What is relevant market? What are the regulations on the determination of the relevant market in Vietnam?

What is relevant market?

According to Clause 7, Article 3 of the Competition Law 2018, relevant market means the market of those products and/or services that are regarded as interchangeable by reason of their characteristics, intended use and prices in a specific geographical area with homogeneous conditions of competition, which is considerably differentiated from neighboring geographic areas.

What is relevant market? What are the regulations on the determination of the relevant market in Vietnam? (Internet image)

What are the regulations on the determination of the relevant market in Vietnam?

Pursuant to the provisions of Decree 35/2020/ND-CP, a relevant market is defined as an inclusion of a relevant product market and a relevant geographic market.

(1) Determination of the relevant product market

The relevant product market is the market where products and services that are regarded as interchangeable or substitutable in terms of their characteristics, uses and prices are sold.

Products and services will be regarded as interchangeable or substitutable if they are identical or homogeneous in terms of one or several elements as follows:

- Their characteristics;

- Their composition;

- Their physical and chemical properties;

- Their technical functions;

- Their side effects on users;

- User’s absorbability;

- Other specific attributes and qualities.

Products and services will be regarded as interchangeable or substitutable in terms of their uses if their main uses are identical.

Products and services will be regarded as interchangeable or substitutable in terms of their prices if the percent difference in these prices is not over 5% under similar transactional conditions.  If the percent difference is more than 5%, National Competition Commission may identify products and services regarded as interchangeable or substitutable in terms of their prices by taking into consideration several additional elements referred to in clause 5, or by employing determination methods specified in clause 6 of this Article. 

+ In case where determining whether products and services have properties and attributes that prove their interchangeability or substitutability as provided above gives insufficient evidence for the conclusion about the relevant product market, National Competition Commission shall additionally take into consideration one or several elements as follows:   

++ Rate of demand-side substitution of a product or service in case of any change in price of another product or service that takes place;

++ Required costs and time that a consumer spends on buying or using another substitute product or service;  

++ Useful lifespan of products or services;

++ Consumption habits;

++ Law affecting substitutability of products and services;

++ Distinguishability in terms of buying and selling prices between different consumer groups;

++ Supply-side substitutability of a product or service prescribed under Article 5 herein.

+ Where necessary, National Competition Commission can determine the price-related substitutability of products or services by using the following methods:

Products or services will be regarded as interchangeable or substitutable in terms of their prices if at least 35% of a random sample of 1,000 consumers living in relevant geographic regions buys or intends to buy other products or services whose qualities, attributes or uses are similar to those that they are using, or intends to use them in the event of the 10 percent increase in their prices in a continuous manner in 6 consecutive months.

If the number of consumers living in the relevant geographic region as mentioned in this paragraph is not 1,000 persons, the acceptable random sample may be at least 50% of total population of consumers living in that geographic region.

(2) Determination of the relevant geographic market

A relevant geographic market is a specific geographical area where available products or services are interchangeable or substitutable under similar competition conditions which are significantly distinguished from those conditions existing within neighboring geographic areas.

Boundaries of geographic areas prescribed in clause 1 of this Article may be defined by the following elements:

- Geographic areas that accommodate business establishments of enterprises participating in distribution of relevant products and services;

- Business establishments of other enterprises that are located within neighboring geographic areas close enough to the geographical areas prescribed in point a of this clause to the extent that they are able to take part in competition with relevant products and services available within these areas; 

- Shipping costs of products and services;

- Shipping time length of products and services;

- Barriers to market entry and expansion;

- Consumption habits;

- Required costs and time that consumers spend on buying or using these products and services; 

A geographical region is regarded as having conditions similar to and considerably distinguishable from relevant geographical areas if it meets one of the following criteria:

- Shipping costs and time constituting the price of a product or service may be increased by 10% at maximum;

- One of barriers to market entry and expansion stated in Article 8 herein exist.

Mai Thanh Loi

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