CRITERIA FOR RELEVANT MARKET DEFINITION IN SOME COUNTRIES EXPERIENCES FOR VIETNAMESE LAWS ON COMPETITION

HO CHI MINH CITY UNIVERSITY OF LAW FACULTY OF COMMERCIAL LAW BACHELOR THESIS CRITERIA FOR RELEVANT MARKET DEFINITION IN SOME COUNTRIES – EXPERIENCES FOR VIETNAMESE LAWS ON COMPETITION STUDENT: COURSE: STUDENT CODE: SUPERVISOR: LÊ TRUNG NHÂN 32 3260111 LL.M TRẦN HOÀNG NGA HO CHI MINH CITY - 2011 I hereby affirm that this thesis is my own study under the supervisor’s guidance All of the information other than my idea to be used or quoted has been acknowledged by means of complete references I would bear full responsibility for my protest July 14th, 2011 Lê Trung Nhân TABLE OF CONTENTS INTRODUCTION CHAPTER I OVERVIEW OF COMPETITION REGULATIONS AND SOME FUNDAMENTAL CONCEPTS OF RELEVANT 1.1 Introduction of “market” and “relevant market” concepts and paramount role of relevant market definition in competition law 1.1.1 Introduction of “market” and “relevant market” concepts 1.1.2 Paramount role of relevant market definition in competition law 10 1.1.2.1 European 10 1.1.2.2 The United States of America 11 1.1.2.3 Vietnam 12 1.2 Overview of regulations governing the relevant market definition in some countries 13 1.2.1 European 13 1.2.2 The United States of America 15 1.2.3 Vietnam 16 1.3 Concept of relevant market definition in competition law 17 1.3.1 The “relevant market definition” concept in EU regulations 17 1.3.2 The “relevant market definition” concept in US regulations 18 1.3.3 The “relevant market definition” concept in Vietnamese regulations 19 1.4 Remarks 20 CHAPTER II 22 FOREIGN REGULATIONS ON THE CRITERIA FOR RELEVANT MARKET DEFINITION 22 2.1 Relevant product market 22 2.1.1 Overview 22 2.1.2 Hypothetical monopolist test process 23 2.1.3 Assessing substitution under the hypothetical monopolist test 25 2.1.3.1 Demand-side substitution 25 2.1.3.2 Supply-side substitution 29 2.2 Relevant geographic market 32 2.2.1 Overview 32 2.2.2 Basic analytical process 34 2.2.3 Defining relevant geographic market in practice 35 2.3 Remarks 38 CHAPTER III 40 VIETNAMESE COMPETITION REGULATIONS ON THE CRITERIA FOR RELEVANT MARKET DEFINITION AND RECCOMMENDATIONS FOR IMPROVEMENT 40 3.1 Vietnamese regulations on the criteria for relevant market definition 40 3.1.1 Defining the products’ substitutability 40 3.1.2 Defining the geographic region in which the products can be interchangeable to each other 47 3.2 Some recommendations to improve Vietnamese regulations on the criteria for relevant market definition 51 3.2.1 The consumers’ reaction in response to a price increase 51 3.2.2 Time factor in relevant market definition 52 3.2.3 Small but significant non transitory increase in price (SSNIP) test 53 3.2.4 Relevant market definition without depending on traditional habit 55 3.3 Remarks 56 CONCLUSION 57 INTRODUCTION The necessity of doing research Competition plays an important role in the economy, serving as a driving force of economic growth, especially in developing countries.1 On December 03rd 2004, Vietnamese Competition Law2 (herein after referred to as “the VCL”) was passed after lots of argument and revision Pursuant to regulations stipulated in this law, Vietnam keeps two main sections of competition regulations in one act including restraint of competition and unfair competition At that time, there was an urgent demand to control the restraint of competition especially towards State-owned enterprises Although Law on State Enterprises3 was terminated, State-owned enterprises still exist, many of which possess dominant or monopoly position in Vietnam, i.e this demand also remains Furthermore, controlling the restraint of competition nowadays, especially when Vietnam has just joined the World Trade Organization is considered as a means of ensuring the equal comparative environment for all sectors of the economy in Vietnam In other words, the role of controlling restraint of competition is more and more important day by day Restraint of competition comprises three concepts including agreements in restraint of competition, abuse of dominant market position and monopoly position; and economic concentration, which all related to the concept “relevant market” The more important to control the restraint of competition is, the more necessary and pressing to define the relevant market becomes Pursuant to the VCL, market share element plays a paramount role in determination of dominant position Examples are the VCL provisions on prohibited agreements in restraint of competition (Article 9); enterprises and groups of enterprises in dominant Vietnam Competition Authority - Ministry of Industry and Trade (2010), A summary of competition assessment report on ten sectors in Vietnam, p Law No 27/2004/QH11 dated December 03rd 2004 of the National Assembly on Competition The law No 14/2003/QH11 dated November 25 th 2003 of the National Assembly on State Enterprises (hereinafter referred to as “Law on State Enterprises”) shall not be applied after July 01st 2010 (According to Article 166 of Law No 60/2005/QH11 dated November 29th 2005 of the National Assembly on Enterprises (hereinafter referred to as “Law on Enterprises”)) market position (Article 11) and prohibited cases of economic concentration (Article 18), as follows: “The agreements in restraint of competition stipulated in clauses 1, 2, 3, and of article of this law shall be prohibited when the parties to the agreement have a combined market share of thirty (30) per cent or more of the relevant market.”4 “1 An enterprise shall be deemed to be in a dominant market position if such enterprise has a market share of thirty (30) per cent or more in the relevant market or is capable of substantially restraining competition A group of enterprises shall be deemed to be in a dominant market position if they act together in order to restrain competition and fall into one of the following categories: (a) Two enterprises have a market share of fifty (50) per cent or more in the relevant market; (b) Three enterprises have a market share of sixty five (65) per cent or more in the relevant market; (c) Four enterprises have a market share of seventy five (75) per cent or more in the relevant market.”5 “Any economic concentration shall be prohibited if the enterprises participating in the economic concentration have a combined market share in the relevant market of more than fifty (50) per cent…”6 How to define relevant market is a main process in any investigation of abusive acts inasmuch as only after we know the sphere of relevant market can the market share be identified.7 In case the relevant market is incorrectly defined, all of the next analyzing Sub-article 9.2 of VCL Article 11 of VCL Article 18 of VCL Robert O’ Donoghue and A Jorge Padilla (2006), The Law and Economics of Article 82 EC, Hart Publishing – Oxford and Portland Oregon, p 63 and discussing steps depending upon the market shares or market structure are useless Nowadays, competition laws of many countries have been making effort on finding out the criteria as well as the effective methods to define relevant market exactly.8 Generally, the regulations for relevant market definition stipulated in Decree No 116/2005/NĐ-CP9 have shown the legislature’s effort in forming lots of objectively reflexive situations which can make influence on defining the relevant market These regulations, however, are not specific enough to apply for practice Meanwhile, in some well-known legal systems on this field, they suggest not only clear regulations but also survey methods called professional tests including lots of complex steps to find out whether two candidate enterprises are in the same relevant market or not With more than seven years of establishment and development, Vietnamese competition laws on the criteria for relevant market definition is regarded as much younger than many other foreign countries around the world Therfore, studying valuable experiences of such foreign countries in order to propose suitable suggestions to improve Vietnamese competition laws in this issue has significant meanings and value For above reasons, the topic “Criteria for relevant market definition in some countries – Experiences for Vietnamese laws on competition” is chosen for the author’s graduation thesis Because of time and experience limitations, this thesis is not able to introduce an ideal comprehensive research on the relevant market definition Therefore, all of comments and pieces of advice from all readers are always received by the author, which will encourage the author to develop the analysis with the purpose of contributing to make the Vietnamese laws not only on competition but also on the relevant market definition become more and more applicable, ensuring the pure competition environment as well as protecting the legitimate rights and interests of both suppliers and consumers TS Lê Danh Vĩnh, Hoàng Xuân Bắc, ThS Nguyễn Ngọc Sơn (2006), Pháp luật cạnh tranh Việt Nam, Nxb Tư Pháp, Hà Nội, p 239 Decree No 116/2005/NĐ-CP dated September 15th 2005 of the Government on providing detailed regulations for implementation of a number of articles of the Law on Competition (hereinafter referred to as “Decree 116/2005/NĐ-CP”) The purpose of the thesis First of all, the thesis focuses on introducing concepts of “market” and “relevant market” as well as the important role of relevant market definition, thereof clarifying and comparing certain concepts of relevant market not only in Vietnamese but also in foreign competition regulations10 so that we can figure out the similar and different fundamental characteristics of these concepts Such similarities and differences shall be used to form a unified basement upon which the author as well as other researchers can draw systematic comparisons of relevant market definition between competition regulations of Vietnam and those of other foreign countries After that, the thesis will research the competition laws of some countries on relevant market definition Completing this step, we have an opportunity to clarify the general characteristics of these regulations as well as consider the effective criteria for relevant market definition Subsequently, Vietnamese competition regulations on criteria for definition of relevant market shall be carefully analyzed so that we can figure out its lack of specification and reasonableness in regulations Discovering such weak points can help us improve the remedies upon dealing with them Finally, after achieving the experiences of foreign regulations, the thesis shall suggest several recommendations suitable for the circumstances in Vietnam so as to develop Vietnamese competition laws on criteria for relevant market definition Delimitation The author has certain limitation in some following points which are the study’s objects because of time and material limitation: Firstly, the thesis shall focus on analyzing the concept of relevant market as well as the criteria for relevant market definition under the legal respect of competition 10 