MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY DISSERTATION ANTI-COMPETITIVE AGREEMENTS OR ABUSE OF DOMINANCE IN THE DIGITAL ECONOMY Major: International Trade Policy and Law Full name: Le Phuong Nam SUPERVISOR: Prof. Tang Van Nghia Ha Noi – 2019 i DECLARATION I hereby declare that this master thesis is the scientific research of my own which made on the basis of theoretical studies and under the direction and supervision of Prof. Tang Van Nghia. The research contents and results of this thesis is completely honest.
These data and documents for the analysis, review and evaluation were collected from various sources which are fully listed in the reference list. I am fully responsible for the content of this master thesis as well as this declaration. Hanoi, 31 December 2018 Author Le Phuong Nam ii CONTENTS CONTENTS.vii LIST OF ABBREVIATIONS.viii LIST OF FIGURES.ix LIST OF BOXES. Scope of research.6 CHAPTER 2: THE PRINCIPLE OF ANTI-COMPETITIVE AGREEMENTS, ABUSE OF DOMINANCE AND THE DIGITAL ECONOMY.
Anti-competitive agreements. The concept of anti-competitive agreements. Characteristics of anti-competitive agreements. General characteristics of anti-competitive agreements.
Main types of anti-competitive agreements. Anti-competitive agreements in terms of relevant market. Overview of Legislation on anti-competitive agreements in the market economy. Abuse of dominance.
The concept of abuse of dominance. Characteristics of abuse of dominance. General characteristics of abuse of dominance. Abuse of dominance in terms of relevant market.
Overview of Legislation on abuse of dominance in the market economy. The digital economy. The concept of the digital economy. Characteristics of the digital economy.
General characteristics of the digital economy. Objects in the digital economy and the relationship between them .25 CHAPTER 3: ANTI-COMPETITIVE AGREEMENTS OR ABUSE OF DOMINANCE IN THE DIGITAL ECONOMY. Anti-competitive agreements in the digital economy. Characteristics of anti-competitive agreements in the digital economy.
Case-study of anti-competitive agreements in the digital economy. Abuse of dominance in the digital economy. Characteristics of abuse of dominance in the digital economy. Case-study of abuse of dominance in the digital economy.
Overview of developed countries’ experience in dealing with anti- competitive agreements or abuse of dominance in the digital economy.48 CHAPTER 4: LEGAL REGULATIONS DEALING WITH ANTI- COMPETITIVE AGREEMENTS AND ABUSE OF DOMINANCE IN VIETNAM. The actual situation in Vietnam and the issues raised. Overview of Vietnam legislation on anti-competitive agreements or abuse of dominance in the digital economy. The situation on anti-competitive agreements and abuse of dominance on the digital economy in Vietnam.
Raising issues from dealing with anti-competitive agreements and abuse of dominance cases in the digital economy. The objective factors.1 Market definition and dominance. Anti competitive agreements by algorithms. The subjective factors.
Competition law system. Quality of personnel of the competition management agency.66 CHAPTER 5: RECOMMENDATION AND CONCLUSION. Improving provisions in Competition Law to enhance its adaptability to digital economy’s problem. The relevant market definition.
Procedure of lodging competition complaints. Using new assessment tools. Improving the skilled human resources in the field of competition law and policy. Raising awareness of competition law and policy.
Raising awareness of consumer. Raising awareness of enterprises.75 vi ACKNOWLEDGEMENT During the completion of this master thesis, I received the guidance and valuable help from the lecturers, siblings and friends. With great respect and deep gratitude, I would like to express sincere thanks to: Prof. Tang Van Nghia, Dean of Faculty of Graduate Studies of the Foreign Trade University (FTU) who wholeheartedly helped, supported and encouraged me from the initial to the final level of this dissertation.
He provided me with comprehensive guide from choosing the topic, outlining the thesis and editing this research. Professors and lecturers from FTU as well as World Trade Institute in the Master of International Trade Policy and Law Intake Four, who not only spread profound knowledge and information in the fields of economy and law but generated strong motivation for me while I was taking this course as well. Last but not least, I would like to express my sincere thanks to my family, my colleagues and my friends, who have always by my side encouraging, supporting, contributing valuable ideas and giving me favorable conditions for me to complete this scientific research. vii LIST OF ABBREVIATIONS Abbreviation Full name EU European Union GDP Gross Domestic Product ICN International Competition Network JICA Japan International Cooperation Agency MFN Most Favoured Nation NAFTA North American Free Trade Agreement NT National Treatment Organization for Economic Cooperation and OECD Development SME Small and Medium – Sized Enterprises SOE State – Owned Enterprises TFEU Treaty on the Functioning of the European Union TRIPS Trade – Related Aspects of Intellectual Property Rights U.S United States of America UNCTAD United Nations Conference on Trade and Development VCA Vietnam Competition Authority VCC Vietnam Competition Council WTO World Trade Organization LIST OF FIGURES viii Figure 1The features of the digital market call for a different and more nuanced approach to competition policy.22 Figure 2: Two side market.28 Figure 3: Marketing mix of digital platforms.30 Figure 4: Monitoring algorithms.34 Figure 5: Parallel algorithms.36 Figure 6: Signalling algorithms.38 Figure 7: Self-learning algorithms.40 LIST OF BOXES Box 1: The airline tariff publishing company case.42 Box 2: The Google case of abuse of dominant.51 Box 3: Article 9 of the Competition Law 2018: "Determining the relevant market.
