ANTITRUST AND MERGERS, SUBSIDIES AND STATE-OWNED ENTERPRISES
Competition policy helps to ensure a more efficient allocation of scarce public or private resources. Rules on competition are not about increasing market access per se, but rather about ensuring appropriate conditions which will enable market access to become effective and translate into real business opportunities. Anticompetitive behaviour and certain subsidies are not the traditional tariff barriers to trade but can be important behind-the-border barriers. The EU is particularly interested in ensuring a level playing field for European and Vietnamese companies and avoiding trade benefits stemming from the FTA being neutralised by anti-competitive practices. When properly designed, competition related issues are inherently pro-development, since it is developing countries whose companies and consumers are the most vulnerable victims of anti-competitive practices. Transparency and basic control of subsidies also ensures a better use of scarce public resources. Moreover, it will be easier for Vietnam to attract foreign companies if these can be reassured that basic competition laws will be respected. Antitrust and mergers The EU and Vietnam have agreed to a section on antitrust and mergers (anticompetitive conducts), including the obligation to maintain competition laws and relevant authorities and to apply the laws in a transparent and non-discriminatory manner. This means that companies operating in Vietnam should respect the same basic competition principles as 62
in Europe, i.e. no abuse of a dominant position and no agreements between enterprises that restrict competition and scrutiny of the competitive effects of a merger. At the same time, companies are assured that their rights in the competition procedures will be respected (procedural fairness) and that they can turn to the Vietnamese competition authorities to ask them to ensure an efficient competitive environment. Subsidies Companies can receive subsidies for well-defined public policy objectives such as research and development, training and regional development. However, the FTA acknowledges that certain kinds of subsidies can hinder competition and trade. Therefore, rules limit the potential negative effects of the subsidies. These cover transparency, consultations and some of the most distortive types of subsidies, which are made subject to specific conditions. Important achievements levelling the playing field between EU and Vietnamese enterprises: • Vietnam has agreed to notify not only subsidies to goods but also subsidies to services. This goes well beyond the existing WTO rules. As a result, at least every four years both sides will notify or make public subsidies to companies in selected services sectors, which are important from market access point of view such as telecommunications, banking, transport and energy.
• Companies have the possibility to alert their governments to potential subsidies with negative effects for their business. Governments can then engage in a consultation process with the other Party, in the first place to get information and, in case the distortive subsidy is confirmed, try to find a satisfactory solution.
Core rules related to SOEs:
• Unlimited guarantees (in amount or duration) are not allowed and subsidies to ailing companies are not possible without a viable restructuring plan.
• Transparency: Parties can request information on a case-by-case basis on corporate structures and finances of the companies.
• Both Parties can provide aid to public services and continue subsidising services of general economic interest. Limited exemptions to the competition rules apply in this regard.
• Corporate governance: regulatory functions will treat SOEs and private enterprises in the same way and that all laws and regulations will be applied in a non-discriminatory manner.
State-Owned Enterprises
Public services are fully safeguarded under the agreement and nothing in the SOE chapter will affect the Parties’ ability to continue providing services of general economic interest.
The agreement contains rules regarding state-owned enterprises (SOEs), designated monopolies (public and private) and enterprises granted special rights or privileges in order to ensure that trade liberalisation achieved by the agreement is not undermined by the unfair behaviour of such companies. A very ambitious and high level agreement on SOEs has been reached. This achievement is even more significant as SOEs have traditionally been a backbone of Vietnamese economy and create around 40% of GDP.
• Non-discrimination and commercial considerations: rules applicable to SOEs will put SOEs and private enterprises on an equal footing when engaged in commercial transactions (sales and purchases with a profit making objective).
To target the most important SOEs from the trade and investment point of view, a turnover threshold of 200 million SDR (around €242 million in October 2018) has been agreed. Moreover, the rules will apply also to subcentral levels of government five years after the entry into force of the agreement.
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