Improving the competition and business monopoly control policy in Vietnam in the context of international economic integration

Competition and monopoly are two opposite extremes and have causal relationship in the market structure. A fierce and aggressive competition without the State control will result in accumulation, concentration and then leading to monopoly, or monopoly is the inevitable consequence of competition. In contrast, monopoly without the State’s control will prevent or even eliminate competition, changing the market structure and correlation, having negative impacts on the society and customers. So, “improving the competition and business monopoly control policy in Vietnam in the context of international economic integration” is the topic to promote the role of the State through policy instruments, in order to create and maintain the fair and equal competitive environment among economic agents in the domestic, regional as well as international markets. This is the topic to analyze and assess the policy with combination of theory and practice not only in the coming time butalso in the process of globalization and international economic integration of Vietnam. The dissertation has made some scientific contributions and has achieved some major research results as follows: (i) The dissertation has provided an overview as well as a clear interpretation of the theoretical issues of the competition and monopoly control policy. In which, the competition and monopoly control law is an important component of the competition policy. The dissertation has identified the changes and development of the market structure in the context of globalization with existence of 2 markets: competitive and noncompetitive. The dissertation has also clearly confirmed and interpreted that the nature of the competition policy and competition law is act of anti-monopoly, monopoly control and competition maintenance. So, there is no presence of monopoly in the competitive environment. (ii) From experience of some countries in the worlds in planning and implementing their competition and monopoly control policy, the dissertation has presented 6 useful lessons for Vietnam with 3 major criteria: increasing social welfare for customers, protecting competition process and increasing efficiency of the economy. (iii) I have developed and used some common criteria, component 24 criteria to conduct an analysis and assessment of policies which have direct or indirect impacts on the business and competitive environment in Vietnam. I have also identified the limitations and shortcomings of the policies. Accordingly, I have recommended conducting an analysis and providing opponent comments on the policy in a scientific manner before and after its application. (iv) In order to create and maintain the competitive environment, I have recommended 5 viewpoints and 5 solution groups for improving the competition and business monopoly control policy inVietnam. In which, it requires the State agencies in policy making andmanagement to change their awareness, visions and guiding thinking. It requires connecting the institutions and policies with the global market and environment, with the international commitments; respect business freedomand autonomy, and legal interests of the customers. It also requires improving the organizational model of competition management agencies based on merger of the Vietnam Competition Authority and Competition Council into the National Competition Commission operating directly under the Government, in order to achieve a greater legal position and power which correspond to its assigned function and task. (v) Implemetation of above chanes and contents will lead to changes in the market structure and relationship, the situation as well as nature of the competition and monopoly. Finally, the State will be able to create and maintain a fair, equal competitive environment, contributing to renewing the growth model, increasing the quality, efficiency and competitiveness of the enterprises and the whole economy as well.

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1 INTRODUCTION 1. Reasons to choose the topic Competition is the classic nature of the market economy, is the driving forces behind the socio-economic development, bringing about numerous benefits to the customers. But monopoly is a form of market structure which is formed by many different causes and has impacts on the whole society and prevent competition, etc. In order to maintain competitive environment and overcome the limitations of monopoly, role of the State through a system of competition policies and laws on monopoly control is very important and crucial. In recent time, the system of such policies in Vietnam does not properly reflect laws of movement of the market economy. It still contains patches, inconsistencies, passive responses and follows the “real arising problems”. In particular, in the current context of increasingly deep globalization and international economic integration, there are still many problems relating to the current system of competition and monopoly control policy on Vietnam. From this situation as well as its urgency and topicality, I decide to carry out my doctoral dissertation on “Improving the competition and business monopoly control policy in Vietnam in the context of international economic integration”. 