Is an agreement to divide consumer markets a prohibited agreement to restrict competition?

Is an agreement to divide the consumer market a prohibited agreement to restrict competition?

According to the provisions of Clause 2, Article 11 of the 2018 Competition Law, the agreement to divide the consumer market is considered one of the agreements to limit competition.

Whether or not an agreement to divide consumer markets is a prohibited agreement to restrict competition, according to the provisions of Article 12 of the 2018 Competition Law as follows:

Agreement to restrict competition is prohibited

1. Agreements to limit competition between enterprises in the same relevant market specified in Clauses 1, 2 and 3, Article 11 of this Law.

2. Agreements to restrict competition between enterprises specified in Clauses 4, 5 and 6, Article 11 of this Law.

3. Agreements to restrict competition between enterprises in the same relevant market specified in Clauses 7, 8, 9, 10 and 11, Article 11 of this Law when such agreements cause or have the potential to cause significant effects in restricting competition in the market.

4. Agreements to restrict competition between businesses doing business at different stages in the same production, distribution, and supply chain for a certain type of goods or services specified in Clauses 1, 2, 3, 7, 8, 9, 10 and 11, Article 11 of this Law when that agreement causes or has the potential to cause a significant anti-competitive effect on the market.

Accordingly, an agreement to divide consumer markets is a prohibited anti-competitive agreement in one of the following cases:

– Agreements between businesses in the same related market.

– Agreement between business enterprises at different stages in the same production, distribution, and supply chain for a certain type of goods and services. This agreement has the effect or is likely to have the effect of significantly restricting competition in the market.

Are market division agreements beneficial to consumers eligible for exemption?

Is the agreement to divide the consumption market beneficial to consumers eligible for exemption, according to the provisions of Article 14 of the 2018 Competition Law as follows:

Exemption for prohibited anti-competition agreements

1. Agreements to restrict competition specified in Clauses 1, 2, 3, 7, 8, 9, 10 and 11, Article 11 that are prohibited under the provisions of Article 12 of this Law are exempted for a limited time if they are beneficial to consumers and meet one of the following conditions:

a) Impact on promoting technical and technological progress, improving the quality of goods and services services;

b) Enhance the competitiveness of Vietnamese enterprises in the international market;

c) Promote the uniform application of quality standards and technical norms of product categories;

d) Agree on conditions for contract performance, delivery, and payment, but not related to price and other factors of price.

2. Labor agreements and cooperation agreements in specific industries and fields that are implemented according to the provisions of another law shall comply with the provisions of that law.

According to the above regulations, an agreement to divide the consumer market (in case of prohibition) but beneficial to consumers can be exempted for a limited period when one of the following conditions is met:

– Impact on promoting technical and technological progress and improving the quality of goods and services.

– Enhance the competitiveness of Vietnamese enterprises in the international market.

– Promote the uniform application of quality standards and technical norms of product categories.

– Agree on conditions for contract performance, delivery, and payment, but not related to price and price factors.

What does a dossier requesting exemption when agreeing to divide consumer markets include?

Pursuant to Clause 2, Article 15 of the Competition Law 2018, dossier requesting exemption when agreeing to divide consumer markets includes the following documents:

(1) Application according to the form issued by the National Competition Commission.

(2) Draft agreement content between the parties.

(3) A copy of the Business Registration Certificate or equivalent document of each enterprise participating in the prohibited competition restriction agreement; copy of the Charter of the industry association in case of prohibited anti-competition agreement with the participation of the industry association.

(4) Financial statements of each enterprise participating in a prohibited anti-competitive agreement for 02 consecutive years immediately preceding the year of submitting the application for exemption or financial statements from the time of establishment to the time of submitting the application for exemption for newly established enterprises with confirmation from an auditing organization according to the provisions of law.

(5) Report specifically explaining compliance with regulations in Clause 1, Article 14 of this Law, accompanied by evidence to prove it.

(6) Authorization document of the parties participating in the prohibited competition restriction agreement for the representative party (if any).

Note: Documents in the application in a foreign language must be accompanied by a Vietnamese translation.