Two foreign legal systems are chosen to analyzed are those of European and the United States of America, which will be introduced in the next section regulations Thus, within the scope of the thesis, other relevant general issues of market such as market power, how to develop market, etc… shall not be discussed Secondly, although relevant market plays an important role in laws on restraint of competition field, the thesis only focuses on discussing and analyzing the criteria for definition of relevant market It does not concern other general legal issues of restraint of competition area including (i) agreements in restraint of competition, (ii) abuse of dominant market position and monopoly position and (iii) economic concentration.11 And finally, with regards to selection of foreign laws for comparison, the thesis shall focus on analyzing the competition regulations of two legal systems They are European Union (hereinafter referred to as “EU”) and The United States of America (hereinafter referred to as “US”) These two legal systems have advanced legislative experiences of building competition law generally and defining relevant market particularly Methodology For the thesis’s objective mentioned above, the author shall combine various kinds of legal methods as follows: The main purpose of the thesis is considered as a comparison between Vietnamese and foreign competition laws on criteria for relevant market definition, therefore, comparative method, no doubt, becomes the main method to be used for doing research This is an effective method to find out the similarities as well as the differences between two or more legal systems whenever we analyze them Furthermore, that comparative method is applied for distinguishing Vietnamese regulations from other foreign countries’ regulations always helps to propose improvement recommendations In addition, several traditional methods are also referred such as analytical method and inductive method, which are really popular methods applied by lots of researchers They still play pretty important roles in this thesis Moreover, some case study shall be applied in the thesis so as to give some examples and situations in the practice of defining relevant market not only in Vietnam but also in the researched foreign countries.12 And last but not least, one method by which necessary information would be mainly exploited from both legal and academic materials including books, legal journals and even from websites on internet is called synthetic method The author as well as other analysts can use this method to collect the relevant information from different sources and then make the remarkable conclusion The literature review of the research Since Vietnamese Competition Law was passed in 2004, there have been a large number of research works not only on unfair competition but also on restrain of competition According to the author’s research, these following researches including books and academic articles are considered remarkable in relation to the matter concerned: (i) “Regulations on Competition in Viet Nam” by Prof PhD Le Danh Vinh, Hoang Xuan Bac, LL.M Nguyen Ngoc Son (2006)13: Prof PhD Le Danh Vinh, the Chairperson of Drafting Boards of Competition Law as well as the Deputy Minister of Ministry of Industry and Trade, is the general director of this book, which makes this research become a profound and thorough analysis Up to now, this book has been stated to be probably one of the most valuable materials for Vietnamese competition legislation (ii) “Analyzing and interpreting the principles of competition law on abuse of dominant market position and monopoly position in restraint of competition” by Assoc Prof PhD Nguyen Nhu Phat, LL.M Nguyen 11 Chapter III of VCL on control of practices in restraint of competition Using cases in EU and US is considered as an important source because such countries are in common law system while cases in Vietnam are introduced as practical examples for the thesis 13 TS Lê Danh Vĩnh, Hoàng Xuân Bắc, ThS Nguyễn Ngọc Sơn (2006), Ibid 12 relevant market of tires for cars Maybe at the time of investigation, firm B remains producing lorries’ tires, which does not mean that firm B will continue to manufactures this kind of product forever Some day, firm B with pretty similar technique as well as conditions will readily switch to supply cars’ tires profitably if firm A increases their products’ prices Actually, upon developing competitive strategic plans, enterprises have to compete with not only the current competitors but also the potential competitors’ ability to market access Consequently, to define the supply-side substitution, i.e the definition of which enterprises are in the same relevant market will be divided into two steps: (i) to identify the number of firms providing the interchangeable products and (ii) to identify other potential enterprises which are doing their business in other markets but can readily switch to supply the interchangeable products mentioned above.78 3.1.2 Defining the geographic region in which the products can be interchangeable to each other Determination of a relevant geographic area is carried out in reliance on consumers’ viewpoints on the products’ substitutability in various regions If the customers using a product manufactured and sold in a certain region switch to another similar product in another region in order to response to the price increase during the sustained period of time, both mentioned regions will be considered to be