Vietnam: Asia Pacific competition highlights | Q1 2022

In brief

After surveying more than 2500 SMEs in Vietnam, the authority found that SMEs generally do not have a high level of awareness of the law. The regulator also published papers on the state of competition in two sectors. The annual report includes consolidated and published statistics by the VCCA and MOIT.

This update was published as part of our quarterly newsletter, Asia Pacific Competition Highlights. Click here to access the full report, which covers the most notable antitrust developments across nine Asia Pacific jurisdictions.

VCCA reports on competition law awareness of SMEs

The Vietnam Competition and Consumer Authority (VCCA) cooperated with Japan International Cooperation Agency (JICA) to conduct a survey of more than 2500 SMEs in Vietnam and has reported that SMEs generally do not have a high level of awareness:

  • 32.96% of surveyed SMEs had good awareness or higher, 50.7% of surveyed SMEs have average awareness, while 16.34% of SMEs have never heard of competition law.
  • 65.63% of enterprises were aware that the MOIT (VCCA) is the relevant competition regulator; 24.78% of enterprises did not know, while the remaining 9.59% gave the wrong answer.

The report also noted the impact of the pandemic on SMEs. Over 60.5% of SMEs had to shorten working hours. During the peak period of the pandemic in 2020-2021, factories had to suspend 50-80% of their employees and dismiss 10% of their employees.

More information can be found here.

VCCA reports on industrial real estate markets

The VCCA, in a report published in cooperation with JICA, found that the urea fertilizer market can be considered as a single product market:

  • the market is driven by the production process. Due to naturally high barriers for market entry, the urea fertilizer market has an oligopolistic structure, with market power held by the group of manufacturing enterprises
  • Vietnam has four domestic urea fertilizer factories with a total capacity of about 2,270 tons/year. Even with the lowest proportion of imports of all fertilizer groups, the majority of supply in the market comes from domestic production
  • In terms of wholesale supply, manufacturing enterprises mainly distribute urea fertilizer through two primary methods: (i) system of distributors/trade partners and (ii) distribution of products through its affiliated companies
  • In terms of retail supply, urea fertilizer retail markets are active with the participation of many suppliers and distributors nationwide.

The report also presents policy and legislative recommendations to state agencies:

  • A database should be established to monitor the urea fertilizer market. Due to the high level of concentration and direct impact on farming activities, it is vital to ensure a fair and equal competitive environment.
  • Competition law advocacy and awareness should be strengthened. Businesses should be mindful of high-risk provisions in agreements, including price-fixing, market allocation and prevention of market entry by other enterprises.

2021 report on Vietnam competition law published

The report includes consolidated and published statistics by the VCCA and MOIT.

Areas of focus for MOIT (Ministry of Industry and Trade) included the agreements to restrict competition in gas associations in some localities and in the fertilizer market; steel and hog price increase; the market of building materials to supply the construction investment project of highways on the North-South East route; advertisement showing signs of unfair competition for promoting functional foods, drugs, products with inflated features related to the Covid-19 pandemic.

Enterprises have continued to carry out M&A activities to restructure business activities or to cooperate with third parties to develop and expand. In 2021, the MOIT received and reviewed 130 notifications, nearly double 2020 figures:

  • over 70% of these transactions were conducted in Vietnam
  • 82% of notified transactions were acquisitions
  • 61% of notifications involved horizontal economic concentration between enterprises in the same relevant market.

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