Antitrust and Competition Vietnam

Client Alert New Decision on Abuse of Dominance by March 2017 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. www.bakermckenzie.com Decision of VCC Baker & McKenzie (Vietnam) Ltd. VCC concluded as follows: 12th Floor, Saigon Tower 29 Le Duan Blvd  The relevant market is the tourism services market for Russians, District 1 Ukrainians and visitors from other CIS countries at tourism destinations Ho Chi Minh City with beaches that are popular to the said foreigners in Vietnam and, Socialist Republic of Vietnam Tel: +84 8 3829 5585 therefore, Anh Duong Company is in a dominant position with 51.6% of Fax: +84 8 3829 5618 the market share.  Anh Duong Company violated Article 13.5 of the Vietnam Competition Baker & McKenzie (Vietnam) Ltd. Hanoi Branch Office Law by forcing other enterprises to accept obligations which were not Unit 1001, 10th Floor directly related to the subject matter of the contracts. VCC declared that Indochina Plaza Hanoi the subject matter of the contracts were accommodation services in the 241 Xuan Thuy Street form of renting hotel rooms. However, Anh Duong Company further Cau Giay District, Hanoi required the Partner Hotels to (i) increase the room price from 15% ~ Socialist Republic of Vietnam 20% when publishing online to protect the benefits and reputation of Anh Tel: +84 4 3825 1428 Fax: +84 4 3825 1432 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.

Should you wish to obtain further Nevertheless, in Decision No. 10/QD-HDCT dated 30 December 2016, VCC information or want to discuss any finally decided to stay resolution of the case in accordance with the issues raised in this alert with us, Competition Law because (i) Anh Duong Company ceased its violations and please contact: removed the anti-competitive terms and conditions from the relevant agreements with the Partner Hotels; and (ii) AB Tours Company voluntarily Chi Anh Tran +84 8 3520 2625 withdrew the complaint. Anh Duong Company was simply requested to pay a [email protected] 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 Maria Chung having handled the competition case. +84 4 3936 9400 [email protected] * * *

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.

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. The information, as referred to in this client alert, is based on the laws, regulations, notifications, practice and policy at the time of its production. The laws, regulations, notifications, practice and policy may change from time-to-time and, therefore, the use of this client alert must be taken with due care. You are strongly advised that no use should be made of the information in this client alert without prior consultation with Baker & McKenzie (Vietnam) Ltd.. No portion hereof may be reproduced or transmitted, by any means, without the prior written permission from Baker & McKenzie (Vietnam) Ltd.. All rights reserved. Baker & McKenzie (Vietnam) Ltd. is a member of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. ©2017 Baker & McKenzie (Vietnam) Ltd. All rights reserved. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.

2 Baker McKenzie  March 2017