Chile's tightening of control over overlapping boards of directors is a lesson for Vietnam in competition management, the National Competition Commission said.
Pioneer in competitive market management and supervision
According to information from the National Competition Commission (Ministry of Industry and Trade), on December 27, 2024, Chile continued to affirm its pioneering position in managing and monitoring transparent competitive markets by strengthening the handling of the phenomenon of overlapping boards of directors (interlocking directorates). This is a phenomenon in which an individual assumes a management or leadership role in multiple competing companies, causing the risk of conflicts of interest and information manipulation, negatively affecting fair competition in the market.
Previously, since 2017, the country has amended the Competition Law (Decree No. 211), which stipulates a strict prohibition on individuals holding leadership or director positions at two or more competing enterprises if the total revenue of these enterprises exceeds 100,000 fomento units (UF) - equivalent to about 3.5 million USD.
“This regulation applies according to the principle of obvious violation (per se), meaning that the conduct is considered a violation regardless of whether the specific impact on the market is proven or not. Meanwhile, indirect overlapping cases - such as the same source of appointment or common control - are analyzed according to the principle of “rule of reason”, based on the level of impact on the market to draw conclusions” - informed the Vietnam Competition Investigation Agency.
In Chile, the National Economic Prosecutor’s Office (FNE) is responsible for monitoring and prosecuting cases of overlapping boards. In recent years, the FNE has increased its investigative and litigation activities, especially in sensitive sectors such as finance and energy, where overlapping relationships pose a high risk of distorting the market.
Several high-profile cases filed before the Competition Tribunal (TDLC) have concluded that these overlapping relationships not only reduce competition but also facilitate price and information manipulation. Offending companies are forced to restructure their boards to ensure compliance with the law.
“Chile has demonstrated that strict control over the phenomenon of overlapping boards of directors not only contributes to protecting the transparency of the domestic market but also strengthens the confidence of international investors. With a strong legal framework and effective enforcement, Chile has minimized the risk of market manipulation, while promoting fair competition in key economic sectors,” the Vietnam Competition Investigation Agency emphasized.
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| Chile continues to affirm its pioneering position in managing and monitoring competitive markets. Illustrative photo |
Lessons for Vietnam
Sharing about the practical situation of this issue in Vietnam, a representative of the National Competition Commission said that although the Enterprise Law and the Competition Law 2018 have provisions on corporate governance and competition, there are no clear provisions to handle the phenomenon of overlapping boards of directors.
“This creates a large legal gap, potentially posing a risk of manipulation and restricting competition in important economic sectors,” the National Competition Commission said.
In particular, in sectors such as banking, real estate and telecommunications, there have been concerns about large individual or group shareholders controlling many competing companies. This could lead to sharing sensitive information, manipulating prices, or erecting barriers to new competitors entering the market.
The Vietnam Competition Investigation Agency analyzed that in the banking industry, individuals holding positions in many rival banks will affect transparency and competitive efficiency. Or in the real estate sector, overlapping relationships can cause real estate prices to be manipulated, causing damage to consumers.
Recognizing that Chile's approach to the phenomenon of overlapping boards of directors offers many valuable lessons for Vietnam, especially in the context of strongly developing strategic industries, the National Competition Commission affirmed that to ensure a transparent and healthy competitive environment, Vietnam needs to implement a number of measures:
Firstly, supplementing legal regulations, according to the Competition Investigation Agency, the Competition Law and the Enterprise Law need to be amended, supplementing clear provisions prohibiting overlapping relationships in the board of directors between competing enterprises.
Second, to strengthen supervision, the National Competition Commission needs to proactively monitor high-risk sectors such as finance, energy, telecommunications and real estate. “The use of technology and big data can help detect illegal overlapping relationships early,” the Competition Investigation Agency said.
Third, raising awareness, businesses need to be raised about transparent governance, accountability and compliance with competition laws. This helps build trust with partners and customers.
Fourth, international cooperation, Vietnam can learn from the experience of countries like Chile in building an effective legal framework and monitoring mechanism. At the same time, cooperation with international organizations will help strengthen management capacity and handle violations.
| Competition Investigation Agency: “Chile has demonstrated that strict control of overlapping boards of directors is an important factor in protecting market competitiveness and transparency. A strong legal framework and effective enforcement measures not only help to minimize the risk of market manipulation but also create a fair business environment, attract investment and promote sustainable economic development. For Vietnam, this is an opportunity to improve the legal framework and strengthen supervision to prevent unfair competition. Ensuring transparency in corporate governance will not only protect consumer rights but also contribute to enhancing the position of the Vietnamese economy in the context of global integration. A fair competitive market is the foundation for promoting innovation, sustainable development and long-term prosperity.” |
Source: https://congthuong.vn/quan-ly-va-giam-sat-thi-truong-canh-tranh-bai-hoc-tu-chile-368789.html
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