Is an agreement to fix commodity prices between businesses in the same relevant market an agreement to restrict competition?

Is an agreement to fix commodity prices between businesses in the same related market a prohibited anti-competitive agreement? If so, how will it be handled?

1. What is an agreement to restrict competition?

According to Article 3 of the Competition Law 2018, an agreement to restrict competition is defined as follows:

An agreement to restrict competition is an agreement between parties in any form that affects or is likely to affect competition.

2. Is an agreement to fix the price of goods between businesses in the same relevant market a prohibited act of agreement to restrict competition?

According to the provisions of Article 11 of the Competition Law 2018, acts of agreement to restrain competition include:

– Agreement to fix the price of goods and services directly or indirectly.

– Agreement to divide customers, divide consumer markets, sources of goods, and provide services.

– Agreement to limit or control the quantity and volume of production, purchase, sale of goods, and provision of services.

– Agreement for one or more parties to the agreement to win the bid when participating in bidding for the supply of goods and services. services.

– Agreement to prevent, restrain, or prevent other businesses from entering the market or developing their business.

– Agreement to eliminate from the market businesses that are not parties to the agreement.

– Agreement to limit technical and technological development and investment.

– Agreement to impose or fix conditions for signing a contract to buy or sell goods or provide services to another enterprise or an agreement to force another enterprise to accept obligations not directly related to the subject of the contract.

– Agreement not to transact with parties not participating in the agreement.

– Agreement to limit the market for consuming products, sources of supply of goods, and provision of services of the parties do not participate in the agreement.

– Other agreements that cause or have the potential to cause anti-competitive effects.

According to the provisions of Article 12 of the Competition Law 2018, prohibited acts of anti-competitive agreements include:

– Agreements to limit competition between enterprises in the same relevant market. specified in Clauses 1, 2 and 3, Article 11 of this Law.

– Agreements to limit competition between enterprises specified in Clauses 4, 5 and 6, Article 11 of this Law.

– Agreements to limit competition between enterprises in the same relevant market specified in Clauses 7, 8, 9, 10 and 11 Articles 11 of this Law when that agreement causes or has the potential to cause a significant anti-competitive impact on the market.

– Agreement to restrict competition between businesses doing business at different stages in the same production, distribution, and supply chain for a certain type of goods or services specified in Clauses 1, 2, 3, 7, 8, 9, 10 and 11 Articles 11 of this Law when that agreement causes or has the potential to cause a significant anti-competitive effect on the market.

Thus, the act of agreeing to fix the price of goods and services directly or indirectly between enterprises in the same relevant market, specifically the act of agreeing to fix the selling price of beer between beer-producing enterprises is a prohibited act of agreeing to restrict competition.

3. How is the act of agreeing to fix the price of goods between businesses in the same relevant market?

According to Article 6 of Decree 75/2019/ND-CP, the act of agreement to restrict competition by businesses in the same related market will be handled as follows:

– Fine from 01% to 10% of total revenue on the relevant market in the fiscal year immediately preceding the year of committing the violation of each enterprise that is a party to an agreement for one of the following acts:

+ Agreement to fix prices of goods and services directly or indirectly;

+ Agreement dividing customers, dividing consumer markets, sources of goods, providing services;

+ Agreement to limit or control the quantity and volume of production, purchase, sale of goods, and provision of services;

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

+ Agreement to prevent, restrain, or prevent other businesses from entering the market or developing their business;

+ Agreement to eliminate from the market businesses that are not parties to the agreement;

+ Agreement to limit technical and technological development, limit investment when that agreement causes or has the potential to cause an impact that restricts competition in a certain way. significantly in the market;

+ Agreements to impose or fix conditions for signing contracts to buy or sell goods or provide services to other enterprises or agreements to force other enterprises to accept obligations not directly related to the subject of the contract when such agreements cause or have the potential to cause significant anti-competitive effects in the market;

+ Agreement not to transact with other enterprises. party not participating in the agreement when that agreement causes or has the potential to cause a significant anti-competitive impact on the market;

+ Agreement to limit the market for consuming products, sources of supply of goods, and providing services of the parties not participating in the agreement when that agreement has an impact or is likely to have a significant anti-competitive impact on the market;

+ Other agreements causes or has the potential to cause an impact that restricts competition.

– Additional sanctions:

Confiscation of profits earned from committing violations for violations specified in Clause 1 of this Article.

– Remedial measures:

Forced removal of provisions violate the law out of contracts, agreements or business transactions.

– The maximum fine for organizations and individuals that commit the acts specified in Points dd and e, Clause 1 of this Article must be lower than the corresponding lowest fine prescribed in the Penal Code for organizations and individuals that carry out such acts. During the process of sanctioning violations specified in Clause 1 of this Article, when detecting signs of a crime specified in Article 217 of the 2015 Penal Code (amended and supplemented by the Law amending and supplementing a number of articles of the 2017 Penal Code), the Chairman of the National Competition Commission is responsible for transferring part or all of the dossier related to signs of the crime to the competent prosecution agency for criminal prosecution according to the law. provisions of law.

Note: The above fine is the fine for organizations, the fine for individuals is half the fine for organizations. (Clause 7, Article 4 of this Decree)

Thus, for acts of agreement to fix goods prices between enterprises in the same relevant market, each enterprise that is a 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 in which the violation is committed. In addition, businesses will be subject to additional sanctions such as confiscation of profits earned from violations and the remedial measure of being forced to remove illegal terms from contracts, agreements or business transactions.