Vietnam - SOE restructuring may put consumers at risk: expert

The restructuring of state-owned enterprises (SOE), if lacking an efficient supervision mechanism, may put consumers at risk and hinder new enterprises from joining the market, said an expert on the wake of two huge telcos planning merger.

Regarding the recent information about the merger of MobiFone and VinaPhone, Nguyen Ngoc Son, an expert on the Competition Law from the University of Economics and Law, said this merger was not in the scope of the Competition Law as it occurred between two members of the same group, not independent competitors.

However, such a merger may lead to economic concentration and unhealthy competition, he said.

The merger would bring benefits to the two mobile operators under the Vietnam Posts and Telecommunications Group (VNPT), as they would become a stronger competitor, leaving a certain impact on the telecom market.

However, the interests of consumers would be affected if the two service providers were merged into one with a sole business strategy and a dominant position on the market with a combined market share of 60%.

The merger of MobiFone and VinaPhone is not a particular case. SOE restructuring in general may pose similar risks to consumers and competition.

Son cited the State stake transfer from Jetstar Pacific to Vietnam Airlines as an example.

To prevent giant players from causing damages to consumers and their competitors, Son suggested: “If consumer interests are prioritized, we should not allow mergers. But if we could anticipate the risks of mergers and had supervision mechanism to prevent big enterprises from mistreating consumers, then there would be no worry about the interests of consumers when enterprises are merged.”

However, he stressed the current mechanisms are insufficient to guarantee consumer interests. “Regulations are available, but enforcement is not smooth enough,” said the expert.

The prevalent Competition Law introduces provisions to prevent price hike, imposing selling and buying prices that are unfavorable to consumers. Still, if the two mobile networks were merged, their consumer protection strategy would be no longer open-handed.

In fact, restructuring to create big enterprises is occurring in several countries in order to safeguard the capital sources for investment and operation, especially in time of economic crises and their aftermaths. The point is such countries have strict supervision mechanisms to protect the consumers, said Son.

Saigon Times

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