HO CHI MINH NATIONAL UNIVERSITY

UNIVERSITY OF ECONOMICS AND LAW

ASSIGNMENT

Course : Competition Law

Lecturer : Mr. Nguyen Anh Tuan
Group :2
Nguyen Ha My Xuan K194071045
Huynh Le Thuy Tien K194151803
Huynh Nguyen Cat Tuong K194071040
Nguyen Thi Ngoc Nhu K194071027
Le Anh Thu K184070971
Tran Thi Minh Huong K184070955

Ho Chi Minh city, November 18th, 2021

 TABLE OF CONTENT
1. IDENTIFY ANTI-COMPETITIVE CONDUCT.......................................................3

2. OUR ADVICE: THE DECISION OF LEAVING THE CLUB................................4

REFERENCE.................................................................................................................... 6
1. IDENTIFY ANTI-COMPETITIVE CONDUCT

The Competition Law 2018 provides for a non-exhaustive list of restrictive agreements,
some of which are illegal per se and some subject to the substantial lessening of
competition test (articles 11 and 12 respectively).
Article 11. Anti-competitive agreements 
1. Agreements on directly or indirectly fixing goods or service prices. 
2. Agreements on distributing customers, consumption market, sources of supply of
goods, provision of services. 
4. Agreements for one of more parties to the agreements to win tenders when
participating in tenders for supply of goods or services. 
8. Agreement on imposing on other enterprises conditions for signing of goods or
services purchase or sale contracts or forcing other enterprises to accept obligations
which have no direct connection with the subject of such contracts. 
11. Other agreements that cause or may cause anti-competitive effects. 
Article 12. Prohibited anti-competitive agreements

1. Enterprises on the same relevant market are prohibited from entering anti-
competitive agreements prescribed in Clauses 1, 2, and 3 Article 11 of this Law.
2. Enterprises are prohibited from entering anti-competitive agreements prescribed
in Clauses 4, 5 and 6 Article 11 of this Law.

According to Clauses 1, 2, 4, 8, 11 Article 11 and Clauses 1, 2 Article 12 of Competition

Law (2018) the anti-competitive conducts are identified as follows:
 Any “Club Member” member must report the question from the customer to a
coordinator and the “Club Member” selected by that coordinator will win the
customer. (Market Division/Customer allocation).
 Club Members use price lists to refer to customer quotes, directing bids to
champions. The "Club Members" have jointly signed an agreement on the quota of
market shares, the projects will be assigned to the "Club Members" by the
coordinators based on market share, factory loading, customer preference and
history of supply. (Price Fixing).
 Moreover, "Club Member" will bid higher than the price quoted by “the
champion” to ensure the "champion" chances of winning; directing the bids to the
champion, arranging will help the champion, not afraid of other "Club Members"
competing on price. (Price Fixing).
 The “Club Members” signed an agreement on quotas for market share and
considered the target market share to allocate to each of them. (Output Restriction)
 The “Club Members” have notified the coordinator(s) of upcoming tenders. In
turn, the coordinator(s) regularly send to the “Club Member” a list of tenders
 allocated with the same. with market share information and price list. (Bid
Rigging).

They are hardcore cartels because they do not bring any economic efficiency and only
causes negative effects on competition and consumer interests. Also, they conclude hard-
cartel elements: Price Fixing, Market Division/Customer Allocation, Bid Rigging, Output
Restriction. 

2. OUR ADVICE: THE DECISION OF LEAVING THE CLUB

As analysed above, the Memorandum of Understanding was having anti-competition

practices by cartelizing between six companies in the marine hose industry. While this
can be assured of the profit margin, helping businesses maximize benefits and reduce
marketing costs in the short term, it also has caused intended anti-competitive effects in
the long run. As an executive of a Club-joined business, we would recommend that the
company should split from the Club and enter the competitive marine hose race in a fair
and transparent manner. This decision has been carefully considered by us in terms of
Vietnamese law, the business's benefits with productive & allocative efficiency, the
responsibility to society, and business ethics.
Andrew Carnegie stated that “And while the law of competition may be sometimes hard
for the individual, it is best for the race because it ensures the survival of the fittest in
every department”. In Vietnam, the rules of competition law have been set up to promote
business growth, protect them from collusion by other organizations. According to Dr.
Nguyen Anh Tuan, businesses have the right to choose to cooperate or compete if that
choice does not harm consumers. However, 6 companies in the case are doing illegal
activities based on the scope of Vietnamese Competition Law 2018. Therefore, to avoid
being sanctioned and handled by the law, the company should leave the club and compete
fairly in compliance with the law.
Regarding productive efficiency, instead of doing the project on our own, we must share
with the other companies thus we cannot maximize profit. When the coordinators do not
choose the company as a champion, we will lose this project as a result which leads to
damage to the financial situation. Moreover, unlike mergers or monopolies where we can
get full profit, cartels can make us profitable in available markets but cannot expand into
potential markets to maximize profit.
Besides, this situation also causes harm to the allocative efficiency. There would be great
deadweight loss through the inefficiency and misallocation of resources by agreeing on
prices and output, for the detection of cheating members or exclusion of other
competitors. In case the price is known in advance, the market price of the projects may
be pushed up to a higher level than intended while also disturbing the market and leading
to a price spam situation or an imbalance in values. Therefore, later projects' prices may
be pushed higher, causing harm not only to the company but also to investors and
customers.
In terms of customer trust, business ethics, and corporate social responsibility, our
company firstly puts customers in a situation in which they are cheated on or
manipulated. And once customers discover our manipulation and allocation could harm
their benefits and property, they would report to the competent authority as well as warn
others and boycott the company. So, businesses must ensure credibility, comply with
commitments on quality standards of products and services instead of defrauding
customers and partners due to ambition to get rich quickly. Second, as a business working
in the economy, the company should have social responsibilities. The action of this Club
may lead to economic stagnation, no innovation, and chaos which leads to unhealthy
competition and will bring negative impacts on the economy in the long run.
In conclusion, as an executive of one of the Club Members, we choose to leave the club
because of the above reasons: the laws, advantages of the company and business ethics
and corporate social responsibility.
REFERENCES 

Carnegie, A. (2009, June). Andrew Carnegie Quotes. Retrieved from:

https://www.brainyquote.com/authors/andrew-carnegie-quotes

Competition Law of 2018, Pub. L No.23, (2018). Retrieved from:

https://www.apeccp.org.tw/htdocs/doc/Vietnam/Competition/apecVietnamlaw.pdf

Nguyen, A. T. (2017, October 23). Thỏa thuận hạn chế cạnh tranh trong pháp luật cạnh
tranh. Retrieved from https://www.linkedin.com/pulse/th%E1%BB%8Fa-thu
%E1%BA%ADn-h%E1%BA%A1n-ch%E1%BA%BF-c%E1%BA%A1nh-tranh-
trong-ph%C3%A1p-lu%E1%BA%ADt-tuan-nguyen/