2. Purpose of the study On the basis of synthesis and clearer interpretation of the relationships between competition and monopoly, between competition policy and monopoly control one, in which competition and monopoly control law forms an important part of competition policy. In addition, based on the analysis results and situation assessment as well as reference to experience drawn from some countries in the world, and changes of the global environment, I would like to propose the State to amend, supplement and adjust a number of sanctions and legal regulations in order to improve the competition and business monopoly control policy in Vietnam. From these issues, I has defined the overall objective of my study is to promote the State’s role through a system of competition and monopoly control policies 2 in order to create a fair, equal and efficient business and competitive environment and implement international commitments. So, it is necessary to depend on content and criteria of analysis to review, evaluate the policies, and propose contents which require amendment or supplements in order to improve these policies in Vietnam. From the overall objective, I have defined detailed objectives of my study: (i) Analyze and evaluate policies having direct impacts (through legal institutions and regulations) and policies having indirect impacts (for support or protection) through such policies as tax, anti-dumping, import and export and State credit, etc. on competition and monopoly control in order to fulfill the objective of promoting role of the State in creating an environment of free trade, free competition, non-discrimination which is the fundamental principle of competition and (ii) Introduce lessons learned from some countries to Vietnam. In order to achieve the above objectives, following issues are required to be included in the study: • What are competition policy and competition law? Their relationship? • Institution of competition and monopoly control policy? Why is competition law the most basic and important component of the competition policy? • Fundamental basis and basic content of competition policy and competition law? • Which criteria are used to analyze and evaluate the competition and monopoly control policy in Vietnam? • What is the suitable level for State’s intervention for adjusting competition and monopoly control? • Why is it necessary to form and maintain a fair and efficient competitive environment? What to do? What is the State’s role relating to this issue? • Why is it necessary to amend and improve the competition and monopoly control policy in the global economy and international economic integration? 3 3. Objects and scope of the study (i) Objects of the study • The competition policy with the main approach on its important content and component which is competition and monopoly control law. • In order to achieve the above objective, the object of the study is an overall analysis and assessment of competition and business monopoly control policy in Vietnam will real evidences taken from manufacturing and service sectors. The study will approach and consider the issues under the perspective of competition policies, i.e. consider monopolization, barriers to market entry and exit, economic concentration level, practices in restraint of competition and unfair competition. These are important content or component of competition policy and competition law. My study uses 5 common criteria and component criteria to analyze and evaluate the policy, namely (1) Market scope, (2) Restraints in competition and market entry, (3) Market structure, (4) Current competition institution and policy, (5) Current competition situation and identification of anti- competition practices. • Study experience learned from some countries in terms of competition policy and law. Useful lessons for Vietnam. • Some enterprises and economic groups are included and briefly analyzed in my study as the direct beneficials of competition policy and law, contributing to the improvement of the policy. (ii) Study scope • Analyze and evaluate the competition and monopoly control policy in Vietnam through the 4 basic contents and 5 criteria as presented above. • Analyze and identify the positive factors contributing to competition promotion and restraints of competition, especially ones arising from regulations, institutions and policies of the Government. • Evidences taken from 2 manufacturing and service sectors of cement and petroleum in Vietnam will be included in the study. • Situations, figures and periods included in the study are taken during 4-5 recent years, especially after the international economic integration and after Vietnam officially became the 150 th member of WTO. 4 4. Study method and references (i) Study method My dissertation contains following study methods: - Comparative and statistical analysis method - Systematic analysis method - Qualitative and selective inheritance method - Diagram and graph method (charts) - Unique study methods of economics: marginal and optimal selection method, positivist and normative method, etc. (ii) Study references • Documents and policies related to the topic of the study of some countries in the region and all over the world. • Documents and policies on competition and monopoly control in Vietnam such as Competition Law, Bankruptcy Law, Decree No. 116/2005/ND-CP, Decree No. 120/2005/ND-CP, Decree No. 05/2006/ND- CP, Decree No. 06/2006/Nð-CP, annual reports of VCCI and Competition Management Authority (Ministry of Trade and Industry) and some specialized laws, etc. • Scientific summary records, economic magazines and internet. 5. Scientific contributions of the dissertation (i) General contributions of the dissertation Contributions of the dissertation are presented in the objectives of the study. Following is further interpretation. 1 In order to improve the competition and monopoly control policy, it is necessary to continue renewing awareness and conception about competition and monopoly, about the relationship between the State and market, avoid restraints in competition and fostering monopoly. 2 The market economy will operate in accordance with its rules and mechanisms, without any impact on the role of the State. The State still plays an important role in creating the environment and regulates the behaviors of the economic agents through legal regulations on competition and monopoly control. 3 Reasonably solve the relationship the level of the State’s adjustment between maintaining competition and restraining monopoly, eliminating monopoly. There is no presence of monopoly in a competitive environment. 