Antitrust and Competition Vietnam Client Alert March 2017 www.bakermckenzie.com Baker & McKenzie (Vietnam) Ltd. 12th Floor, Saigon Tower 29 Le Duan Blvd District 1 Ho Chi Minh City Socialist Republic of Vietnam Tel: +84 8 3829 5585 Fax: +84 8 3829 5618 Baker & McKenzie (Vietnam) Ltd. Hanoi Branch Office Unit 1001, 10th Floor Indochina Plaza Hanoi 241 Xuan Thuy Street Cau Giay District, Hanoi Socialist Republic of Vietnam Tel: +84 4 3825 1428 Fax: +84 4 3825 1432 New Decision on Abuse of Dominance by Vietnam Competition Council Background Information In April 2014, Vietnam Competition Administration Department ("VCA") received a complaint from Trading Tourism Co., Ltd. ("AB Tours Company") alleging Anh Duong Manufacturing Trading Services Import & Export Co., Ltd. ("Anh Duong Company") of implementing conducts of abuse of dominant position on the market of tour organization for tourists from Russia, Ukraine and other Commonwealth of Independent States ("CIS") countries visiting certain provinces in Vietnam. To be specific, Anh Duong Company (i.e., a partner of Pegas Touristik Group in Vietnam) entered into agreements with hotels in Nha Trang, Phan Thiet, Phan Rang and Phu Quoc Island (collectively, the "Partner Hotels") obligating the Partner Hotels to only accept tourists from Russia, Ukraine and other CIS countries introduced by Anh Duong Company. As a result, the Partner Hotels declined to offer rooms to tourists introduced by AB Tours Company and other tourism services providers despite the fact that they had vacant guest rooms. In 2015, VCA carried out an official investigation into the case and by 28 March 2016, VCA transferred the file to Vietnam Competition Council ("VCC") for resolution. Decision of VCC VCC concluded as follows: The relevant market is the tourism services market for Russians, Ukrainians and visitors from other CIS countries at tourism destinations with beaches that are popular to the said foreigners in Vietnam and, therefore, Anh Duong Company is in a dominant position with 51.6% of the market share. Anh Duong Company violated Article 13.5 of the Vietnam Competition Law by forcing other enterprises to accept obligations which were not directly related to the subject matter of the contracts. VCC declared that the subject matter of the contracts were accommodation services in the form of renting hotel rooms. However, Anh Duong Company further required the Partner Hotels to (i) increase the room price from 15% ~ 20% when publishing online to protect the benefits and reputation of Anh Duong Company; and (ii) stop introducing, selling and allowing other individuals and tourism services providers from introducing and offering “Option Tours” to Anh Duong Company’s clients. Anh Duong Company violated Article 13.6 of the Vietnam Competition Law by preventing the market participation of new competitors. VCC found that Anh Duong Company improperly required the Partner Hotels to (i) only accept tourists from Russia, Ukraine and other CIS countries introduced by their own company; and (ii) refrain from entering into any other contract with Pegas Touristik Group’s competitors providing flight services from Russia to Cam Ranh International Airport. 2 Baker McKenzie March 2017 Nevertheless, in Decision No. 10/QD-HDCT dated 30 December 2016, VCC finally decided to stay resolution of the case in accordance with the Competition Law because (i) Anh Duong Company ceased its violations and removed the anti-competitive terms and conditions from the relevant agreements with the Partner Hotels; and (ii) AB Tours Company voluntarily withdrew the complaint. Anh Duong Company was simply requested to pay a fee of VND50,000,000 (about US$2,300) to the National Treasury. Such amount was not declared as a fine but merely a settlement fee for VCC having handled the competition case. * * * From competition law perspective, it's interesting to note how the relevant market was narrowly defined by VCC for this particular case both in types of tourists and geographic areas. Should you wish to obtain further information or want to discuss any issues raised in this alert with us, please contact: Chi Anh Tran +84 8 3520 2625 email@example.com Maria Chung +84 4 3936 9400 firstname.lastname@example.org This client alert provided by Baker & McKenzie (Vietnam) Ltd. is intended to provide our clients, and other interested parties, with an overview of the recent legal changes in the relevant area for information purposes only. The information contained in this client alert does not constitute legal advice or legal opinion, and should not be regarded as a substitute for detailed advice in individual cases. 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