Pháp luật chống định giá lạm dụng của EU, Hoa Kỳ, Việt Nam – So sánh và kinh nghiệm áp dụng cho Việt Nam

LUND UNIVERSITY HOCHIMINH CITY

FACULTY OF LAW UNIVERSITY OF LAW

TRAN HOANG NGA

REGULATIONS

AGAINST ABUSIVE PRICING

– A COMPARISON OF EU, US, AND

VIETNAMESE LAWS

AND AN APPLICATION OF ITS RESULTS TO

VIETNAM

Field of Study: International and Comparative Law

Code: 62.38.60.01

DOCTORAL DISSERTATION OF LAW

HO CHI MINH CITY - 2011

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LUND UNIVERSITY HOCHIMINH CITY

FACULTY OF LAW UNIVERSITY OF LAW

TRAN HOANG NGA

REGULATIONS

AGAINST ABUSIVE PRICING

– A COMPARISON OF EU, US, AND

VIETNAMESE LAWS

AND AN APPLICATION OF ITS RESULTS TO

VIETNAM

Field of Study: International and Comparative Law

Code: 62.38.60.01

DOCTORAL DISSERTATION OF LAW

Swedish Supervisor Vietnamese Supervisor

Prof. Hans Henrik Lidgard Asst. Prof. Le Thi Bich Tho

HO CHI MINH CITY - 2011

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Table of Contents

PREFACE ............................................................................................. 5

List of Abbreviations .............................................................................. 7

1. INTRODUCTION .......................................................................... 9

1.1. Background ........................................................................................ 9

1.1.1. Relationship of competition and monopoly ............................................... 9

1.1.2. Pricing in competition and monopoly ...................................................... 11

1.1.3. Monopoly control laws in US, EU and Vietnam ..................................... 11

1.2. Purposes: .......................................................................................... 25

1.3. Definition and delimitation ............................................................. 26

1.4. Methods ............................................................................................ 29

1.5. Value of the research: ...................................................................... 31

1.6. Outline .............................................................................................. 31

2. REGULATIONS AGAINST ABUSIVE PRICING UNDER EU

AND US LAW .......................................................................................... 33

2.1. Basic rules and concepts on abusive pricing in EU and US ......... 33

2.1.1. Basic rules ............................................................................................... 33

2.1.1.1. EU Competition Law and US Anti-Trust Law are directed against

abusive conduct, which includes abusive pricing .................................................. 33

2.1.1.2. Laws against abusive pricing in the EU and the US protect

Competition, not Competitors ................................................................................ 45

2.1.2. Concept of Dominant position, Market power and Monopoly power ..... 48

2.1.2.1. General approach: .......................................................................... 48

2.1.2.2. Identification: ................................................................................. 51

2.1.3. The Relevant Market concept .................................................................. 57

2.1.3.1. The relevant product market: ......................................................... 59

2.1.3.2. The relevant geographic market: .................................................... 62

2.2. Specific forms of abusive pricing ................................................... 64

2.2.1. Excessive pricing: .................................................................................... 64

2.2.1.1. Excessive pricing on the selling side .............................................. 65

2.2.1.2. Excessive pricing on the buying side ............................................. 73

2.2.1.3. Remarks ......................................................................................... 75

2.2.2. Predatory pricing ..................................................................................... 76

2.2.2.1. EU test of predatory pricing ........................................................... 83

2.2.3. Price Squeeze ........................................................................................... 86

2.2.3.1. Price squeeze in the US .................................................................. 88

2.2.3.2. Price squeeze in the EU.................................................................. 92

2.2.4. Price Discrimination ................................................................................ 98

2.2.4.1. Price discrimination in the US ....................................................... 99

2.2.4.2. Price discrimination in the EU ..................................................... 102

2.2.5. Discount or rebate schemes ................................................................... 104

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2.2.5.1. Bundled discounts ........................................................................ 105

