UNFAIR COMPETITION PRACTICES AND SANCTIONS FOR UNFAIR COMPETITION PRACTICES

In a period of extremely exciting commercial business, competition between individuals and organizations is inevitable. Healthy competition will contribute to the promotion of production and business activities, on the contrary, unfair competition will cause negative impacts for individuals and organizations under competition in particular and the business environment in general. Therefore, to build a healthy business environment and protect individuals and businesses, the competition law has introduced regulations and sanctions to regulate this behavior.

1. What is unfair competition practice?

According to the provisions of Article 3.6 of the Law on Competition 2018, unfair competition practices means practices by an enterprise which are contrary to the principles of goodwill, honesty, commercial practice and other standards in business and which cause or may cause loss and damage to the legitimate rights and interests of other enterprises.

2. Prohibited unfair competition practices

According to Article 45 of the Law on Competition 2018, the following competitive acts will be prohibited in business activities:

• Infringing secret information in business in the following forms:

- Accessing or collecting secret information in business by hacking the security measures taken by the owner of such information;

- Disclosing or using secret information in business without permission from the owner of such information.

• Coercing customers or business partners of another enterprise by threatening or coercive conduct to compel them not to make or to cease a transaction with such other enterprise.

• Providing untruthful information about another enterprise by way of directly or indirectly spreading untruthful information about [such other] enterprise which adversely impacts on the reputation, financial position or business activities of such other enterprise.

• Disrupting the business activities of another enterprise by way of directly or indirectly hindering or interrupting the lawful business activities of such other enterprise.

• Illegally inducing customers in the following forms:

- Providing false or misleading information to customers about an enterprise or goods, services, promotion or transaction conditions for goods or services provided by such enterprise to attract the customers of another enterprise;

- Comparing its goods or services with goods or services of the same type of another enterprise without being able to prove the contents.

• Selling goods or providing services below total prime cost, resulting in or possibly resulting in excluding another enterprise from conducting business in the same type of goods or services.

• Other prohibited unfair competitive acts as stipulated by other laws.

3. Sanctions for unfair competition activities

According to the provisions of the Law on Competition, for each practice in breach of the law on competition, the individual or organization in breach must be subject to one of the following main forms of penalty such as a warning, a fine.

Depending on the nature and seriousness of the breach, one or more of the following additional forms of penalty may also be applied to an individual or organization in breach of the law on competition:

• Withdrawal of enterprise registration certificate or equivalent document; deprivation of the right to use a license or practicing certificate;

• Confiscation of exhibits and facilities used to commit the breach of the law on competition;

• Confiscation of proceeds from conducting the breach.

In addition to the forms of penalty as mentioned above, one or more of the following measures for remedying consequences may also be applied to an individual or organization in breach of the law on competition:

• Remove infringing elements on goods, goods packaging, means of business, articles;

• Public correction;

• Other measures are necessary to remedy the effects of the practice in breach.

Penalties for unfair activities competition are specified in Section 4 of Decree 75/2019/ND-CP of the Government. Accordingly, the fine level for each unfair competition activity will range from VND 50,000,000 to VND 1,000,000,000 with additional penalties and remedial measures.

Note: The maximum fine for violations of regulations on unfair competition is VND 2,000,000,000.

ADK & Co Vietnam Lawyers Law Firm