Enterprises are not allowed to agree on the division of customers to limit competition, except in the case of jointly promoting the competitiveness of Vietnamese enterprises in the international market

Legal grounds:

• Competition Law 2018.

Enterprises with the same relevant market must not engage in anti-competitive practices that infringe on the interests of consumers.

Agreements to divide the market, divide customers, restrict the supply of goods to force consumers to buy goods at high prices can all be banned.

1. Is it possible to agree to divide customers in the same relevant market?

Article 11 Competition Law 2018 has a provision to list the types of agreements that are considered to be anti-competitive, including:

1. Agreement to fix the price of goods or services directly or indirectly.
2. Agreement on division of customers, division of consumption markets, supply of goods and provision of services.
3. Agreement to limit or control the quantity and volume of production, purchase and sale of goods or provision of services.
4. Agreement for one or two parties to win a bid when participating in a bidding process for the supply of goods or services.
5. Agreements to prevent, restrain or prevent other enterprises from entering the market or developing their business.
6. Agreement to exclude from the market businesses that are not parties to the agreement.
7. Agreements to limit technical and technological development and investment.
8. Agreements to impose or fix conditions on entering into contracts for the purchase and sale of goods or provision of services to other enterprises or agreements to force other enterprises to accept obligations that are not directly related to the subject matter of the contract.
9. Agreement does not deal with parties not participating in the agreement.
10. Agreement to limit the market for products, goods and services by parties not participating in the agreement.
11. Other agreements that have the effect or are likely to have an anti-competitive effect.

According to the above regulations, enterprises shaking hands with each other to agree to divide customers and divide markets are considered agreements to limit competition.

In principle, the State encourages the maintenance of a healthy competitive environment, in order to protect the interests of consumers.

Therefore, based on Clause 1, Article 12 of the Competition Law 2018, an agreement on division of customers, distribution of consumption markets, supply of goods and provision of services among enterprises in the same relevant market is prohibited. Because the consequences of this agreement may lead to infringing on the interests of consumers.

2. When is a customer division agreement accepted?

In principle, customer division agreements are prohibited. However, there are exceptions if the agreement is beneficial to the consumer. Specifically, Article 14 Competition Law 2018, an agreement that leads to at least 1 of the following 4 consequences will be exempted for a definite time:

1. The impact of promoting technical and technological progress, improving the quality of goods and services;
2. Enhance the competitiveness of Vietnamese enterprises in the international market;
3. Promote the uniform application of quality standards and technical norms of product categories;
4. Agree on the terms of contract performance, delivery, payment but not related to price and price factors.

Note:

• To be exempt, the agreement between businesses must benefit consumers.
• The exemption is for a limited time, so it may no longer be granted if the market situation changes in the favor of consumers or at least 1 of the 4 consequences above is no longer met.