CASE STUDY

MARINE HOSES CASE

1. Background

Six companies in the marine hose

industry entered into a
Memorandum of Understanding.
Accordingly, the companies agreed
that any member (the “Club
Member”) who received an inquiry
from a customer would then report
it to a coordinator, who would in
turn designate the customer to a
“champion” i.e. the Club Member
who was supposed to win that
customer. Projects would be
designated to the Club Members on the basis of market share, factory loading,
customer’s preference and history of supply.

To ensure that a customer was designated to the right “champion”, the Club
Members discussed on the prices that each of them should quote so that all the
prices they offered would be above the price quoted by the champion.

To this end, the Club Members agreed on price lists which served as a reference for
the prices quoted to customers and were used to steer tenders to the champion
which effectively fixed the price for that tender. Moreover, the arrangements also
removed the risk of price competition from other Club Members.

The Club Members would also enter into an agreement on market share quotas and
repeatedly reviewed target market shares to be attributed to each of them.

To ensure that the arrangements between Club Members are executed smoothly, the
Club Members informed the coordinator(s) of upcoming tenders. In turn the
coordinator(s) regularly sent the Club Members lists of allocated tenders with market
share information and price lists.

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2. Questions

a. From the Vietnamese competition law perspective, identify the anti-

competitive conducts in the case above. Are they hardcore or non-hardcore
cartels? Why?

b. If you were an executive of one of the Club Members, what would you advise
your company to do? Why?

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