in the same geographic area where the products can be substituted for each other, i.e they have the same relevant geographic market and vice versa Pursuant to VCL 2004, “relevant geographic market means a specific geographic area in which goods or services may be substituted for each other with similar competitive conditions and which area is significantly different from neighboring area.79” Geographic area consists of regions where the interchangeable products are supplied to the consumers such as a district, a city, or even a country The competitive conditions which should be estimated comprise transportation cost, time to transport the products from one area to another in the same market region or from one market region to 78 79 PGS.TS Nguyễn Như Phát, ThS Nguyễn Ngọc Sơn, Ibid, p 32 Sub-article 7.1 of Decree 116/2005/NĐ-CP another market region Besides, the barriers to market access had better be taken into account The final objective of relevant geographic market definition is to find out the evidence so as to estimate the consumers’ psychology In other words, this is applied to answer the question whether the consumers decide to change their habits from using a regular product or set of products in one region to using similar products in another region or not Therefore, all relevant factors seem to effect on the consumers’ demand and psychology such as transportation cost, time to transport the products between various areas and one firm’s ability to attend and supply its products in that region The consumers have to think of the benefit upon switching to buy a similar product with lower price in another region because sometimes the cost and time for transportation is much more than the increased price For that reason, should the consumers accept all of these factors, such different regions will be regarded as in the same relevant geographic market and vice versa Transportation costs and the duration of transportation results in an increase in the retail price of goods not exceeding ten (10) per cent, which means that no longer will the consumer demand change exist in case of an increase in the retail price of goods exceeding ten (10) per cent Furthermore, as introduce above, the barriers to market access also plays a paramount role whenever the agencies would like to make an accurate conclusion Occurrence of such barriers between the candidate neighboring regions can prevent not only the firms’ supply-side but the consumers’ demand-side as well80 The regulations related to this factor are stipulated in article of Decree 116/2005/NĐ-CP, as defined below: “The following shall comprise barriers to market access: (i) Patents, utility solutions, industrial designs, trademarks and geographic indications in accordance with the laws on industrial property; 80 The barriers may also stem from policy and legislation If these barriers are high, they will make it difficult for new businesses to join and therefore limit the degree of competition in the market If the barrier is low, new business will be easier to assess market; hence the degree of competition in the market will increase See more in Vietnam Competition Authority - Ministry of Industry and Trade, Ibid, p (ii) Barriers regarding financial matters, including costs of investment in production and distribution, commercial promotion and ability to access financial sources; (ii) Administrative decisions by State administrative bodies; (iv) Regulations on business condition, on use of goods or services and on professional standards;81 (v) Import duties and import quotas; (vi) Practices of consumers;82 and (vii) Other barriers to market access.” Generally, almost all procedures in both criteria for relevant market definition have been introduced in sub-sections 3.1.1 and 3.1.2 However, with a desire of applying these steps as a practical tool in a specific case, the author has tried defining the relevant market in the case of Megastar, a famous and current case in this field “Megastar is one of the leaders of entertainment field in Ho Chi Minh City According to the information provided by many articles on newspapers, total six enterprises in cinema field submitted the complaint application to the Vietnam Competition Authority under Ministry of Industry and Trade in order to complain that Megastar had abused the dominant market position In the complaint file, these enterprises relied on the following reasons 81 These are called natural barriers, i.e requirements of naturally specific nature of the industry for competitor when joining the market (such as unique technology, the economic efficiency of scale, or the cost of mining and oil exploration gas in the oil industry…) See more in Vietnam Competition Authority - Ministry of Industry and Trade, Ibid, p 82 For example, the domestic companies producing powdered milk account for only 30% of the market share, the rest is imported products (70%) Thereof, products are heavily dependent on consumer habit of tending to consume imported rather than domestic milk (e.g brands, promotion, advertising and marketing) See more in Vietnam Competition Authority - Ministry of Industry and Trade, Ibid, p 12 First, at present, over 90% of the movies that are being projected are foreign movies, which are imported from the foreign film production firms Through a contract, a foreign film production firm will agree for a local enterprise to import a movie and then distribute to other local enterprises It was estimated that about 50% of the movies are imported