2.2.5.2. Single-product royalty discounts .................................................. 110

2.2.6. Remarks ................................................................................................. 116

2.3. Remedies to abusive pricing in EU and US laws ........................ 117

2.3.1. Conduct and Structural Remedies .......................................................... 118

2.3.1.1. Termination of infringement ........................................................ 119

2.3.1.2. Behavioural remedies ................................................................... 120

2.3.1.3. Structural Remedies ..................................................................... 121

2.3.2. Monetary Remedies ............................................................................... 125

2.3.2.1. Fines and penalties ....................................................................... 126

2.3.2.2. Compensation............................................................................... 128

2.3.2.3. Legal Fees .................................................................................... 133

2.3.3. Criminalization and Incarceration: ........................................................ 134

2.3.4. Remarks ................................................................................................. 134

3. ABUSIVE PRICING IN VIETNAM COMPARED WITH EU AND

US .................................................................................................... 137

3.1. Background, basic rules and concepts ......................................... 138

3.1.1. Gradual development of legislation and enforcement capacity ............. 138

3.1.1.1. Development of Vietnamese laws ................................................ 138

3.1.1.2. Competent Authorities for regulating abuses of dominance ........ 146

3.1.2. Recent practices related to of abuse of dominance ................................ 150

3.1.2.1. Vinapco case ................................................................................ 151

3.1.2.2. Megastar case ............................................................................... 153

3.1.2.3. K+ issue ....................................................................................... 154

3.1.2.4. “Electric pole war” ....................................................................... 157

3.1.2.5. Medicine and milk prices ............................................................. 161

3.1.3. Basic rules ............................................................................................. 165

3.1.3.1. Abusive conducts including abusive pricing ................................ 165

3.1.3.2. Vietnamese Competition Law protects competition and competitors

170

3.1.4. Concepts ................................................................................................ 171

3.1.4.1. Dominance and monopoly position.............................................. 171

3.1.4.2. Relevant market: .......................................................................... 175

3.2. Specific forms of abusive pricing in Vietnamese laws ................ 177

3.2.1. Excessive pricing: .................................................................................. 178

3.2.1.1. Excessive pricing on the selling side ............................................ 178

3.2.1.2. Excessive pricing on the buying side ........................................... 180

3.2.1.3. Fixing a minimum re-selling price ............................................... 182

3.2.2. Predatory Pricing: .................................................................................. 184

3.2.3. Price Discrimination: ............................................................................. 186

3.2.4. Foreclosing competitors ........................................................................ 187

3.2.5. Remarks ................................................................................................. 189

3.3. Remedies to Abusive Pricing ........................................................ 190

3.3.1. Conduct and Structural Remedies .......................................................... 191

3.3.1.1. Conduct remedies ......................................................................... 191

3.3.1.2. Structural remedies....................................................................... 192

3.3.2. Monetary remedies ................................................................................ 192

3.3.2.1. Fine .............................................................................................. 192

3.3.2.2. Compensation............................................................................... 193

3.3.3. Remarks ................................................................................................. 194

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4. SUGGESTIONS FOR IMPROVING VIETNAMESE

REGULATIONS ON ABUSIVE PRICING AND CONCLUSIONS ...... 195

4.1. Suggestions for improving the presentation and communication

of competition matters .................................................................................... 196

4.1.1. Publication of VCAD and VCC decisions ............................................. 196

4.1.2. Categorize abuses of monopoly position along with abuse of a dominant

position ............................................................................................................... 197

4.1.3. Determination of a dominant position ................................................... 198

4.1.3.1. Single firm dominance ................................................................. 198

4.1.3.2. Collective dominance ................................................................... 199

4.1.4. Determination of a relevant market ....................................................... 199

4.2. Suggestions on regulations on abusive pricing ........................... 200

4.2.1. Excessive pricing ................................................................................... 200

4.2.2. Predatory pricing ................................................................................... 202

4.2.3. Price discrimination ............................................................................... 203

4.2.4. Market foreclosure ................................................................................. 203

4.2.5. Price squeeze ......................................................................................... 203

4.2.6. Discount and rebate schemes ................................................................. 204

4.3. Suggestions on remedies for abusive pricing .............................. 205

4.4. Conclusion ...................................................................................... 206

5. Annexes ...................................................................................... 208

1 - Extract of the VLC ......................................................................................... 208

2 - Extract of the VLC – With suggested amendments ....................................... 212

3 - Extract of Decree 116/2005 ........................................................................... 216

4 - Extract of Decree 116/2005 – with suggested amendments........................... 222

Table of Cases .................................................................................... 228

Official Documents ............................................................................ 233

List of websites .................................................................................. 235

BIBLIOGRAPHY .............................................................................. 236

PREFACE

This dissertation is the visible result of my Ph.D research within the

framework of the joint doctoral program between Lund University Faculty

of Law and Ho Chi Minh City University of Law, supported by SIDA’s

“Strengthening legal education in Vietnam” project. The research focuses on

laws against abuse of a dominant position in the EU, the US and Vietnam

utilizing a comparative law approach.

