VietNamNet Bridge – Vietnamese management agencies understand that US-based Abbott Laboratories’ sales strategy will establish a bad precedent for unhealthy competition in the dairy market. But they do not know how to deal with the problem.

In 2013, Abbot launched the Ensure Nutrition Shake product with a warning “not to be sold in Vietnam and Mexico” on the packages.

On the Ensure Gold Vigor 237 ml cans, a statement says that 3A Nutrition is the distributor of Abbott’s products in Vietnam.

Vietnam’s Steering Committee 389 said that it can see signs of unhealthy competition in the case, which could damage the domestic dairy market.

After the warning was given, the Ministry of Health convened a private meeting with representatives from relevant ministries and branches on January 19 to discuss the problem.

The “strange labeling”, as commented by trade experts, has helped 3A Nutrition Company make fat profits.

The company’s dairy import turnover in 2013 increased sharply by 63 percent to VND300 billion.

The products have been selling very well, even though the company has raised the prices by two or three times.

In the past, 50 businesses legally imported the products.

At present, 3A Nutrition is clearly dominant in the distribution market. To everyone’s surprise, the Ensure products the manufacturer prohibits from selling in Vietnam are still available in the domestic market.

Sources said that the officials attending the private meeting all agreed that this is unhealthy competition in Abbott’s case, because the geographical indication may create misunderstandings among consumers.

An official from the Ministry of Industry and Trade (MOIT) pointed out that if the “Abbott model” is used by other manufacturers, consumers would suffer heavily, saying that Abbott harbors intentions to do this.

“In a market with such a high demand like Vietnam, if there is no competition, the manufacturer (Abbott) and the exclusive distributor (3A Nutrition) can easily join hands to control the selling prices in the market,” he explained.

However, Vietnamese management agencies still do not know how to prevent unhealthy competition.

The Competition Law includes provisions that prohibit manufacturers and distributors from using labels that may lead to consumers’ misunderstandings.

The law also prohibits enterprises from creating a monopoly to control prices, which causes losses to other enterprises.

However, the Competition Law, like any other Vietnamese law, only covers subjects within Vietnamese territory. This means that Vietnamese management agencies do not have the right to intervene in the labeling of beverage products not manufactured in Vietnam.

The Ministry of Industry and Trade (MOIT) reported that imported milk prices in Vietnam are higher by 20-150 percent) than in other markets. The import price of Abbott’s Ensure Gold in Vietnam, for example is 20-30 percent higher than in Thailand).

Pham Huyen