Vietnam authorities call 3G fee hike legal

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The Vietnam Competition Authority (VCA) rejected accusations on Monday that a recent hike in 3G tariffs by Vietnam's three largest local telcos was illegal, but experts said the agency failed to perform inspections properly.

According to the agency at the Ministry of Industry and Trade, the price adjustments by Viettel, MobiFone, and Vinaphone were "reasonable" and did not violate the Law on Competition as accused, Tuoi Tre (Youth) newspaper reported.

On October 16, the 3G suppliers that hold 97.3 percent of the market share increased their tariffs from VND50,000 to VND70,000 a month, under Ministry of Information and Communication approval.

The hikes, which increased some of the companies' service packages by 20, 40, and even 330 percent, have since provoked widespread criticism.

Local experts and the public accused the companies of violating the competition law by increasing their fees at the same time. They also said that the law does not allow dominant companies to raise their prices by more than 5 percent per hike.

However, VCA said it did not detect signs of collusion among the three companies regarding the price adjustment.

It said the telcos increased their 3G fees in accordance with a government decree issued in July 2012.

They submitted new tariffs with the communication ministry's Telecommunication Department at different times, and their proposals for effective times and changes for each service package were also different.

But, after getting approval on October 4, the companies increased their fees simultaneously on October 16, because the cycle of 3G tariffs is due on either the beginning or the middle of the month, the agency was quoted as saying.

Although the telcos made similar price adjustments for their common packages, the adjustments were all approved by the department, VCA said, adding that the new fees were different for other packages.

According to VCA, the price hike raised prices an average of 20 percent, which was against the competition law that said businesses are not allowed to raise their prices by more than 5 percent per hike, if their input costs do not increase accordingly.

The telcos' input costs did not strongly fluctuat, and may have even  been lower than 2012.

However, the agency also said that the companies made the hike because the number of 3G subscribers soared (a total of 18.9 million as of November 2013) and exceeded their capacity.

For whom?

In a comment on VCA's report, Dr Nguyen Ngoc Son with the Ho Chi Minh City University of Economics and Law's Department of Law Competition told Tuoi Tre that what VCA did was explain away the price hike's legality on behalf of the businesses.

The VCA failed to present itself as an agency in charge of managing competition and creating a harmony between the benefits of consumers and those of businesses, he said, adding that it analyzed and compiled reports by related parties, instead of conducting an independent investigation.

He also criticized the agency for failing to analyze the price hike from an economic viewpoint.

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VCA contradicted itself when admitting that the companies increased their packages by 20 percent on average, higher than allowed, regardless of decreases in their input costs, but still saying that they did nothing wrong due to strong increase in the number of subscribers, according to Son.

The authority failed to prove how strong the increase in 3G subscribers was and how it could lead to such a price hike, he said.

In fact, when announcing their price hikes, all the companies claimed that without the hike, in the long term, they could not make profits for further capital expenditures and did not mention an imbalance between supply and demand.

Even if the companies supposedly increased prices to improve quality, they have so far failed to do so, because their services are still unsteady, Son said.

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