In Vietnam, competition matters are regulated by the Law on Competition (LOC), which was passed by the National Assembly on November 9 2004, and came into effect on July 1 2005. The introduction of the LOC is widely considered as an important step in the ongoing development of a legal framework of commercial law in Vietnam.
The rules and regulations of LOC apply to all organisations and individuals conducting business activities in Vietnam, including (i) domestic private enterprises; (ii) state owned enterprises; (iii) foreign invested enterprises (e.g. joint venture enterprises and 100% foreign owned enterprises); and (iv) overseas enterprises operating in Vietnam (e.g. foreign branch offices, foreign contractors with office/provide services in Vietnam).
Aimed at preserving the rights of enterprises to compete freely and lawfully with each other, the LOC requires all competitive practices to be undertaken within the legal framework and on the principles of honesty, non-infringement of the State and public interest and the lawful rights and interests of enterprises and consumers.
Apart from regulating unfair competitive practices, the LOC also governs practices in restraint of competition, including: (i) agreements in restraint of competition; (ii) abuse of dominant market position or monopoly position; and (iii) economic concentration.
Unfair competitive practices, as defined under the LOC, means competitive practices by an enterprise during the business process which are contrary to general standards of business ethics and which cause, or may cause, damage to the interests of the State and/or the legitimate rights and interests of other enterprises or consumers. The LOC prohibits enterprises from undertaking the following unfair competitive practices:
n Misleading instructions – giving consumers misleading information to mislead them in their understanding of the goods or services rendered;
n Infringement of business secrets – unlawfully accessing, disclosing, using or abusing business secrets of another enterprise;
n Coercion in business – coercing consumers or other enterprises into transacting or ceasing to transact with another enterprise;
n Defamation of another enterprise – disseminating false information which adversely impacts the reputation, financial status or business activities of another enterprise;
n Causing disruption to the business activities of another enterprise;
n Advertisements or promotion aimed at unfair competition – advertising or conducting promotion which contains false, dishonest or misleading information to mislead, confuse or deceive the consumers on the price, quantity, quality, usage, origin, manufacturer of the goods and method of services, or offering free products to consumers in exchange of similar products manufactured by another enterprise;
n Discrimination by an association – unreasonably restricting an enterprise from admitting to or withdrawing from an industry association;
n Illegal multi-level selling of goods – pyramid selling of goods; and
n Other unfair competitive practices as prescribed by the government.
Vietnam Competition Administration Department (VCAD) and the Vietnam Competition Council (VCC) are responsible for implementing the LOC. The VCAD is responsible for investigating possible violations of law. Meanwhile, VCC is a quasi-judicial body that is responsible for settling cases concerning practices in restraint of competition and recommend action after VCAD completes the investigation. Both VCC and VCAD operate under the umbrella of the Ministry of Industry and Trade.
Under LOC, individuals and organisations committing unfair competitive practices may be subject to penalties in the form of warning and monetary fine. There are three levels monetary fine: (i) V5-10 million; (ii) V15-25 million; and (iii) V50-70 million.
In addition, individuals and organizations in breach of LOC, where such breach causes loss to the interests of the State, other individual(s) or organisation(s), will be required to make appropriate compensation. Depending on the seriousness of the offence, additional sanctions, such as confiscation of the facilities used to commit the offence, public retraction, may also be imposed.
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Le Thi Tuyet Dung and Lee Kien Han
KhattarWong
Tel: (65) 6535 6844
Fax: (65) 6534 4892
Email: dungle@khattarwong.com
leekienhan@khattarwong.com
Website: www.khattarwong.com
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