In the digital age, monitoring and managing large digital platforms is an indispensable task for competition authorities.
landmark decisions
According to the National Competition Commission, in the context of the Fourth Industrial Revolution dramatically changing the global economy , several countries, including Chile, have emerged as models for managing digital competition. In particular, thanks to the decisive intervention of Fiscalía Nacional Económica (FNE) – Chile's national competition authority – this agency has demonstrated a strong commitment to protecting fair competition in the digital market, ensuring the rights of consumers and small businesses.
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| Headquarters of Fiscalía Nacional Económica - Chile's national competition authority. Photo: FNE |
Accordingly, in November 2023, FNE officially announced the conclusion of its two-year investigation into major food delivery platforms such as Uber Eats, PedidosYa, and Rappi. The focus of the investigation was on “Most Favoured Nation” (MFN) terms, a strategy often used to retain providers by requiring them not to offer better prices or conditions on any other channel, including their own websites.
FNE argues that these Most Favored Nation (MFN) terms have significantly harmed the market. They tie restaurants tightly to platforms, reducing price competitiveness and increasing costs for consumers. As a result, prices on food delivery platforms are often higher than reasonable, while consumer welfare is significantly diminished.
During the investigation, all three platforms—Uber Eats, PedidosYa, and Rappi—agreed to remove their Most Favored Nation (MFN) clauses and committed to not applying similar clauses in the future. The Tribunal de Defensa de la Libre Competencia (TDLC), Chile's competition authority, approved this decision, considering it a significant milestone in digital competition management.
Previously, in August 2023, FNE investigated the online hotel booking market. The investigation focused on broad Most Favored Nation (MFN) terms; in which hotels were required to offer prices and conditions no less favorable than any other distribution channel, including on their own websites.
FNE argues that broad MFN terms restrict competition among booking platforms, leading to higher prices and reduced consumer choice. Simultaneously, these terms limit hotels' ability to offer unique deals, thereby stifling innovation and competition in the market. In conclusion, FNE proposes that TDLC completely ban broad MFN terms in the online hotel booking sector. They also encourage platforms to move toward more transparent partnerships with hotels, facilitating sustainable and fair development in the tourism industry.
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| The broad Most Farewell (MFN) clause has limited competition among booking platforms. (Illustrative image) |
Many valuable lessons for Vietnam.
The National Competition Commission assessed that Chile's actions not only set an important precedent in the region but also have significant implications for the global digital competition management landscape. The firm handling of MFN (Most Favored Nation) provisions has helped Chile shape a model for protecting healthy competition in the digital market, ensuring transparency and fairness for all participants.
“Chile has demonstrated that, in the digital age, monitoring and regulating large digital platforms is an indispensable task for competition authorities. The success of the FNE in investigating and handling these cases sends a clear message: Any behavior that distorts the market or undermines consumer interests will be dealt with severely,” said the National Competition Commission.
The Vietnamese competition investigation agency also stated that the battle against MFN terms in Chile offers valuable lessons for Vietnam, where large digital platforms are playing an increasingly important role in the economy.
This involves building a robust legal framework. Vietnam needs to establish clear regulations on competition in the digital market, particularly closely monitoring potentially anti-competitive terms such as Most Favored Nation (MFN). These regulations must be designed to protect not only consumers but also small businesses, which are particularly vulnerable in the digital business environment.
In addition, it is necessary to strengthen the capacity to enforce the Competition Law. The personnel of competition management agencies need to be improved in terms of expertise and equipped with modern technology to detect and handle violations quickly.
At the same time, transparent competition needs to be encouraged. Vietnam needs to encourage digital platforms to cooperate more transparently with partners, thereby promoting healthy competition and creating conditions for innovation.
Another important aspect is enhanced international cooperation. Learning from the experiences of countries like Chile and collaborating with international regulatory bodies will help Vietnam develop policies that align with global trends, while also improving its oversight capacity in the digital sector.
Chile has demonstrated that, with strong measures and high determination, a country can create positive changes in maintaining healthy competition in the digital market. The lessons from Chile are not only valuable for countries in the region but also have global significance, especially in the context of digital technology increasingly dominating the world economy.
"For Vietnam, this is an opportunity to orient its competition management policy in the digital age, creating a fair business environment where both businesses and consumers are protected," the competition investigation agency affirmed.
| National Competition Commission: Transparency and fairness are not only the foundation for sustainable development but also decisive factors for Vietnam's deeper integration into the global economy. A fair and transparent digital market will be the "key" to promoting innovation and economic development in the future. |
Source: https://congthuong.vn/quan-ly-canh-tranh-ky-thuat-so-kinh-nghiem-tu-quoc-te-374282.html
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