5 4 Experience of other countries in terms of design, construction, operation, amendment and supplements of competition policy and law, monopoly control and anti-monopoly law is useful lesson and reference for Vietnam. (ii) Specific contributions of the dissertation 1. The dissertation has found out that in the contemporary economy and globalization which contains the development of the “Digital economy” and of “flat world” whose key element is establishment of the global supply chain and changes in the market structure, there are two kinds of markets: competitive market and non-competitive one. The competitive market consists of for-profit businesses while the non-competitive market consists of non-profit businesses and ones which are established under the “Blue Ocean Strategy”. 2. The dissertation has analyzed and made some recommendations: in order to create and maintain a competitive environment, it is required to control monopoly, implement legal regulations, sanctions and measures of the competition policy whose most important component is competition law which is a Code of the State consisting of civil and criminal regulations in order to prevent anti-competition practices. Only by that, the equality, non- discrimination, free trade and competition are ensured, because they are the nature as well as the fundamental basis of competition policy and competition law. 3. The competition policy and other economic policies have an interdependent relationship, “no policy is a separate island”. The interdependent relationship has impact on the economic operation and competitive environment. So, I recommend: it is necessary to carry out a scientific analysis and assessment of competition policy, including relevant policies before and after the policy is implemented, in order to ensure its consistency and efficiency; and also overcome the shortcomings, overlapping, patches and following of the “real situation” the policies. In the dissertation, I also recommend: improving and adding common criteria, component criteria and auxiliary criteria which should be used together in analyzing and evaluating the policy. 4. In the current context of global economy, there appear many changes after the financial and public debt crisis. Mergers and Acquisitions (M&A) in ASEAN and Vietnam have been enjoying a strong development and 6 growth. This is the potential factor leading to an establishment of a market dominance and impact on the competitive environment. Therefore, in my dissertation, I recommend controlling the economic concentration through institutions and legal regulations should be the most important component of the competition policy. 5. With the new trend of current integration and development, in the dissertation, I recommend: The State should make a change in the direction of reducing the function of “State doing business” and strengthening “Welfare State”, “Legitimate State”; implementing and “imposing” competitive market to all enterprises, including SOEs to ensure an fair “playground” and effectively use all social resources. 6. In order to create and maintain the fair competitive environment, in the dissertation, I recommend the State to make a simultaneous application of both types of policies: the policies of direct impact through institutions and legal regulations, and the ones of indirect impact such as tax, import and export, anti-dumping and credit, etc. in order to support or protect the domestic enterprises. 7. Based on the experience in construction of model of competition management authorities of some countries, the urgency of real operation in Vietnam, especially settlement of violations of competition law which contains several shortcomings, overlapping, takes long time and have low efficiency, in the dissertation, I recommend: merging 2 current competition authorities (Vietnam Competition Authority and Vietnam Competition Council) into one single competition authority (the National Competition Commission which is under direct management of the Government) which occupies a higher legal position and corresponds to its assigned functions and tasks. 6. Structure of the dissertation In addition to the introduction, conclusion, table of contents, appendices and references, the dissertation consists of 4 chapters: Chapter 1: Overview of the research Chapter 2: The basic theories on competition and monopoly control policy Chapter 3: Situation of competition – monopoly and adjustment policies in Vietnam Chapter 4: Viewpoints and solutions for improving the competition and business monopoly policy in Vietnam 7 CHAPTER 1. OVERVIEW OF THE RESEARCH The chapter 1 consists of 3 parts: (i) research objectives, (ii) Classification of researches based on forms of publication and (iii) Overall assessment. Here is the basic content: Overview of the research is the summary, assessment and comparison of research works relating to the topic of the dissertation so that I could identify “gaps” and “missing” questions for study. Accordingly, I have classified the research works into 3 main categories: (1) reference books / monographs, (2) Annual Reports of ministries / sectors, and (3) Summary reports, magazines, and scientific works. Based on analysis and assessment of above types of works, I have concluded that: (i) Despite different approaches of works, they share the same criteria of assessment and show the nature of competition and monopoly; (ii) the research works contain consistencies between theories and practices, shortcomings and restraints in competition and monopoly control, anti- monopoly; (iii) competition law mentions 3 main issues: 1 abuses of market dominance, 2 competition restriction agreements, and 3 regulation on control of economic concentration level. Position of competition laws in the competition policy is shown in the following model: Regulating rules COMPETITION LAW Market structure Policies affecting competition Socio-economic policies Business’ behaviors Competition policy applied to a specific sector/market > Trade and protection > Trade policy > Intellectual property > Consideration