by Megastar every year For instant, of all 106 movies which was imported to Vietnam in 2009, Megastar held 50 ones Also, the complaint file stated that Megastar’s income on supplying the imported movies in Vietnam is equivalent to 34% to 75% of the total income of this market in Vietnam ”83 So, the first step in the investigation undertaken by Vietnam Competition Authority under Ministry of industry and Trade is relevant market definition First, a key question is whether the relevant product market in this case is the market of films projected in cinemas or the market of importing and distributing foreign films The matter which is focused by six enterprises in the complaint application is the price of the distributed foreign films as well as relevant matters In other words, the matter in this case is related to relationship of distribution, so, the relevant product market is defined as a market of distributing foreign films projected at cinemas Second, because Megastar has distributed foreign films for other enterprises all around the country, the relevant geographic market in this case is identified as in national scope In brief, by applying Vietnamese current principles, the relevant market in the case of Megastar, according to the author’s opinion, is the market of distribution of imported movies projected at cinema in Vietnam Actually, some Vietnamese authors divide the relevant market definition into three steps instead of two as provided above84 The third one is defining which firms are in the same relevant market, i.e the definition of competitors and potential competitors after defining relevant market According to these authors, 83 Phạm Hoài Tuấn (2011), “Áp dụng luật cạnh tranh – Bình luận từ việc Megastar bị khiếu nại”, Tạp chí nghiên cứu lập pháp (05/2011) Actually, a lot of matters in this fact involve in other areas in competition field However, the author just quoted the paragraph in respect of relevant market definition 84 PGS.TS Nguyễn Như Phát, ThS Nguyễn Ngọc Sơn, Ibid, p 31 and TS Lê Danh Vĩnh, Hoàng Xuân Bắc, ThS Nguyễn Ngọc Sơn, Ibid, p 253 “…Not until the market structure is identified is the relevant market definition considered to be completed Market always consists of supply-side and demandside, so to analyze the demand-side substitution such as the products’ characteristics, geographic areas, etc… is not enough to define the relevant market The agencies had better take the supply-side substitution into consideration by determine how many firms attend the market as well as their market share This task will help to make an ideal conclusion on the relevant market structure at present and even in a near future Moreover, the patterns on market share in the candidate market can also provide the position of such firms…85” Although agreeing with the above explanations on the paramount role of the definition of the competitors and potential competitors in the relevant market, the author disagree to consider this one is the third step of the relevant market definition process because all tasks in this step will be carried out absolutely after the relevant market definition is completed In the author’s opinion, relevant market should be defined on reliance on only two main criteria as those in EU and US regulations: relevant product market and geographic product market 3.2 Some recommendations to improve Vietnamese regulations on the criteria for relevant market definition 3.2.1 The consumers’ reaction in response to a price increase As introduced above, sub-article 4.5.c of Decree 116/2005/NĐ-CP regulates that “Goods or services shall be deemed capable of being substituted for each other in terms of price if above fifty (50) per cent of a random sample quantity taken from one thousand (1000) consumers living in the relevant geographic area change to purchasing or intend to purchase other goods or services with the same characteristics and use purpose as the goods they are currently using or intend to use where the price of such goods or services increases by more than ten (10) per cent and remains stable for six consecutive months Where the number of consumers living in the relevant geographical area stipulated in this clause is less than one thousand (1000), the 85 PGS.TS Nguyễn Như Phát, ThS Nguyễn Ngọc Sơn (2006), Ibid, p 31-32 minimum random sample quantity shall be equal to fifty (50) per cent of the total number of such consumers.” So, this clause does not provide the maximum level of a price increase, which is considered unreasonable by some countries’ principles Particularly, when the demand-side substitution is assessed under the hypothetical monopolist test under Article 102 TFEU, this level is suggested by 5%-10% The reason is the hypothetical monopolist test is applied to estimate the position of one enterprise in the market If this firm can profitably increase their products’ price without the consumers’ reaction, it will be regarded as the monopolist and vice versa Furthermore, the hypothetical information used in the test must reasonable because to increase the price too much can lead to the big change in market demand as well as the decreasing demand while to increase too little will cause to little consumers’ reactions which does not make any market demand In brief, the number “over 10%” pursuant to Vietnamese regulations had better be taken into consideration so as to be changed into another level with the minimum and the maximum points 3.2.2 Time factor in relevant market definition First of all, the