Competition Law: has it fulfilled its purpose?

The Competition Law was passed 13 years ago, but the number of times the law has been cited to fight against monopoly and collusion has been very modest. 

In 2014, the price of a bowl of instant noodle at Tan Son Nhat International Airport skyrocketed to VND160,000, while a package of instant noodle was sold at VND4,000-5,000. The prices of other kinds of food were also sky high.

Giao Thong’s reporters needed to spend time to discover that the shops that sold food at the airport were backed by one owner.

Lawyers then commented that the owner of the shops violated Article No 13.2 of the Competition Law while abusing the dominant position to impose unreasonable prices. 

However, instead of settling the problem with the Competition Law, the Minister of Transport then requested the shops to lower the instant noodle selling price to VND20,000.

In 2015, the petroleum price decreased sharply by 40%, but taxi firms deliberately did not lower the taxi charge.

The behavior was believed to violate Article 8.2 of the Competition Law on collusion to set service prices.

If the taxi firms violated the law, they would be fined up to hundreds of billions of dong as stipulated by Article 118.1 of the Competition Law, and they would be forced to abrogate the agreement on pricing. 

However, the Competition Law was not applied in this case. Instead, the State took inspection tours to taxi firms and released administrative orders to force taxi firms to lower the fees.

The two examples show that once there are signs of abnormal price increases, state agencies would immediately think of using state management tools to deal with problems instead of applying the Competition Law.

In a market economy and in the context of normal competition, the prices would be at reasonable levels. If a supplier sells its products and services at prices higher than the average market prices, it will lose customers.

Therefore, if seeing prices increase abnormally, questions should be asked: Is the market competitive enough? Are there signs of a monopoly? 

However, management bodies apparently do not raise such questions.

In August 2014, the leaders of the Ky Anh district in Ha Tinh province sent a dispatch to local agencies, requesting them to prioritize beer made by Sabeco in the locality at meetings and events. 

The decision then faced strong opposition from the public as it violated the Competition Law. However, the case was never resolved.

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