for merger > competition restriction agreements > Abuse of market > Protection by the State > Natural monopoly > Sensitive industries 8 I also propose 5 issues for further study: 1 Competition and monopoly control policy should indicate changes in viewpoints and meeting the specified requirements and objectives; 2 No attention to raising opponent comments to the policy, conducting a scientific analysis and assessment of the policy before and after its implementation; 3 Use of common criteria and component criteria in combination with other relevant factors to analyze and evaluate the policy; 4 Settlement of violations of competition law, and 5 “Characteristic” settlement of monopolies in Vietnam still contains several disputes. CHAPTER 2. BASIC THEORIES ON COMPETITION AND MONOPOLY CONTROL POLICY Chapter 2 consists of: (i) Competition and monopoly, (ii) Law on competition and monopoly control, (iii) Role of State Management Authorities in competition and (iv) experience of foreign countries and lessons for Vietnam. This chapter presents the following major contents: nature, criteria for competition classification and impact of competition. Competition is a classic issue, a property and a rule of the market economy. In the contemporary market economy, there are two kinds of markets: there are two kinds of markets: competitive market (consisting of competitive enterprises) and non-competitive one (consisting of enterprises of public benefits, enterprises of social security and ones formed under the “Blue Ocean Strategy”). Competition and monopoly have a causal inverse relationship. Dispite of causes of its establishment, the monopoly has negative impact on the whole society and customers as well. Therefore, Vietnam and many other countries all over the world consider anti- monopoly and monopoly control the most important task of their States. The important and effective legal instrument for the State to carry out their task is competition and monopoly control policy because the competition law is law of anti-monopoly and competition maintenance. There will be no 9 presence of monopoly in a competitive environment! In terms of theory, I have presented 4 main contents and 5 common criteria as well as the component criteria to analyze and evaluate the competition policy in order to ensure high consistency, logic and accuracy. In terms of organization, the state management authorities must be organized in an independent, professional manner. They should occupy a high legal position which corresponds to their function and responsibilities and should be operated under the direct management of the Government. They also should be provided with sufficient conditions for well operation. Lessons learned from other countries, especially those which share similarities with Vietnam defined in this chapter are a very useful reference for Vietnam. CHAPTER 3. SITUATION OF COMPETITION – MONOPOLY AND ADJUSTMENT POLICIES IN VIETNAM This chapter consists of: (i) situation of competition and monopoly, (ii) Situation of competition and monopoly control law and (iii) Overall assessment of competition and monopoly control policy. This chapter primarily aims to provide an overall assessment of real situation of competition and monopoly; the implementation of the competition and monopoly control policy after 6 years since the Competition law became effective (July 1, 205) in Vietnam. The above criteria and content have been used to conduct the analysis and assessment of the situation. Here, I specially base on number of enterprises (market size), identification of positive factors promoting competition as well as restraints in competition arising from legal regulations, institutions and policies made by the Government, economic concentration level and monopolization, restraints in market entry and exit, unfair competitive practices, etc., which means a identification and assessment of direct and indirect impacts of the polity on competition and monopoly control. The policy has direct impacts on competition and monopoly control through regulations and sanctions of the competition law. 10 Its indirect impacts are indicated through such policies as tax, anti-dumping, import and export and state credit, etc. in order to support and protect industries and enterprises in Vietnam. From the above content and issues, I would like to present here my specific assessment (strengths and limitations) in policy implementation as following: 1 Awareness and conception There is a change in awareness and conception about the operational rules and mechanisms of the market economy and the fundamental principle of competition is non-discrimination, free competition, free trade, free market entry and exit. We also see the role of the State through a system of competition policies and laws on monopoly control, as well as enterprises – its beneficials. 199.788 112.95 246.451 131.318 305.358 155.771 370.676 205.689 455.207 248.757 544.394 290.767 622.977 0 100 200 300 400 500 600 700 2005 2006 2007 2008 2009 2010 2011 Total number of registered enterprises Total number of operating enterprises under survey of GSO Source: - General Statistics Office and Agency of business registration - Vietnam enterprise annual report - VCCI in 2011, page 22 Figure 3.1: Total number of registered enterprises and operating prices as at December 31 of years from 2005-2011 Total number of enterprises Year 11 The figure 3.1 shows that there are a large number of enterprises with high potentials for competition in the Vietnam market, and accordingly, the competition among competitors have become increasingly fierce and aggressive. However, from such competition, there happen numerous unfair competitive practices in the Vietnam market. 2 Policies of direct impacts (i) Legal regulations on competition restriction agreements Although the competition restriction agreements have been specified in the Competition Law; Decree No. 116/2005/ND-CP detailing the implementation of a number of articles of the Competition Law and Decree No. 120/2005/ND-CP on dealing with breaches in the competition law, etc., many breaches still appear in the market. 