author would like to focus on the point of time for relevant market definition Thereof to determine the point of time for relevant market definition must be taken into account by the agencies because the scope of the relevant market as well as the correspondent market share is non-stationary These factors always alter from time to time in accordance with other changes in the market, the scope of the relevant market, therefore, when the abusive practices exist may be different (narrower or broader) from that when the investigation is undertaken by the agencies Only when the relevant market is defined in time of occurrence of the abusive practice can a final conclusion be accurately made, and of course, all of the market changes after will be estimated in a careful way Secondly, time dimension86 in relevant market definition had better be taken into consideration as introduced and discussed above Actually, in some countries such as in EU, time relevant market is sometimes considered as one step of relevant market definition beside product relevant market and geographic relevant market, which appreciates time factor whenever the agencies deal with this matter The author not intend to suggest the same way for Vietnamese regulations, i.e to divide the relevant market definition into three steps including product, geographic and time relevant market In other words, that time factor is put in the product relevant market definition as current legal instruments is acceptable However, the agencies had better much more depend on this element as an important characteristic of a product with the purpose of making an accurate final conclusion on relevant market definition 3.2.3 Small but significant non transitory increase in price (SSNIP) test The key concepts as well as the process of this method was introduced in sub-section 2.1.2 above, which has been being popularly applied in many legal systems on the relevant market definition all around the world However, upon using this method, the agencies have to face to several obstacles which are introduced above such as the cellophane fallacy as well as consistency between elasticity and margin estimates Besides, SSNIP test sometimes can be difficultly applied in the event of lack of product’s data Furthermore, it is sometimes difficult for the SSNIP test along with other methods focusing on certain product or certain price to be applied in an active economy.87 Hence, a number of solutions have been proposed to solve the problems of SSNIP test, especially the cellophane fallacy Although these solutions are not perfectly effective, they can help the agencies to overcome the obstacles of this matter by depending on what evidence is available to estimate the extent to which prices already exceed the competitive level, including by reference to qualitative criteria and experience in comparable markets Particularly, they are: (i) Estimate the competitive price before undertaking a critical loss analysis: To avoid making an incorrect conclusion from the existence of supra-competitive prices, the first solution to be applied is to estimate the competitive price level prior to engaging in a critical loss analysis If, somehow, the competitive price level could be identified, then there would be no need to go through the whole process of defining relevant 86 87 This term can be named “temporal aspect” as that in EU TS Lê Nết, Ibid markets and assessing dominance on the basis of structural and behavioral proxies.88 (ii) Use a combination of qualitative and quantitative evidence: Another proposed solution is to adopt a qualitative approach based on the analysis of product characteristics and intended use, but taking into account the logic and principles of the SSNIP test and the critical loss analysis In reliance on the logic principles of the SSNIP test ensures that: (a) two products which is physically similar but not considered as substitutes by consumers are not included in the same relevant market; and on the contrary (b) two products with relatively dissimilar functionality, but which consumers consider as substitutes, are in the same relevant market (iii) Use other comparable markets as a crosscheck: Another possible way to refine the market definition resulting from the quantitative analysis is to investigate market definitions in similar markets that are more competitive than the one under investigation If the price level in these markets is not significantly lower than in the market defined using standard critical loss analysis, then it is unlikely that the cellophane fallacy plays a major role.89 (iv) Examine the competitive reactions of the allegedly dominant firm: Another possibility is to investigate whether the allegedly dominant firm monitors and reacts to the price changes and new products introductions of its competitors If it does, then those products are likely to be close substitutes for its own products And the locations where those rivals operate are likely to be part of the same geographic market than the firm in question.90 and 88 See S Bishop and S Baker, “The Role of Market Definition in Monopoly and Dominance Inquires” Economic Discussion Paper 2, OFT 342, July 2001, para 3.7 as quoted in Robert O’ Donoghue and A Jorge Padilla, Ibid, p 82 89 Robert O’ Donoghue and A Jorge Padilla, Ibid, p 83 90 See J Baker, “market Definition” in WD Collins (ed.), Directions in Antitrust, ABA Publishing, 2006 (forthcoming) as quoted in Robert O’ Donoghue and A Jorge Padilla, Ibid, p 83 (v) The small but