This dissertation would not have been accomplished without the help and

contribution of several individuals, to whom I would like to express my

deepest appreciation.

First, it was my great honour to be supervised by Professor Hans Henrik

Lidgard and Associate Professor Le Thi Bich Tho. Professor Lidgard has

given me invaluable guidance, advice and encouragement from the very first

to the final steps of the research. He spent a great deal of his precious time

reading and commenting my writing, and discussing the issues raised in my

drafts. Associate Professor Le Thi Bich Tho provided me not only with

warm encouragement throughout the whole process, but also with insightful

comments, especially with regard to the approach to Vietnamese law in my

dissertation. I would like to express my deep gratitude to Prof. Lidgard and

Asst. Prof. Le Thi Bich Tho for being my teachers and supervisors

throughout both my masters and doctoral degree programs. I am indebted to

them for much of the professional legal content of my dissertation. Any

remaining errors are entirely my own.

Second, I would like to send my special thanks to Mr. Robert Schwartz,

who helped me to improve my writing in the English language. Moreover,

he provided me with many practical comments and relevant and valuable

information. Without his help, my dissertation would not reach the standard

for international academic writing.

Third, I would like to thank Dr. Nguyen Thanh Tu, Professor Katarina

Olsson, and all the other professors, doctors who were opponents or

members of examining boards of annual prolongation seminars, during the

course of which they gave me many meaningful comments and feedback on

the content of drafts of this dissertation.

Fourth, one thing I will never forget is the support and encouragement of

the Lund University Faculty of Law and Ho Chi Minh City University of

Law during my research. I would like to express my gratitude to Prof.

Christina Moell, Prof. Bengt Lundell, Prof. Traskman, Asst. Prof. Mai Hong

Quy, Dr. Bui Xuan Hai, and many other professors, lecturers, administrative

staff and librarians of the two universities. In addition, I also would like to

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send my thanks to Suffolk Law School, where I was aided in US antitrust

law research. In particular my thanks go to Professor Stephen C. Hicks, Mr.

Jonathan D. Messinger and Suffolk’s administrative staff and librarians.

Finally, I would like to thank my parents, my children, my friends and

my students for their warm support, encouragement, care and love.

Ho Chi Minh City, August 31, 2011

Tran, Hoang Nga

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List of Abbreviations

ASEAN Associations of South East Asian Nations

AAC Average avoidable cost

ATC Average total cost

AVC Average variable cost

CCHC Competition Case Handling Council (Vietnam)

CIEM Central Institute for Economic Management (Vietnam)

CJEU Court of Justice of European Union

DOJ Department of Justice (US)

EC European Community (Communities)

EPL English Premier League

EU European Union

EVN Electricity of Vietnam Group

FOEs Foreign owned enteprises

FTAIA Foreign Trade and Antitrust Improvements Act (US)

FTC Federal Trade Commission (US)

GC General Court (EU)

HCTV Hanoi Cable Television

IDRC International Development Research Centre

ICN International Competition Network

LIRC Long run incremental cost

LRAIC Long run average incremental cost

MoF Ministry of Finance (Vietnam)

MoIC Ministry of Information and Communication (Vietnam)

MoIT Ministry of Industry and Trade (Vietnam)

MPC Minimum – per – cap policy

OECD Organization for Economic Cooperation and Development

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SOEs State owned enterprises

SRMC Short-run marginal cost

UN United Nations

UNCTAD United Nations Conference on Trade and Development

UNDP United Nations Development Programme

US United States of America

VCA Vietnam Competition Authority

VCAD Vietnam Competition Administrative Department

VCC Vietnam Competition Council

VFF-FAN Vietnam football supporters association

Viettel Army Telecom Group

VLC Vietnam Law on Competition

VNPT Vietnam Post and Telecommunications Group

VSTV Viet Nam Satellite Digital Television

VTV Vietnam National Television

WTO World Trade Organization

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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. This part of the

dissertation presents different perspectives on the relevant issues, in order to

explain the importance of the subject. It begins with a discussion on

relationship between competition and monopoly. Then a description of

economic theories on relationship of prices and competition is briefly

presented in order to describe the influence of pricing by enterprises on

various kinds of market. It concludes with a description of the legal and

practical situation of Vietnam in order to demonstrate the importance of

research into the regulation of abusive pricing for the country.

