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Official Gazette

Friday, January 27, 2023

Major provisions of the Competition Law

Updated: 15:31’ - 04/07/2005

By CAO MAI PHUONG, VLLF

Vietnam has adopted a “doi moi” (renewal) policy to develop a socialist-oriented market economy which has, however, given rise to unfair competition phenomena, adversely affecting the economy. Meanwhile, Vietnam lacked a system of law regulating competition relations.

Although the 1992 Constitution recognizes the existence of various economic sectors and affirms their equality before the law, many State agencies have failed to strictly abide by these provisions. Discrimination between economic sectors, especially between State enterprises and private ones, still exists. Prompted by local or sectional interests, some State agencies have indirectly interfered with enterprises’ business activities by their administrative orders, thus creating advantages for one or several enterprise(s) and creating trade barriers. Therefore, the promulgation of a Competition Law with severe penalties against acts causing negative impacts on the business environment is necessary.

In the short term, Vietnam, from a low starting point and with several inherent socio-economic characteristics, will continue to maintain its State monopoly over some branches and domains. Through the provisions of the Competition Law, the State needs to work out a control mechanism so as to restrict authoritarianism, manipulation and abuse of monopolistic position and avoid their negative impacts on and consequences for the society.

The process of opening the market through the signing of, and accession to, bilateral and multilateral trade agreements has brought to Vietnam multinational companies which, with their economic strengths, are capable of establishing a monopolistic position, and in that context, Vietnamese enterprises with more limited potential might be gradually squeezed out. Therefore, it is necessary to prepare legal grounds for controlling business monopoly.

Subject to the application of the Competition Law are business organizations and individuals, including enterprises producing and/or providing public-utility products and/or services, enterprises operating in State-monopolized branches and domains, foreign enterprises operating in Vietnam, and professional associations operating in Vietnam.

The Competition Law defines acts of competition restriction and unfair competition, order and procedures for settling competition cases and matters, and measures to handle violations of competition law.

It consists of 123 articles arranged in 6 chapters, covering:

-General provisions (Chapter I);

-Control of acts in restraint of competition (Chapter II);

-Unfair competition (Chapter III);

-Competition-managing agency and competition council (Chapter IV);

-Investigation and handling of competition cases and matters (Chapter V); and,

-Implementation provisions (Chapter VI).

1. Acts in restraint of competition

Acts in restraint of competition mean acts performed by enterprises to reduce, distort and prevent competition on the market, including acts of collusion, abuse of dominant position in the market, abuse of monopolistic position, and economic concentration.

2. Unfair competition

Unfair competition means acts performed by enterprises in the process of doing business which run counter to common standards of business ethics, causing or possibly causing damage to the interests of the State or the legitimate rights and interests of other enterprises or consumers. Unfair competition acts are divided into three groups.

Group 1: Infringing upon interests of competitors, including:

-Using misleading indications and trading in goods and services with the use of misleading indications;

-Infringing upon business secrets;

-Constraint of trade;

-Discrediting other enterprises;

-Disturbing business activities of other enterprises.

Group 2: Infringing upon customers’ interests, including:

-Advertising for the purposes of unfair competition;

-Sale promotion for the purposes of unfair competition;

-Illicit multi-level sales.

Group 3: Interfering in the competition environment, e.g., discriminatory acts by associations.

3. Competition-managing agency

In Vietnam, it is the Trade Ministry’s Competition Management Department that performs management over competition. The Department has the following tasks and
powers:

-To control the process of economic concentration;

-To accept dossiers of application for exemption and proposals to the Trade Minister or the Prime Minister for decision;

-To investigate competition cases related to acts in restraint of competition and unfair competition acts;

-To handle and sanction unfair competition.

The Law also provides for a Competition Council, which is not a competition-managing body but an agency set up by the Government and tasked to handle and settle complaints about competition cases or matters related to acts in restraint of competition.

4. Settlement of competition cases and matters

If organizations and individuals deem that their legitimate rights and interests are infringed upon by acts violating the Competition Law, they may lodge complaints with the competition-managing agency. The competition-managing agency shall accept complaint dossiers.

The settlement of competition cases and matters related to acts in restraint of competition shall comply with the Competition Law. For cases or matters related to unfair competition, the Competition Law as well as laws on the handling of administrative violations shall apply. In the process of conducting competition-related legal proceedings, the adjudicators must keep the business secrets of enterprises confidential and respect the legitimate rights and interests of involved organizations and individuals.

Competition-related adjudicating agencies include the competition-managing agency and the Competition Council. Competition-related adjudicating individuals include members of the Competition Council, the head of the competition-managing agency, investigators and hearing clerks.

Hearings shall be organized for competition cases and matters falling within the competence of the Competition Council. The chairman of the Competition Council shall decide whether to set up a Competition Adjudicating Council to settle a specific competition case or
matter.

5. Handling violations of competition law

For each act that violates the competition law, violating organizations or individuals shall be subject to one of two principal sanctioning forms, i.e., caution or fine.

For acts of violating the provisions on competition restricting agreements, abuse of a dominant position in the market, abuse of a monopolistic position, or economic concentration, violating organizations or individuals may be imposed a fine of up to 10% of total turnover earned in the fiscal year preceding the year when they commit the violations.

For acts of violating the provisions on unfair competition and other acts violating the Competition Law, the agencies with the sanctioning competence shall impose fines according to legislation on handling of administrative violations or relevant provisions of law.

Violating organizations or individuals may be subject to one of the following additional forms of sanctions: withdrawal of business registration certificates, deprivation of licenses and practice certificates; confiscation of material and means used in the commission of violations.

Apart from principal and additional sanctions, violating organizations or individuals may also be subject to the application of one or more than one of the following remedial measures:

-Restructure of the enterprises that have abused a dominant position in the market;

-Division or split of merged or consolidated enterprises, to force the sale of the acquired enterprise parts;

-Public restitution;

-Invalidation of illegal provisions in business contracts or transactions;

-Other necessary measures to overcome the competition-restricting impacts of the violations.

The Competition Adjudicating Council, the Competition Council and the competition-managing agency are competent to sanction and handle violations. Other agencies are competent to sanction acts violating the provisions on unfair competition related to intellectual property rights according to laws on administrative violations.

Enforcement of the Competition Law will create a level playing field for enterprises to enjoy freedom of competition within a legal framework. The State protects the lawful right to business competition and encourages fair competition. Competition must be carried out on the principles of honesty and non-infringement upon the interests of the State, the public and legitimate rights and interests of enterprises and consumers.

With a view to efficiently enforcing the Competition Law, the Government and the Supreme People’s Court will issue documents detailing and guiding the implementation of the Law.-

VNL_KH1 

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