3 cases relating to “price maintenance agreements” in the automobile physical damage insurance market, roof plate market and student insurance market are typical examples. Relating to the competition restriction agreements, there are some regulations which are just inflexible principles, do not approach the anti-competition nature of the case, especially sophisticated ones made by the enterprises. Specifically, Article 9 of the Competition Law is unreasonable. Normally, any agreements on price fixing, market division, output restriction and auction collusions which always contain anti- competition should be prohibited and not be exempted. But in fact, there is no regulation on such agreements, leading to many difficulties in settlement. By law, such agreements are prohibited only the combined market share accounts for 30% or more, but in fact, many cases in which the combined market share accounts for less than 30% still leads to an increase in price and price maintenance. So, how to settle the situation is very difficult? (ii) Legal regulations on unfair competitive practices. Due to inconsistency, patches in the competition mechanism and policy of Vietnam, the market is still affected and driven by law of value, law of supply and demand and law of competition. Therefore, any unfair 12 competitive practices have impacts on legal rights of other economic agents and the society. Following are some typical examples of unfair competitive practices which have been settled by the Competition Law (from Article 40 to Article 49). Specifically, in 2006: 1 case; 2007: 5 cases; 2008: 13 cases; 2009: 14 cases and 2010: 28 cases. In which 46/63 cases have investigation was initiated by the Vietnam Competition Authority and 15/61 cases have investigation based on complaints from enterprises, including 21 cases relating to advertising; 17 ones relating to illegal multi-level sales; 6 cases relating to promotion; 4 ones of misunderstanding instructions; 1 cases relating to business disruptive practices, etc. (iii) Legal regulations on abuse of market dominance and monopoly In 2009, the Vietnam Competition Authority conducted eight investigations concerning abuse of market dominance/monopoly position, in which only one was realized in accordance with regulations of competition law. Its main reasons are competition authorities, awareness of enterprises and regulations of the Competition Law. A typical example of this behavior is the dispute on fuel price between the Vietnam Air Petrol Company (Vinapco) and Jetstar Airways Pty Ltd. on April 1, 2008 which was settled by the National Competition Council with the final conclusion: Vinapco was fined for more than 3.3 billion VND, but there have been several controversies around the dispute. Its direct cause was that the two parties reached no agreement in fuel price. Vinapco stopped providing petroleum to Jetstar Pacific, leading to its non- operation, and then Vinapco accused Jetstar Pacific of not paying for petroleum and forcedly stopped its supply of petroleum. In addition, there are many other cases relating to movies distribution and showing, telecommunications, electricity, cement and so on. 13 1.88 2.00 2.25 0 1 2 3 TeTechnology Inf rastructure development in the operating sector and area hav ing impact on competition Deep access and output of the production process Figure 1/Appendix 2: Natural barriers in the cement industry (iv) Legal regulations on economic concentration level According to the Competition Law, the basic content for analysis and assessment of economic concentration level is enterprise merger, consolidation, acquisition, joint venture and associations. Following is the real situation of economic concentration in Vietnam in 2005 - 2010. Generally, this operation has been growing in number, value and scale. Figure 3.2. Number and value of M&A in Vietnam (2003 – 1 st quarter/2012) Source: Report on Vietnam economic concentration in 2012 – Vietnam Competition Authority – p.11 1. Low 2: Medium 3: Relatively high 14 In recent years, some industries have had vibrant M&A operation: industry, energy, finance and banking, materials, consumer goods and fast moving consumer goods, etc. Table 3.1. Industry-based M&A in Vietnam in 2011 In which In which Value (million USD) Total Number of cases Minority shares Majority shares Acquisition Merger Financial Services 1,588 72 197 1,391 779 808 Bank 1,562 10 889 673 953 609 Food and drinks 1,242 26 283 959 1,242 0 Technology 475 22 152 323 425 50 Essential services 304 16 289 15 304 0 Construction and materials 236 28 71 165 236 0 Personal and household goods 226 14 12 214 226 0 Travel and leisure 217 14 4 213 131 86 Health Care 118 10 15 103 118 0 Basic Resources 116 12 113 3 116 0 Insurance 93 1 93 0 93 0 Chemicals 31 2 31 0 31 0 Industrial goods and services 29 28 25 3 29 0 Oil and Gas 12 2 12 0 12 0 Retail 8 6 8 0 8 0 Communications 2 3 1 2 2 0 6,259 266 2,195 4,064 4,705 1,553 Source: Report on Vietnam economic concentration in 2012 – Vietnam Competition Authority – p.13 Together with M&A, in Vietnam, there are many companies announcing or advertising their large market share of their products. However, there are still many limitations in Competition law in economic concentration: no mentioning of economic concentration control in both vertical and mixing directions; no regulation to empower the Vietnam Competition Authority to build the verification content, inform and exemptions of economic concentration and no economic concentration control regulations; no regulation on combination of economic concentration control procedure and procedure of state management over business and investment registration; no regulation on combination between the control authority and State management authority over the economic concentration, etc. 15 3 Policies of indirect impacts The policies have indirect impacts in order to support or protect the implementation of