1.1.1.Relationship of competition and monopoly

Competition is an essential feature of a market economy. Fair

competition benefits society. Within the overall framework of an intense

struggle among suppliers for resources and economic benefit, competition

motivates them to improve their performance at all times. Practical benefits

are the result, such as the improvement of goods and the quality of service,

with consumers getting more reasonable prices day by day. However,

competition in the long run may also lead to another result, because, as is

10

often said, “competition sows the seeds of its own destruction”.1

Competition encourages the economic development, but there are always

winners and losers, and when winners are too successful and grow in

strength beyond a certain limit, they may achieve monopoly positions

whereby they are able to prevent others from competing and damage the

process as a whole. Especially, monopoly positions contain ability of

independently decide, or even govern, prices.

From a philosophical perspective, competition and monopoly are

considered to be two dialectically connected sides of a perfect whole.2

Monopoly is the opposite pole of competition: where monopoly exists,

competition does not. Like other economic phenomena, monopoly has

advantages and disadvantages. When monopoly is the reward for successful

competition, it motivates competitors, thus encouraging the development of

production and the economy. Enterprises approaching monopoly size by

way of successful competition usually have financial and technical

strengths, and are often leaders in researching and applying advanced

techniques. Their size and economies of scale may help to minimize the

fixed costs of each unit, and the monopoly enterprise can satisfy market

demand at a low price, fulfil market demand with less waste and free the

otherwise wasted resources for other uses. However, once monopoly exists

stably and firmly, the market may lose its ability to motivate. Customers are

forced to depend on the monopoly enterprise, so any element of balance

may be lost. This leads to the enterprise becoming over-confident, ignoring

the demands and interests of customers. Furthermore, monopolists may be

attempted to abuse their monopoly position by keeping output at a level

lower than demand in order to push prices up and maximize profit. In the

long term, monopoly may deny consumers and society the ability to choose

from among the best alternatives for their demands. Personnel and financial

allocation will not be able to maximize efficiencies resulting in serious

1

See e.g. European Commission’s Ninth Report on Competition Policy, Ninth Report on

Competition Policy (1979) p.10 ("It is an established fact that competition carries within it

the seeds of its own destruction."). Available at

http://ec.europa.eu/competition/publications/annual_report/index.html: ; See also Edward

Cattermole, The Development and Implications of 'Collective Dominance' in EC

Competition Law, Lund University Centre for European Studies Working Paper No. 14

(2002) p. 14 Available at http://www.cfe.lu.se/publikationer/cfe-working-papers-series: ;

and Marco Lankhorst, Increasing the Requirements to Show Antitrust Harm in Modernised

Effects-Based Analysis: An Assessment of the Impact on the Efficiency of Enforcement of

Art 81 EC, (2010) (Ph.D. dissertation University of Amsterdam Center for Law &

Economics) p.20 ("Yet, competition carries within it the seeds of its own destruction.")

Available at http://dare.uva.nl/document/159558 .

2

Dang, Vu Huan, Regulations on monopoly control and anti-unfair competitive activities

in Vietnam [Pháp luật về kiểm soát độc quyền và chống cạnh tranh không lành mạnh ở Việt

Nam], National Politics Publisher, Hanoi, 2004, p. 18, in Vietnamese.

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damage to consumers and society.

1.1.2.Pricing in competition and monopoly

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. In a comparative

metaphor, if demand – supply relationship is considered as the “material

bones”, prices are considered to be the “face” and competition is the “soul”

of the market.3

Most basic economic concepts are relevant to prices. For

example, the market demand curve represents the relationship between price

and supply; elasticity of demand measures the relationship between the

price of the product and the demand for it; the relationship between prices

and costs is used to describe perfect competition as well as monopoly. 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, 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.

1.1.3.Monopoly control laws in US, EU and

Vietnam

The market and its self-correcting mechanisms will erode monopoly

3

Nguyen, Nhu Phat, Market and Competition [Thị trường và Cạnh tranh], Forum for

discussion about Draft of the Law on Competition, in Vietnamese, available at

http://www.vibonline.com.vn/vi-VN/Forum/TopicDetail.aspx?TopicID=839

12

power and eventually it will be eliminated. The extra profit (economic rent)

available to a monopoly is an attraction. Thus, if the barriers are low

enough, many competitors will enter or re-enter the market. A firm which

attempts to enjoy the fruits of monopoly power by increasing prices and

lowering output, will lose its monopoly power to others, since over time, its

customers will switch to more efficient firms, which undercuts prices and

eventually provides welfare benefits through better quality products and

services. Consequently, competition does come back to life. However, the

problem is that the monopolist is well aware of this threat; and will try his

best to find ways of preventing potential competitors from entering the

market. There are many situations in which the market mechanism by itself

is unable to or inefficient in checking the unfair activities of a monopolist,

who wants to maintain his position and nullify the efforts of potential

competitors. This creates a role for government intervention in the market to

ensure the operation and development of fair competition, and deal with

anti-competitive activities and abuse of monopoly power. In a nutshell,

government intervention is necessary if free competition is not to destroy

itself.