significant non-transitory decrease in prices (SSNDP) test: An alternative way to delineate the boundaries of the relevant market is to consider the impact on the volume sold by a hypothetical monopolist of a 5-10% reduction in the prevailing price (unlike an increase in the case of SSNIP).91 Thanks to these solutions, it is believed that the SNNIP test will become an official method as the criteria for the relevant market definition in Vietnamese laws on competition in a near future Thereof, this kind of test can be applied more and more easily and accurately by the agencies when the number of cases in respect of this field is increasing day by day 3.2.4 Relevant market definition without depending on traditional habit Beside the above recommendations which are taken from EU and US experiences, the author would like to propose several suggestions for current regulations on competition as well as relevant market definition in our country Firstly, Vietnam generally has few experiences in relevant market definition since the government is used to dividing the market in reliance on either the career or the economic area in the process of building the economic and politic policy So, according to the traditional habit, viewpoints of market definition are usually involved in some career or some place, which are not scientifically understood as the relevant market under the competition regulations Secondly, the relevant market which is analyzed under laws on competition is indeed flexible under any circumstances from time to time, which requires the ability and even the talent of the agencies or the competitive authorities In other words, the authorities who work in this field not only have to give up the traditional habit of relevant market definition but also need to be equipped with skills and knowledge of economics, 91 See PB nelson and LJ White, Market definition and the Identification of Market Power in Monopolization Cases: A Critique and a Proposal, Working Paper #EC-03-06 of Stern School of Business, (November 2003) as quoted in Robert O’ Donoghue and A Jorge Padilla, Ibid, p 84 technique, etc so that they are able to make the exact analysis by evaluating the patterns provided in practice 3.3 Remarks Generally, Vietnamese competition regulations provide pretty enough criteria for the relevant market definition through the principles which are stipulated in Article 4, 5, 6, & of Decree 116/2005/NĐ-CP Thereof, relevant market definition also relies on product and geographic dimension Besides, through article 4.6, article and article 8, the Vietnamese competition legislators tried to predict what market factors can make influence on the final conclusion, which is considered their great effort However, these regulations have not been applied as practical instruments effectively yet because several principles are only the theory Furthermore, the Vietnamese agencies really lack of practical experiences upon dealing with the occurring matter, i.e they are not used to applying the detailed criteria stipulated in the legal documents into practice when estimating the competition cases generally and cases on defining the relevant market as well as the market share particularly For that reason, such competition authorities found it difficult in face to the current cases such as the case of Megastar Media J.V Co., Ltd as introduced already In short, the Vietnamese laws on the relevant market definition can be improved only when they can satisfy both conditions: (i) a guideline in detail must be built by the relevant authorities to specify the current regulations into the practice; and (ii) the agencies need training professionally and equipping with knowledge of economics, technique, etc to step by step get familiar with the required tasks CONCLUSION Relevant market definition is always considered as one of the most important steps in the investigation of restraint of competition so as to determine the market share after that Again, market share can only be calculated once the boundaries of the relevant market have been correctly established So, to thoroughly review the Vietnamese laws governing this matter along with legal systems of EU and US would be reasonably helpful to find out such weak points of Vietnamese regulations as well as study valuable experiences of some developed countries By analyzing and comparing the relevant legal instruments, the thesis can figure out the basic similarities and differences between countries’ regulations on the criteria for relevant market definition After that, the thesis introduced and provided in detail the most fundamental and popular methods which are being used under Article 102 TFEU and the US Horizontal Mergers Guidelines, focusing on effective and applicable solution to identify the relevant market in both product dimension and geographic dimension Finally, the thesis did a research on Vietnamese Law on competition accompanied by other relevant legal documents with the purpose of discussing the lack of specification and reasonableness in respect of relevant market definition as well as proposing several recommendations for improvement Nowadays, there are more and more cases in connection with competition field in both areas including restraint of competition and unfair competition inasmuch as not only enterprises but also consumers are step by step aware of role of regulations on competition This is hardly surprising that our competition authorities will have to face to more and more complex practical