the competition and monopoly control policy, ensure and maintain the fair and equal competitive and business environment. They include: price and output regulating policy; SOE adjustment and restructuring policy; tax and anti-dumping policy; import and export policy and state credit policy, etc. These are macro policies which have positive impacts and significant contributions to implementation of the competition and monopoly control law to stabilize the market, maintain competition and continually improve the quality, performance as well as competitiveness of enterprises and the whole economy as well. Table 3.2 Percentage of real and nominal protection of exportable goods under impact of integration commitments (%) Agriculture, aquaculture Mining, combustible gas Manufacturing Average Year Real Nominal Real Nominal Real Nominal Real Nominal 2001 7.43 6.28 16.39 8.91 95.97 25.28 58.46 17.92 2003 12.52 11.06 -0.03 3.55 43.94 29.23 24.87 18.20 2005 7.40 6.10 4.39 3.85 40.38 19.45 21.43 11.12 2006 6.42 5.37 4.33 3.84 38.93 18.69 20.43 10.53 2007 6.20 5.17 4.38 3.84 31.21 15.25 16.93 9.04 2008 5.50 4.72 4.41 3.84 29.58 14.45 15.97 8.54 2009 5.00 4.39 4.43 3.83 28.00 13.71 15.10 8.11 2010 4.59 4.13 4.45 3.83 26.78 13.14 14.41 7.78 2015 3.51 3.25 -0.29 0.17 21.14 10.65 10.57 5.64 2020 3.36 3.11 -0.32 0.13 20.76 10.30 10.34 5.43 Source: [43. p.102] Table 3.3. Percentage of real support of some key exports of Vietnam (%) 2005 2006 2007 2008 2009 2010 2015 2020 Garments 134.19 135.70 58.02 58.44 57.72 57.48 58.26 57.83 Leather Products 100.75 95.57 102.80 91.75 80.91 73.60 52.58 53.09 Plastic products - 59.47 59.10 53.40 47.55 42.49 25.93 25.45 Processed seafood 50.37 42.51 40.73 33.77 28.66 23.52 15.84 16.17 Source: [43.p.105] 16 4 Overall assessment of the situation (i) Strengths The initial success of Vietnam is that it has already had its own competition law (2005) - an important component of competition policy. It is a legal instrument to regulate competition and control monopoly, containing the following contents: • Confirmation of persistent existence of the multi-sector commodity economy operating under market mechanism. • Free trade and investment, free competition and non- discrimination. • All economic agents are equal to law. • Acceptance of legal profitability of the enterprise. • Respect of interests of the State, public interests, legal rights and interests of others. • Competition law is the law of monopoly control, anti-monopoly and competition maintenance. All unfair competitive practices such as speculation, dumping, disparaging, preventions, engagement, bribing, threatening, labeling violations and intellectual property rights are prohibited. To control the abuse of market dominance and monopoly position; control the practices in economic concentration to make profit, prevent competition and have negative impacts on the market. * Legal regulations on a number of business sectors: • Production and trade in counterfeit goods. • False advertising or advertisement containing any comparison which has negative impacts on others. • Violations of industrial property rights, intellectual property rights. • Settlement of restraints in competition in securities and securities market. • Bidding regulations and prohibition of negative collusion in 17 bidding. (ii) Limitations * In terms of mechanism of application of law: • There are still shortcomings in a number of legal factors and institutions; some patches, overlapping, incompletion, inconsistencies, shortcomings in general and following the “real situation” still contained in the framework law and laws of each ministry/sector (law on enterprise, investment law, law on import and export, Law on finance – banking, bankruptcy law, etc.). Settlement of some cases in the market is still passive and is just for the situation, not a general settlement. • Impact of the competitive environment always consists of two sides: positive and negative. Many enterprises still exist, but many others become bankrupt. There are still many missing issues in the Bankruptcy Law concerning to procedure as well as issues to be settled, especially those relating to the employees, finance, society, environment, method and authority of settlement; rights and liabilities of enterprises, intervention and authority of state agencies. Some SOEs which make losses and are on the edge of bankruptcy hardly apply the regulations on bankruptcy, but often change their business forms in which the most popular are merger, joint venture, associate with other enterprises of the same ministry or sector. While if the private enterprises fall into the same situation, there is no way for them rather than bankruptcy. This is also an illustration of monopoly power [74]. • Legal violations are settled against their nature in accordance with the legal regulation of each law without being fully based on their purpose of unfair competition. Therefore, only practices which are defined illegal get sanctioned, leading to an omission of unfair competitive practices due to a lack of legal basis for settlement. Or if such unfair competitive practices are detected, they only get a simple administrative sanction, lacking educability and deterrence. 