The SOE’s Duopoly of Vietnam’s Telecommunications Industry: Ally of the Country’s Development But Enemy to International Competition Law?

Telecommunications services are among key services of every country. Their liberalization is encouraged by the World Trade Organization (WTO). The WTO members who commit to liberalize telecommunications services shall allow foreign service providers to access the domestic market in a non-discriminatory manner. In addition, they shall comply with the anti-competition commitments enshrined in the Annex on telecommunications services. However, in many countries, in particular developing ones, domestic telecommunications services providers are often partially state-owned enterprises (SOE), which holds critical infrastructure for these services within their territory. In some countries, the monopoly on telecommunications services is maintained, as demonstrated by the case Mexico-Telecommunication Services, in which finally Mexico had to adjust its measures that restricted the competition of U.S. service providers. Vietnam also committed to liberalize telecommunications services when it joined the WTO. To fulfil its commitments, Vietnam has adjusted the legal framework to open the telecommunications services market. However, more than 15 years after Vietnam’s obtaining WTO membership, almost no foreign service provider can have a foothold in its market. This is due to the strong development of the two largest telecommunications service providers in Vietnam, VNPT (formerly part of the Ministry of Post and Telecommunications) and Viettel (owned by the Vietnamese military). Their duopoly does not allow any third service providers—whether they are foreign or national—to easily enter the market. Meanwhile, the EU—Vietnam Free Trade Agreement (EVFTA) was signed on 30 June 2019. This agreement provides for a greater liberalization of Vietnam’s telecommunication services market, in comparison with that in the WTO framework. But despite this FTA, telecommunication investors/providers from Europe will still face Vietnam’s legal framework that supports its SOEs’ duopoly in the country. In this context, one may raise the following questions: Is there a violation of WTO rules on telecommunications services market liberalization? Why do these SOEs have such special role? Are they enemies to international competition law? In order to answer to these questions, we will analyse three main issues: The compatibility of Vietnam’s legal framework with its WTO commitments related to telecommunication services liberalization and anti-competition restriction; The government’s intervention on prices as well as the role of Vietnamese competition law on SOEs; Solutions for Vietnam to comply with the WTO and the EVFTA commitments, which will soon come into effect and to limit risks for investors/providers from Europe in particular, WTO members in general in this field in Vietnam.