputes can create doubts of the entities in the competition case when the judger is also the settler of complaints related to the settlement. For competition cases, ensuring objectivity and the absolute protection of competition are always the top priority to ensure fair, effective, and most-convincing handling results towards those who received the decision to resolve the competition case[2]. Therefore, it is necessary to create a good control mechanism to ensure effectiveness in the resolving decisions of the enforcement acgency under the competition law. 

Third, because the independence of the National Competition Committee under the Competition Law 2018 is no longer exist like the Competition Council’s under the 2004 Competition Law, its decisions may be subject to the dependence and domination by the Ministry of Industry and Trade, leading the status of the enforcement agency’s legislation has been reduced compared to the old law provisions; from which, the enforcement of the responsibility to maintain and protect the fairness and competitive environment may be affected. Such suspicion originated from the fact that there are still a number of Groups and Corporations doing business in many different fields and industries in the Ministry of Industry and Trade’s organizational structure that can cause potential benefit conflict with businesses in the market. The problem will arise when there is a competition conflict involving enterprises under the management of the Ministry of Industry and Trade, the National Competition Committee, with the legal position of an agency directly under the management of the Ministry and Trade and at the same level as State’s Groups and Corporations, will potentially be subject to political influence related to the investigation and handling procedures of competition cases. Then, the National Competition Committee cannot ensure the necessary objectivity and independence of its decisions to protect a fair, competitive environment.

Fourth, the merging of two competition law enforcement agencies into a single one means that the workload related to competition management will also increase and potentially create an overload in the dealing process of members of the National Competition Committee; besides, according to the content of the “Draft Decree on Regulating the functions, tasks, powers and organizational structure of the National Competition Committee,” this agency is also assigned to manage the issues related to multi-level business activities to protect maximum interests of consumers. This new regulation is a commendable and highly anticipated point; however, besides the above-mentioned potential risk of overload, the National Competition Committee is also creating considerable skepticism about the effectiveness of its competition management activities, because if competition cases occur are not resolved quickly and accurately, it may create worse consequences to a fair, competitive market; thereby, reduce the faith of entities in the business market to the competition management activities of this new agency. 

2. Practical application of the legal provisions on the competition management authority (National Competition Committee)

Competition Law 2018 has completely changed the organization of the competition management authority. Accordingly, it ceased the existence of the Competition Administration Department and Competition Council and replaced them with the National Competition Committee. This is an agency under the management of the Ministry of Industry and Trade, has the function of advising on the field of competition management and handling and prosecuting competition cases.

Since the 2018 Competition Law comes into force, the National Competition Committee has not been established yet. The draft Decree on regulating the functions, tasks, powers and organizational structure of the National Competition Committee has not been approved. On May 7th, 2020, the Ministry of Industry and Trade, as the host to drafting the content of the Draft Decree of the Government, detailing the tasks, powers and organizational structure of The National Competition Committee has reported on some of its organizational structure at the Government’s regular meeting. At this meeting, the Standing Government directly stated: “Accordingly, the Prime Minister basically agreed with the Ministry of Industry and Trade report. The Prime Minister emphasized the spirit of reducing the internal clue but improving the effectiveness and efficiency of management to do the right functions and tasks, promote fairness competition, and strictly handle violations. Payroll must be suitable for each function and mission. The Prime Minister agreed with the plan that the National Competition Committee was equivalent to the General Department level, in which the investigating body of the Committee would be equivalent to the Department level to ensure the position and independence in the implementation of the function and mission. The model of the General Department will be favorable for building the operation mechanism and relationship of the Committee with the Ministry of Industry and Trade and other agencies. According to the provisions of the Competition Law, the President of the National Competition Committee is appointed by the Prime Minister, therefore, determining the position of the Committee to be equivalent to the General Department level will ensure the similarity of the authority to consider and appoint the Chairman of the Committee. The investigating and handling competition cases of multinational and cross-border nature require building a model of competition enforcement agencies with a strong enough position and role to carry out investigations and adjudicate activities independently according to regulations”. [3].