18 • The monopoly management and control mechanism is mainly done through such policies of tax, price and output control. But in our current context, there is no tax policy to apply to monopolistic enterprises and monopolistic products. Monopolistic price control is heavily administrative with numerous inappropriate contents which should be added and improved. The fundamental basis for increasing price is production cost, but it is not clearly and transparently interpreted, resulting in a low persuasion. As regulated, for monopolistic goods and services, the State must take control and regulation over their prices, not all “losses” are allowed to require an increase in price. Of course, during recent time, the State has implemented the limited monopoly pricing policy in such industries of cement, petroleum, etc. In economics perspective, they are not goods of pure monopoly (complete monopoly). During their production and trade, such goods still contain many competitive elements, despite their very weak competitiveness. Thus, purpose of monopoly price control is to regulate monopolistic enterprises, ensure social justice. But the control is not really effective. • There is no specific and clear legal regulation to adjust and settle restraints in competition and monopoly control. Therefore, it is difficult to define the specific results of law application. • Some regulation indicates an excessive concern and intervention of the public authorities in business, operation and management of enterprises. • The countries also have many forms of ownership, many economic sectors (including state ownership), but the difference in their business legal framework is not as big as in Vietnam. * Regarding shortcomings in implementation of laws and settlement of violations • The current settlement and investigation on responsibility of producers and salespersons of counterfeit goods. All of consequences of 19 producing and selling counterfeit goods have not been completely solved. • There is no legal regulation to protect the owners of goods which are made counterfeit and customers of counterfeit goods. • Almost copyright infringements and advertising violations are settled at the simple administrative management level, lacking educability and deterrence. • Business monopoly control is mainly done through the price control policy and mechanism. Currently, there is no complete tax policy applicable to monopolistic enterprises and monopolistic goods. The price control mechanism is just for administrative management and inefficient. • Settlement of violations faces many difficulties, partially because of some certain shortcomings and limitations in legal regulations on competition and monopoly control, partially because the current function, power and legal position of the State competition agencies (Competition Council and Vietnam Competition Authority) does not correspond to their assigned tasks, they lack fund for their operation while their operation lacks professionalism. 20 CHAPTER 4: VIEWPOINTS AND SOLUTIONS FOR IMPROVING THE COMPETITION AND MONOPOLY CONTROL POLICY IN VIETNAM Chapter 3 consists of: (i) Economic integration and arising issues for improving the policy, (ii) Viewpoints for improving the policy and (iii) Solutions for improving the policy. Following is the basic content: From brief introduction of the context of the global economy as well as economy of Vietnam, the trend of globalization and international economic integration as well as its impact on the Vietnam economy in terms of: advantages – disadvantages, opportunities – challenges, positive – negative, etc. Based on the content of chapter 2 and 3, I would like to propose some issues to improve the competition and monopoly control policy as following: • In the context of international economic integration, the greatest pressure for Vietnam is a competitive environment at all levels: nation, enterprise and product, followed by pressure of cost reduction and localization (high adaptability in local market). Vietnamese enterprises will enter an unequal competition with foreign invested enterprises which have strong economic potentials and great experience in the market. • In the context of integration and globalization, the competition law and policy as well as the monopoly control law of Vietnam must comply with the international law. The advantages and disadvantages of business and competition must be carefully considered and studies in the global scope and environment, in the value chain, ensure benefits of ourselves as well as of the whole society. • The competition law is the anti-monopoly and competition maintenance Act. So, any violations of the competition law should be treated with strict penalties (administrative fines, civil or criminal punishments). Also, in the chapter 4, I have presented 5 viewpoints and 5 solution groups to improve the competition and monopoly control policy, namely: 21 (i) Viewpoints for improving the policy: (1) Compliance with viewpoints, guidelines and strategies for socio-economic development of the Party and State; (2) Compliance with the market principles and international commitments; (3) Ensuring rights of free trade and free competition, non-discrimination; (4) Ensuring efficiency and legal interests of customers; (5) complianace with the business culture and ethics of Vietnam. Renewal of awareness and conception must be indicated throughout the State management system, administrative reform, organization, working style as well as behaviors of public authorities. The competition law develops based on the international relationships and economic development process, so, in order to improve and implement the competition and monopoly control policy in Vietnam, it is required to ensure: • Addressing the relationship between the dominant role of the state economy and requirement of ensuring the fair and equal business competitive environment, between monopoly control and anti-unfair competition and specialized law upon adjustments of law. • Based on the experience and the implementation of some countries in the world as well as the real situation of Vietnam to improve and implement the competition law, monopoly control, anti-unfair competition in compliance with the current socio-economic and political conditions of Vietnam. However, we must also learn from foreign countries in their strict, equal and public manner to treat violations of competition law, creating high educability and deterrence. • Consistency throughout the system of economic and business policies. • Legal regulations and institutions issued by the State must be clear, coherent and close to the reality. • Validity of legal regulations and institutions must ensure consistency in regulating business behaviors. It is necessary to limit and at best, eliminate all exceptions in order to ensure equality among