Is Price-Fixing Agreements Between Enterprises on the Same Relevant Market a Prohibited Competition-Restricting Agreement?

Is an agreement fixing the prices of goods between enterprises on the same relevant market a prohibited competition-restricting agreement? If so, how is it handled?

1. What is a competition-restricting agreement?

Under Article 3 of the Competition Law 2018, a competition-restricting agreement is defined as follows:

A competition-restricting agreement is an agreement between parties in any form that causes or is capable of causing competition-restricting effects.

2. Is an agreement fixing the prices of goods between enterprises on the same relevant market a prohibited competition-restricting agreement?

Under Article 11 of the Competition Law 2018, competition-restricting agreements include:

– Agreements directly or indirectly fixing the prices of goods or services.

– Agreements dividing customers, consumption markets, and sources of goods and service supply.

– Agreements restricting or controlling the quantity or volume of production, purchase, and sale of goods and provision of services.

– Agreements allowing one or more parties to the agreement to win bids when participating in bidding for the supply of goods or provision of services.

– Agreements preventing, restraining, or barring other enterprises from participating in the market or developing business.

– Agreements eliminating from the market enterprises that are not parties to the agreement.

– Agreements restricting technical and technological development and restricting investment.

– Agreements imposing or fixing conditions for signing goods purchase/sale contracts or service provision contracts with other enterprises, or agreements forcing other enterprises to accept obligations not directly related to the subject matter of the contract.

– Agreements not to transact with parties that are not participants in the agreement.

– Agreements restricting the consumption markets for products, sources of goods, or service supply of parties not participating in the agreement.

– Other agreements that cause or are capable of causing competition-restricting effects.

Under Article 12 of the Competition Law 2018, prohibited competition-restricting agreements include:

– Competition-restricting agreements between enterprises on the same relevant market as prescribed at clauses 1, 2, and 3 of Article 11 of this Law.

– Competition-restricting agreements between enterprises as prescribed at clauses 4, 5, and 6 of Article 11 of this Law.

– Competition-restricting agreements between enterprises on the same relevant market as prescribed at clauses 7, 8, 9, 10, and 11 of Article 11 of this Law where the agreement causes or is capable of causing significant competition-restricting effects on the market.

– Competition-restricting agreements between enterprises operating at different stages of the same production, distribution, and supply chain for a certain type of goods or services as prescribed at clauses 1, 2, 3, 7, 8, 9, 10, and 11 of Article 11 of this Law where the agreement causes or is capable of causing significant competition-restricting effects on the market.

Thus, an act of directly or indirectly fixing the prices of goods or services between enterprises on the same relevant market — specifically, an agreement fixing beer sale prices between beer-producing enterprises — is a prohibited competition-restricting agreement.

3. How is an agreement fixing the prices of goods between enterprises on the same relevant market handled?

Under Article 6 of Decree No. 75/2019/ND-CP, competition-restricting agreements of enterprises on the same relevant market are handled as follows:

– A fine of 01% to 10% of total revenue on the relevant market in the fiscal year immediately preceding the year the violation was committed, for each enterprise party to the agreement, for any of the following acts:

+ Agreements directly or indirectly fixing the prices of goods or services;

+ Agreements dividing customers, consumption markets, and sources of goods and service supply;

+ Agreements restricting or controlling the quantity or volume of production, purchase, and sale of goods and provision of services;

+ Agreements allowing one or more parties to the agreement to win bids when participating in bidding for the supply of goods or provision of services;

+ Agreements preventing, restraining, or barring other enterprises from participating in the market or developing business;

+ Agreements eliminating from the market enterprises that are not parties to the agreement;

+ Agreements restricting technical and technological development and restricting investment where the agreement causes or is capable of causing significant competition-restricting effects on the market;

+ Agreements imposing or fixing conditions for signing goods purchase/sale contracts or service provision contracts with other enterprises, or agreements forcing other enterprises to accept obligations not directly related to the subject matter of the contract where the agreement causes or is capable of causing significant competition-restricting effects on the market;

+ Agreements not to transact with parties that are not participants in the agreement where the agreement causes or is capable of causing significant competition-restricting effects on the market;

+ Agreements restricting the consumption markets for products, sources of goods, or service supply of parties not participating in the agreement where the agreement causes or is capable of causing significant competition-restricting effects on the market;

+ Other agreements that cause or are capable of causing competition-restricting effects.

– Additional penalty:

Confiscation of profits gained from committing the violation for the act prescribed at clause 1 of this Article.

– Remedial measures:

Compulsory removal of unlawful provisions from contracts, agreements, or business transactions.

– The maximum fine for organizations or individuals committing the acts at points dd and e clause 1 of this Article must be lower than the corresponding minimum fine prescribed in the Criminal Code for organizations or individuals committing such acts. In the course of penalizing violations at clause 1 of this Article, upon discovering signs of the crime prescribed at Article 217 of the Criminal Code 2015 (as amended and supplemented by the Law amending and supplementing a number of articles of the Criminal Code 2017), the Chairperson of the National Competition Commission is responsible for transferring part or all of the dossiers related to the signs of the crime to the competent criminal justice authorities for criminal prosecution as prescribed by law.

Note: The above fines are fines for organizations; fines for individuals equal 1/2 of the fines for organizations. (Clause 7 Article 4 of this Decree)

Thus, for the act of fixing the prices of goods between enterprises on the same relevant market, each enterprise party to the agreement will be fined from 01% to 10% of total revenue on the relevant market in the fiscal year immediately preceding the year the violation was committed. In addition, enterprises will be subject to the additional penalty of confiscation of profits gained from the violation and the remedial measure of compulsory removal of unlawful provisions from contracts, agreements, or business transactions.