Ministry of Industry and Trade receives opinions from experts and businesses

Lao Dong newspaper recently published an article citing the opinions of the Vietnam Confederation of Industry and Commerce (VCCI) and businesses contributing to the draft Decree on petroleum trading. In it, VCCI gave its opinion on the issue of traders distributing and buying and selling to each other.

Article 17 of the draft stipulates the rights and obligations of petroleum distributors, but does not allow distributors to buy and sell petroleum with each other. VCCI said that this is "unfounded and goes against market rules".

Talking to Lao Dong Newspaper about this issue, Ms. Nguyen Thuy Hien - Deputy Director of the Domestic Market Department (Ministry of Industry and Trade) said that the draft Decree on petroleum business to be submitted to the Government soon, the Drafting Committee will receive opinions from professional agencies, experts and business representatives. For controversial opinions, the Drafting Committee will present many options for consideration.

"In the upcoming draft, we will present an additional plan to allow petroleum distributors to buy and sell from each other, as suggested by experts, scientists, and professional agencies, so that the Government can consider and decide on a plan that is suitable for practice, ensuring objectivity and science," said Ms. Hien.

A petroleum business in the South told Lao Dong that distributors are businesses with the right to compete freely. If they are not allowed to cross-buy from each other, market competitiveness will not be guaranteed.

"During periods of erratic prices, thanks to cross-selling, distributors can share with each other about quantity and selling price. Restricting this right may not stabilize the market," said the business leader.

Non-mutually purchased gasoline distribution may be anticompetitive

Reviewing the content of the draft Decree on petroleum business, the Ministry of Justice pointed out many issues that need to be clarified, including those related to the law on business competition.

Clause 1, Article 17 of the draft Decree stipulates that "petroleum distributors are allowed to purchase petrol from key petroleum traders". However, these traders "are not allowed to buy and sell petrol with each other".

"The above limitation will in principle limit the choice of gasoline supply sources for gasoline distributors, which may not be consistent with the State's policy on competition in Clause 2, Article 6 of the 2018 Competition Law," the Ministry of Justice commented.

Clause 2, Article 6 of the Competition Law 2018 stipulates: "Promote competition, ensure the right to freedom of competition in business of enterprises according to the provisions of law".

With the above provisions, the Ministry of Justice also noted that the proposal in the petroleum decree for the above-mentioned distributors can be identified as acts of obstructing competition in the market that are strictly prohibited as stated in Point a, Clause 1, Article 8 of the Competition Law, which is "forcing, requesting, recommending enterprises... to carry out or not to carry out the production, purchase, sale of goods, supply, use of specific services or purchase, sale of goods, supply, use of services with specific enterprises".

Allowing only distributors to purchase goods from wholesale traders makes many petroleum businesses worry that it will give too much power to the wholesalers, making them dependent on both supply and profit.

In case the draft Decree on petroleum business does not allow traders to distribute and buy and sell to each other, Mr. Nguyen Tien Thoa - former Director of the Price Management Department (Ministry of Finance) said that it is necessary to specify more conditions in the decree.

In which, it stipulates a mechanism for close linkage, connection, and mutual control in the "vertical" petroleum supply system from the main trader to the distributor onwards through contracts and commitments.

At the same time, there is a registered supply system with higher responsibility in ensuring sources, sharing business costs, and reasonable discounts to ensure the harmony of interests between about 300 distributors and 32 main traders.

On that basis, the Ministry of Industry and Trade can provide specific guidance on the contents of commitments, monitor the commitments for implementation, and avoid the situation of "mutual suppression" in business.