business agents belonging to all economic sectors upon implementation of such 22 policies. For example, it is required to clearly define the boundary between prohibited behaviors, exemptions and clemencies; between behaviors of heavy sanctions and those of soft sanctions, etc. (ii) Solutions griups for policy improvement: (1) Complete, amend, supplement and specify regulations of competition law: applicable to abuses of market dominance/monopoly position, competition restriction agreements and unfair competition, economic concentration level, and monopolistic price control; (2) promote the role of the State, creating the consistency in policies in order to improve the market structure and reform SOEs empowered for monopoly and restructure SOEs. Figure 4.1. Some efficient solutions for SOE restructuring 56 56 60 65 83 86 87 87 0% 20% 40% 60% 80% 100% Government’s guarantee stopped Termination of bank’s preferential loans Termination of land preferentials Stop of Government’s assistance Regulation strenthening Conduction of several independent audits Improvement of operational transparency Share strenthening Positive impact No impact Negative impact Unknown Source: Summary from VCCI’s survey and business forum (Investment newspaper issued on April 16, 2012) of Dr. Nguyen Dinh Cung – Deputy director of Central Institute for Economic Management. (3) Enhance the efficiency of the environmental analysis and forecast as well as the competitiveness of the economy; (4) Improve the State competition authority in accordance with the model of centralized, independent and professional organization to achieve a greater legal position which corresponds to its assigned function and task. As such, I would like to recommend the State to establish the National Competition Commission by merging the Vietnam Competition Authority and Competition Council and (5) Other solutions such as strengthening links in the supply chains of industries; promoting role of Associations; developing supporting industries and services, etc. 23 CONCLUSION Competition and monopoly are two opposite extremes and have causal relationship in the market structure. A fierce and aggressive competition without the State control will result in accumulation, concentration and then leading to monopoly, or monopoly is the inevitable consequence of competition. In contrast, monopoly without the State’s control will prevent or even eliminate competition, changing the market structure and correlation, having negative impacts on the society and customers. So, “improving the competition and business monopoly control policy in Vietnam in the context of international economic integration” is the topic to promote the role of the State through policy instruments, in order to create and maintain the fair and equal competitive environment among economic agents in the domestic, regional as well as international markets. This is the topic to analyze and assess the policy with combination of theory and practice not only in the coming time but also in the process of globalization and international economic integration of Vietnam. The dissertation has made some scientific contributions and has achieved some major research results as follows: (i) The dissertation has provided an overview as well as a clear interpretation of the theoretical issues of the competition and monopoly control policy. In which, the competition and monopoly control law is an important component of the competition policy. The dissertation has identified the changes and development of the market structure in the context of globalization with existence of 2 markets: competitive and non- competitive. The dissertation has also clearly confirmed and interpreted that the nature of the competition policy and competition law is act of anti-monopoly, monopoly control and competition maintenance. So, there is no presence of monopoly in the competitive environment. (ii) From experience of some countries in the worlds in planning and implementing their competition and monopoly control policy, the dissertation has presented 6 useful lessons for Vietnam with 3 major criteria: increasing social welfare for customers, protecting competition process and increasing efficiency of the economy. (iii) I have developed and used some common criteria, component 24 criteria to conduct an analysis and assessment of policies which have direct or indirect impacts on the business and competitive environment in Vietnam. I have also identified the limitations and shortcomings of the policies. Accordingly, I have recommended conducting an analysis and providing opponent comments on the policy in a scientific manner before and after its application. (iv) In order to create and maintain the competitive environment, I have recommended 5 viewpoints and 5 solution groups for improving the competition and business monopoly control policy in Vietnam. In which, it requires the State agencies in policy making and management to change their awareness, visions and guiding thinking. It requires connecting the institutions and policies with the global market and environment, with the international commitments; respect business freedom and autonomy, and legal interests of the customers. It also requires improving the organizational model of competition management agencies based on merger of the Vietnam Competition Authority and Competition Council into the National Competition Commission operating directly under the Government, in order to achieve a greater legal position and power which correspond to its assigned function and task. (v) Implemetation of above chanes and contents will lead to changes in the market structure and relationship, the situation as well as nature of the competition and monopoly. Finally, the State will be able to create and maintain a fair, equal competitive environment, contributing to renewing the growth model, increasing the quality, efficiency and competitiveness of the enterprises and the whole economy as well.

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