Competition Law
question marks hang over VNPT’s VinaPhone and MobiFone merger plan
The Ministry of Information and Communications’s (MIC) 2011 Information
Technology While Book showed that VinaPhone held a 28.71 per cent market share
and MobiFone 29.11 per cent market share in subscriber counts.
Assuming MobiFone and VinaFone were merged under a VNPT scheme (both
operators are managed by VNPT, a leading state telecom group), the VNPT would
hold a dominant share in three crucial segments in the local telecom services
market, with the fixed line segment at a 72.94 per cent market share, internet
surfing 72 per cent and mobile phone services 57.82 per cent.
The plan would be banned if the Law on Competition’s Clause 18 was
factored in, which stipulates that an economic concentration will be prohibited
if combined share of businesses surpassed 50 per cent of total market share.
However, this alone is not enough to hurt these big telecom operators’
merger plan.
Decree 25/ND-CP/2011 guiding the implementation of some articles in the
Telecom Law stipulates for economic concentrations in the telecom services
market in which the combined market share of relevant businesses ranging from
30-50 per cent relevant businesses are obliged to report to specialised telecom
management authority. If the combined market share surpasses 50 per cent, the
Minister of Industry and Trade will issue exemption decisions after getting
exemption documents from MIC.
Clause 19 in the Law on Competition, however, presents two exemptions.
Lawyer Tran Vu Hai, head of Tran Vu Hai Lawyer Office and Hanoi Law
Company, argued exemption regulation only took effect if the two would-be-merge
businesses dissolved or went bankrupt. In this case, both MobiFone and
VinaPhone are healthy and operating profitably.
“These two operators’ merger violates the Competition Law or not
depends on work results by the Competition Council factoring on the date of
birth of the Competition Law, the foundation of these two operators and
relevant documents,” said Hai.
The Ministry of Industry and Trade’s Vietnam Competition Authority
deputy chief Vu Ba Phu said market share was not a sole criterion in
considering the deal. “Enhanced competitiveness after a merger, market access
capacity and opportunities for new comers are more important factors.
Management and supervision by relevant state bodies in post-merger period is of
foremost importance since the market share may vary year-on-year,” said Phu.
In fact, under the Competition Law, exemption also applies in case merger
and consolidation helps expand export and brings benefits to sciences and
society. In this case, firms must submit exemption records to the Vietnam
Competition Authority and the government, the final decision is pending on the
prime minister.
From an observer’s angle, Freshfields Bruckhaus Deringer Vietnam
managing partner Tony Foster said any MobiFone and VinaPhone merger would
undermine Vietnam’s telecom market competitiveness. Operation by two leading
state giants VNPT and Viettel should be put under close eyes by management
authorities to shield consumer interests.
“The best option in restructuring VNPT would be equitising MobiFone,”
said lawyer Tran Vu Hai, adding that state interests should be taken as the top
factor in VNPT restructuring plan.
Hai suggested the state hold 51 per cent stake in MobiFone after
equitising in which VNPT keeps 20 per cent with the remaining 32 per cent to be
retained by the State Capital Investment Corporation.
Tuan Huyen | vir.com.vn
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