tasks, which required lots of skills as well as really effective guidelines Consequently, the most important and vital question raised for Vietnam at present is how to specify such theoretical principles, i.e how to make the principles stipulated in the laws become a practical tool for the competition authorities In other words, Vietnamese legislators can find out some method in order to clarify each competition regulations on relevant market definition, On the other hand, how to train the competition agencies had better be taken into consideration due to Vietnam’ current circumstances With limited time and experience, the thesis certainly cannot provide absolutely effective methods on relevant market definition However, the author hopes it helps to draw a fundamental overview of this matter Furthermore, with the purpose of contributing to develop Vietnamese regulations on competition generally and relevant market definition particularly, the author always looks forward to receiving comments as well as pieces of advice from all readers The more applicable such principles are, the safer the competition environment becomes Therefore, should we achieve this objective; Vietnamese Laws on Competition will be able to affirm its paramount role That is, ensuring the pure competition environment as well as protecting the legitimate rights and interests of both suppliers and consumers BIBLIOGRAPHY I Legal documents Vietnamese Law No 27/2004/QH11 dated December 03rd, 2004 of the National Assembly on Competition Law No 14/2003/QH11 dated November 25th, 2003 of the National Assembly on State Enterprises Law No 60/2005/QH11 dated November 29th, 2005 of the National Assembly on Enterprises Decree No 116/2005/NĐ-CP dated September 15th, 2005 of the Government on providing detailed regulations for implementation of a number of articles of the Law on Competition Decree No 120/2005/NĐ-CP dated September 30th, 2005 of the Government on Dealing with Breaches in the Competition Sector Decree No 05/2006/NĐ-CP dated January 9th, 2006 of the Government on Establishment, Functions, Duties, Powers and Organizational structure of Vietnam Competition Council Decree No 06/2006/NĐ-CP dated January 9th, 2006 of the Government on Functions, Duties, Powers and Organizational structure of Vietnam Competition Administration Department English (EU) Article 101 and 102 TFEU - Council Regulation No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (Available at http://europa.eu/legislation_summaries/competition/firms/l26092_en.htm) (EU) Commission Notice on the definition of the relevant market for the purposes of Community competition law [1997] OJ C372/5 [1998] 4CMLR 177 10 (US) Horizontal Merger Guidelines by US Department of Justice and the Federal Trade Commission updated on 19 August 2010, replacing the Horizontal Merger Guidelines issued in 1992, revised 1997 II Cases 11 US Supreme Court, United States v E.I Du Pont De Nemour & Co, 351 US 377 (1956) (Available at http://supreme.justia.com/us/351/377/) 12 Case 6/72, Europemballage Corp & Continental Can Co Inc v Commission, European Court reports 1975, page 00495 (Available 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A Jorge Padilla (2006), The Law and Economics of Article 82 EC, Hart Publishing – Oxford and Portland Oregon 21 Vietnam Competition Authority - Ministry of Industry and Trade (2010), A summary of competition assessment report on ten sectors in Vietnam IV Journals Vietnamese 22 GS TS Nguyễn Vân Nam (2010), “Vụ K+ nhìn từ Luật cạnh tranh”, Thời báo kinh tế Sài Gòn online, (16/8/2010) 23 TS Lê Nết (2005), “Khái niệm kiểm sốt kết nối thị trường đóng góp ý kiến cho nghị định hướng dẫn thi hành số điều luật cạnh tranh.”, Tạp chí Khoa học pháp lý Tp Hồ Chí Minh, (03/2005) 24 TS Tăng Văn Nghĩa (2007), “Một số vấn đề đặt việc thực thi Luật cạnh tranh”, Tạp chí Nhà nước pháp luật, (231) 25 Phạm Hoài Tuấn (2011), “Áp dụng luật cạnh tranh – Bình luận từ việc Megastar bị khiếu nại”, Tạp chí nghiên cứu lập pháp, (05/2011) 26 TS Đào Trí Úc (2000), “Cạnh tranh pháp luật cạnh tranh Việt Nam”, Tạp chí Nhà nước pháp luật, (151) English 27 Body of European Regulators for electronic communications (2010), Report on relevant market definition for business services, Public consultation (Available at http://erg.eu.int/doc/berec/bor_10_46.pdf) 28 Malcolm B Coate and Jeffrey H Fischer (2008), A practical guide to the hypothetical monopolist test for market definition (Available at http://jcle.oxfordjournals.org/content/4/4/1031.abstract) V Website: 29 30 31 32 33 34 35 36 37 38 39 40 41 http://dictionary.cambridge.org http://europa.eu http://erg.eu.int http://encyclopedia.farlex.com http://jcle.oxfordjournals.org http://phapluattp.vn http://tuoitre.vn http://vietbao.vn http://vi.wikipedia.org http://www.ldoceonline.com http://www.oxfordadvancedlearnersdictionary.com http://www.thesaigontimes.vn http://www.vca.gov.vn ... III VIETNAMESE COMPETITION REGULATIONS ON THE CRITERIA FOR RELEVANT MARKET DEFINITION AND RECOMMENDATIONS FOR IMPROVEMENT 3.1 Vietnamese regulations on the criteria for relevant market definition. .. competition regulations on the criteria for relevant market definition Chapter III: Vietnamese competition regulations on the criteria for relevant market definition and recommendations for improvement... effective guidance for this matter 1.3 Concept of relevant market definition in competition law 1.3.1 The ? ?relevant market definition? ?? concept in EU regulations EU regulations on competition have provided