However, when considering the content of the provisions that the National Competition Committee is an agency under the Ministry of Industry and Trade, we realize that this is a significant shortcoming in the Competition Law 2018; Because it is difficult to ensure independence and objectivity in handling competition cases of this agency. It is acknowledged that these shortcomings had already existed in the content of the 2004 Competition Law and related guiding documents; of which, the Competition Council, although established by the Government, but being influenced by the advisory decisions of the Minister of Industry and Trade. This has resulted in the handling of competition cases of these two agencies is not really convincing and ensuring objectivity.

This is evidenced by the abuse of the monopoly position of the Vietnam Petroleum Company (VINAPCO). In this case, although we haven’t know whether the matter is right or wrong after VINAPCO received the Instruction Letter from the Ministry of Transport, VINAPCO immediately resumed the loading of fuels to Pacific Airlines. (PA). VINAPCO is an air transport enterprise under the management of the Ministry of Transport. Suppose, when the Competition Administration Department under the management of the Ministry of Industry and Trade investigates VINAPCO’s violation, with the influence from the Minister of Transport and the relationship between the Ministry of Industry and Trade and the Ministry of Transport, can the Competition Administration Department conduct an objective case investigation? This has been clearly confirmed by the abuse of the monopoly position of the VINAPCO was only fined by the Competition Council at the rate of 0.025% of total revenue in the fiscal year prior to the violation year; meanwhile, the fine rate under the Law is up to 5% of the total revenue in the fiscal year preceding the violation year. Furthermore, with a considerable number of enterprises under the management of the Ministry of Industry and Trade, the National Competition Committee, under the Ministry of Industry and Trade’s management,  investigates and handles violations of enterprises is not feasible, no different from the Ministry of Industry and Trade is kicking the ball and blowing the whistle at the same time.[4].

3. Recommendation 

For the above reasons, the Competition Enforcement Authority should have the following elements: (1) Must be given full authority and legal potition; (2) high independence operation; (3) Independent decision-making and operations must be ensured; (4) Transparency in operations must be ensured[5]. Independence does not mean having to stand independently, separate in terms of organization, not under any governing body, but independent in terms of organization and operation as well as, duties and powers.

Therefore, the Model of the National Competition Committee under the Ministry of Industry and Trade under the Competition Law 2018 is not appropriate and needs more amending. Accordingly, we propose that the next revised Competition Law should stipulate as follows: “The National Competition Committee is the state management agency for competition, established by decision of the Government and independent, not under the ministries; The members of the National Competition Committee are appointed and dismissed by the Prime Minister”. The provisions of the National Competition Committee as above will limit the inadequacies that have existed during the past time as follows:

  • Overcoming the inadequacy of the legal position of the National Competition Committee as the currents. Therefore, the competition enforcement agency should not be under the Ministry of Industry and Trade, which leads to ineffective handling the competition law violation when these acts are related to enterprises managed by ministries. Consequently, it is necessary to separate the competition law enforcement agency into an independent organization, directly under the Government.
  • Creating independence for the competition enforcement agency with third parties, consistent with international law experience to meet the needs of global integration.

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This article is for general information only and is not a substitute for legal advice.

 

[1] In the content of the Draft Decree on regulating the functions, tasks, powers and organizational structure of the National Competition Committee, this agency is proposed to be an organization equivalent to the General Department under the Ministry of Industry and Trade.

[2] The Competition Law 2018 (National Competition Commission) regulations on the complaint settlement agency of the competition decision related to the settlement result have not changed much from the 2004 Competition Law ( Competition Council) leads to many people still doubting the objectivity and independence of the settlement process for decisions related to the settlement of competition cases. However, in the content of the 2004 Competition Law, the Competition Council only plays a part in solving competition-related issues, but mainly this work falls under the jurisdiction of the Competition Administration Department, therefore, can create relative independence in control to ensure the transparency and effectiveness of decisions to resolve competition cases.

[3] http://baochinhphu.vn/Hoat-dong-cua-lanh-dao-Dang-Nha-nuoc/Thuong-truc-Chinh-phu-hop-ve-mo-hinh-to-chuc-cua-Uy-ban-Canh-tranh-Quoc-gia/394931.vgp

[4] Mai Xuan Hoi (2016), “The National Competition Committee – the appropriate competition law enforcement agency”, 18 (322) Legislative research 38

[5] Le Danh Vinh, Hoang Xuan Bac, Nguyen Ngoc Son (2010), Competition Law Curriculum, Hanoi Law University, Dan Tri Publishing House, Hanoi, page 208