There is another aspect of the process, which we should also not neglect:

If markets are permitted to compete without any restraint this will also lead

to unfair competitive activities. This is due to the fact that there are many

ways to win and competing fairly is more difficult and requires more from

the competitor’s talents, morals, will, patience, and many other factors,

while unfair activities are easier to carry out, helping these competitors to

reach their objectives with less expense and time and more profit. Thus, if

there is no one with sufficient power to point out which activities are wrong

and take steps against them, many competitors will act unfairly regardless of

morals because of the lure of profit. “The person” with sufficient abilities

and power to ensure the benefit of society and protect market participants

cannot be other than the Government. In conditions of model market

economies, the “invisible hand” - self-correcting mechanism is, admittedly

at work but it cannot rule absolutely; the “State’s hand” is needed alongside

the “invisible hand”.

Generally, in a market economy, free competition is accepted, but the

State utilizes suitable measures to ensure the healthy development of

competition and to eliminate the disadvantages of monopoly. Measures

usually fall into two groups. Group one includes administrative and

economic measures such as taxation policies, price control, monopoly

adjustment, and nationalization. Group two include laws regulating

competition. Laws on competition include two main areas: anti-unfair

competition laws and monopoly control laws. In fact, many countries have

an act or laws bearing the name “Anti-Monopoly”. However, no country

forbids monopoly in all cases. Monopoly can be the positive result of fair

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competition (economic monopoly), arise from objective conditions (natural

monopoly), or be established by the State to serve its purposes (state

monopoly). Therefore, even if they are titled “Anti-Monopoly Acts”, these

laws usually focus rather, on controlling the ways in which monopoly arises

and the activities of existing monopolies. Monopoly control laws normally

regulate three kinds of economic activity: (i) cartels, (ii) mergers, and (iii)

abuses of dominant position.

Cartels and mergers are activities that aim at association and unity (no

matter whether temporary or permanent, secret or open, loose or tight) in

order to create an aggregation of market power which can, under certain

conditions, overwhelm, constrain or eliminate rivals. Thus, laws on cartels

and mergers aim at preventing the dangers of this type of monopoly

formation and of the way it can constrain free competition.

The investigation of the concept of “dominant position” is one of the

central tasks of this dissertation and will be presented and analysed more

deeply in the next chapter. Understand it in shorthand, common sense way it

signifies an entity having enough market power to constrain the market.

This can, in most cases, also be called monopoly power. The majority

consensus is to permit undertakings to hold dominant positions in a market,

while strictly prohibiting abuses by them. Laws on abuses of dominant

position aim to regulate the activities of existing monopoly power and

prevent the elimination of competition and the harm of general consumers’

welfare.

Looking at the negative side of things, we can see that where a monopoly

power is abused to restrain competition, more harm is done than when mere

unfair competitive activities are at issue. Therefore, the role of monopoly

control laws is as important as anti-unfair competition laws. Abuse of

market power not only harms a competitor or some particular customers, but

impact consumers and society as a whole. Some even regard monopoly

control laws as a higher order in the hierarchical development of anti-unfair

competition laws.4

If a constitution is a tool to master political power and

force the government to heed the public, then monopoly control laws are

tools to master economic power and force that power to obey competitive

pressure. Monopoly control laws could thus be considered as one of the

main components of the “Economic Constitution”.5

4

Dang, Vu Huan, supra note 2, pp. 77-78,.

5

See e.g. Pham, Duy Nghia, Professional References for Economic Law [Chuyên khảo

Luật Kinh Tế], The Hanoi National University, Hanoi, 2004, p. 796, in Vietnamese ; see

also, U.S.v. Topco Associates, Inc. 405 U.S. 596,610 (1972)"Antitrust laws in general, and

the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important

to the preservation of economic freedom and our free-enterprise system as the Bill of

Rights is to the protection of our fundamental personal freedoms. And the freedom