Is illegally soliciting customers an act of unfair competition?

1. What is unfair competition behavior?

According to Article 3 of the Competition Law 2018, unfair competition behavior is regulated as follows:

Unfair competitive behavior is an enterprise’s behavior that is contrary to the principles of good faith, honesty, commercial practices and other business standards, causing damage or may cause damage to the legitimate rights and interests of other businesses.

2. Is unfair solicitation of customers a prohibited act of unfair competition?

According to Article 45 of the Competition Law 2018, prohibited unfair competition practices include:

– Infringement of confidential business information in the following forms:

+ Accessing and collecting confidential business information by opposing the security measures of the owner of that information;

+ Disclosing or using confidential business information without the permission of the owner of that information.

– Coercing customers or business partners of other enterprises with threatening or coercive behavior to force them not to transact or stop transacting with that enterprise.

– Providing untruthful information about another enterprise by directly or indirectly providing untruthful information about that enterprise that adversely affects the reputation, financial status or business operations of that enterprise.

– Disrupting the business activities of another enterprise by directly or indirectly obstructing or interrupting the lawful business activities of that enterprise.

– Illegally soliciting customers in the following forms:

+ Giving false or misleading information to customers about the business or the goods, services, promotions, or transaction conditions related to the goods and services that the business provides in order to attract customers of other businesses;

+ Compare your goods and services with goods and services of the same type from other businesses but cannot prove the content.

– Selling goods or providing services below total cost leads or is likely to lead to the elimination of other businesses that are trading in the same type of goods or services.

– Other acts of unfair competition prohibited by other laws.

3. How is the act of illegally soliciting customers handled?

According to Article 20 of Decree 75/2019/ND-CP the act of illegally soliciting customers is handled as follows:

– Fine from 100,000,000 VND to 200,000,000 VND for the act of soliciting customers illegal in the following forms:

+ Providing false or misleading information to customers about the business or the goods, services, promotions, and transaction conditions related to the goods and services that the business provides to attract customers of other businesses;

+ Comparing its goods and services with the same type of goods and services of other businesses but not being able to prove the content content.

– Fine twice the level specified in Clause 1 of this Article for violations in Clause 1 of this Article in case the violation is committed in two or more provinces and centrally run cities.

– Additional forms of sanction:

+ Deprivation of the right to use licenses or practice certificates for a limited period of time or suspension only operates for a limited time;

+ Confiscation of evidence and means used to commit administrative violations of competition;

+ Confiscation of profits gained from committing violations.

– Remedial measures:

+ Forced public correction declare;

+ Remove infringing elements on goods, goods packaging, business vehicles, and articles.

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, the act of illegally soliciting customers is subject to a fine of from 100,000,000 VND to 200,000,000 VND for organizations, and a fine of from 50,000,000 VND to 100,000,000 VND for individuals. In case the violation is committed in two or more provinces or centrally run cities, the fine will be twice the level specified in Clause 1 of this Article. In addition, violators are also subject to additional sanctions such as deprivation of the right to use licenses and practice certificates for a limited period of time or suspension of operations for a limited period of time, confiscation of material evidence and means used to commit administrative violations on competition, confiscation of profits earned from committing violations and remedial measures such as forced public rectification and removal of infringing elements on goods, packaging of goods, means of business and articles.