57 Box 4: Determine the market of related products.57 Box 5: Grab-Uber case of merger.59 ix ABSTRACT The digital economy is developing very rapidly, digital technologies have gone into all aspects of life, including the production and business activities of enterprises. This thesis shows the new characteristics of the digital economy, the differences that digital technologies have impacted on the competitive behavior of enterprises, including anti-competitive agreements as well as abuse dominant behaviors. Since then, the thesis points out the difficulties and challenges faced by Vietnam 's competition authority when dealing with competition issues of the digital economy. A number of solutions to improve the effectiveness of resolving anti-competitive agreement or abuse of dominance cases will also be discussed.
More specifically, the thesis presents some contents such as: (i) Basic concepts and principles of competition law, anti-competitive agreements, abuse of dominance behaviors of enterprises in the market; (ii) The legal provisions of Vietnam and the world in adjusting and managing competitive acts of enterprises, especially anti- competitive agreements as well as abuse of dominant position; (iii) The characteristics of the digital economy, the participants, the relationship between subjects, the difference in competitive behavior of enterprises on digital platforms; (iv) Differential characteristics of the anti-competitive agreements in the digital economy, the forms of agreements, the conditions of agreement, the method of agreement, the difficulties for the management agencies to check and detect ; (v) Differences in acts of abusing the dominant position of the enterprise in the digital economy, the main implementing entity, the implementation methods, difficulties in the detection and management of the competition authorities (vi) challenges competition authorities face when dealing with competition cases in the digital economy, difficulties in identifying relevant markets, managers do not have expertise in digital technology, consumers lack awareness of protecting themselves .; (vii) Some solutions to help Vietnam's competition authority to improve the management capacity of anti-competitive agreements or abuse of dominance, solutions to improve the agency's capacity management, improvement of the legal system, solutions to raise consumers' awareness. x In general, the dissertation provides new content on anti-competitive agreements as well as abuse of dominance in the digital economy, and proposes some solutions to authorities before rapid development of this economy. xi CHAPTER 1: INTRODUCTION 1. Research rationale Competition is a core element of a market economy, competition law is also considered as the constitution of the economy.
With continuous development, many new business models have been formed, and the most outstanding ones in recent years are the emergence of digital business models. These businesses grow at a rapid pace and create a whole new market - digital market or even digital economy. However, competition in the digital market differs in some ways compared to competition in more traditional markets. This field often includes platform-based business models, multi-sided markets, network effects and economic scale, which make competition more complex.
These distinctive characteristics have ambivalent effects on the competitive process. Indeed, while digital markets are generally perceived to benefit consumers through lower prices, increased transparency and improved product quality, they also have a tendency towards market concentration, which results in new big concern for competition authorities, who are not quite familiar with kinds of digital characteristics. 1 In a digital economy, a mainstream trend often takes place, that one or very few companies account for the majority, even the entire market share. A term commonly used to describe this situation is “winner-takes-most” markets, which means that dominant firms have excessive power to raise prices without losing many customers.
Today’s superstar companies owe their privileged position to digital technology’s network effects, whereby a product becomes even more desirable as more and more people use it. With considerable market power, these companies often use it skillfully to increase their economic benefits. On the other hand, for emerging, small-scale digital companies, it is imperative to have agreements between them and between them and "superstar" companies to do business in a digital economy, unless they want to be annexed by other super big companies. In many cases, these digital companies violate competition law by anti- competitive agreements or market power abusive conducts, and then dramatically eliminating competitiveness in the market.
Competition authorities around the world are now facing difficulties in resolving these kinds of issues, because of their newness and complexness. Because of the above practice, this essay will focus on analyzing the new and complex characteristics of anti-competitive agreements and abuse of dominance conducts by businesses in the digital economy, and then, making some recommendations for competition authorities, especially Vietnam competition authority in handling these kinds of competition cases. Literature review While a significant amount of researches have been conducted in the fields of competition law and policy, there are not many researches focusing on competition in the digital economy. The main reason is that the digital economy has just been developed for more than a decade; but the issues of competition in the digital economy are therefore not really clear and become a major concern for competition 2 management agencies.
In Europe, a number of studies on competition policy in the digital economy have been conducted, and are still very new. First of all, there must be research “Competition law in the digital economy: a French perspective (Pierre Honoré and Romain Verzeni, 2017). This is a research on digital market, with both pro and anticompetitive characteristics. On the one hand, digital markets are generally perceived to benefit consumers through lower prices, increased transparency and improve product quality.
On the other hand, they also have a certain tendency towards market concentration. Drawing upon the recent decision-making practice of the French Competition Authority, the article provides a brief account of some of the challenges raised by the application of competition rules in the digital economy. Market Power of Platforms and Networks (Bundeskartellamt, 2016), in respond adequately to the challenges of the digital economy for antitrust enforcement. In the context that the Internet is relevant for many cases.
Large US Internet companies such as Google, Facebook and Amazon are operating on a national and European level with a high-profile online presence. At the same time, their competitive conduct and their strategies always provoke intensive discussions about competitive harm caused by such strategies and the question of whether they are legal or should be dealt with under a regulatory framework. The paper it is the Bundeskartellamt’s goal to expand its expertise in the field of the digital economy, to develop antitrust investigation concepts including relevant case practice and – to the extent required – highlight any need for legislative action. In general, this study focuses on Platforms and Networks which is a key component of the digital economy through which businesses and consumers meet, exchange, buy and sell goods and services online.