Unfair Competition Practices Under Vietnamese Law: Definition & Sanctions

What is an act of unfair competition? What acts of unfair competition are prohibited by law?

1. What is an act of unfair competition?

Under Clause 6 of Article 3 of the Competition Law 2018, an act of unfair competition is an act of an enterprise that is contrary to the principles of good faith, honesty, commercial customs and other standards in business, causing or likely to cause damage to the lawful rights and interests of other enterprises.

2. Prohibited acts of unfair competition

Article 45 of the Competition Law 2018 provides that prohibited acts of unfair competition include:

– Infringement of trade secrets in the following forms:

+ Accessing and collecting trade secrets by defeating the security measures of the owner of such information;

+ Disclosing or using trade secrets without the permission of the owner of such information.

– Coercing customers or business partners of another enterprise by threats or duress to make them not transact or stop transacting with that enterprise.

– Providing dishonest information about another enterprise by directly or indirectly providing dishonest information about the enterprise adversely affecting its reputation, financial condition or business operations.

– Disrupting the business operations of another enterprise by directly or indirectly hindering or interrupting the lawful business operations of that enterprise.

– Unfair customer solicitation in the following forms:

+ Providing false or misleading information to customers about the enterprise or the goods, services, promotions or transaction conditions related to the goods or services provided by the enterprise in order to attract customers of another enterprise;

+ Comparing its goods or services with goods or services of the same type of another enterprise but failing to substantiate the content.

– Selling goods or providing services below full cost, leading to or likely to lead to the elimination of other enterprises trading in the same goods or services.

– Other acts of unfair competition prohibited under other laws.

Based on the information you provided, the act of your company is one of the acts of unfair customer solicitation for unfair competition purposes, namely: “Comparing its goods or services with goods or services of the same type of another enterprise but failing to substantiate the content.”

3. Principles and forms of handling acts of unfair competition and remedial measures

Article 110 of the Competition Law 2018 provides on the principles of violation handling, forms of violation handling and remedial measures for violations of competition law as follows:

– Organizations and individuals committing acts violating competition law shall, depending on the nature and seriousness of the violation, be subject to disciplinary action, administrative sanction or criminal prosecution; if causing damage to the interests of the State or the lawful rights and interests of organizations and individuals, they must compensate for damages as prescribed by law.

– For each act violating competition law, the violating organization or individual shall be subject to one of the following principal sanctions:

+ Warning;

+ Fine.

– Depending on the nature and seriousness of the violation, organizations and individuals violating competition law may also be subject to one or more of the following additional sanctions:

+ Revocation of the Certificate of Enterprise Registration or equivalent document, deprivation of the right to use licenses or practicing certificates;

+ Confiscation of exhibits and means used to violate competition law;

+ Confiscation of profits obtained from the violation.

– In addition to the sanctions prescribed above, organizations and individuals violating competition law may also be subject to one or more of the following remedial measures:

+ Restructuring of the enterprise abusing its dominant market position or monopoly position;

+ Removing provisions violating the law from contracts, agreements or business transactions;

+ Dividing, splitting or reselling part or all of the capital contributions or assets of the enterprise formed after economic concentration;

+ Being subject to control by a competent state authority over the purchase prices, selling prices of goods or services or other transaction conditions in contracts of the enterprise formed after economic concentration;

+ Public correction;

+ Other necessary measures to remedy the impact of the violation.

– The Government shall provide details of the sanctions and remedial measures for each act violating competition law.

Regarding fines in particular, Clause 3 of Article 111 of the Competition Law 2018 provides that the maximum fine for violating provisions on unfair competition is VND 2,000,000,000 for organizations and a maximum of VND 1,000,000,000 for individuals under Clause 5 of Article 111 of the Competition Law 2018.

If your enterprise is concerned about acts of unfair competition by a competitor, or needs to review its own business operations, discuss with a lawyer before acting. Contact ANT Legal for advice.