You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

October 8, 2019

Vietnam Issues Penalties for Violations of Competition Law

Subscribe to Updates

On September 26, 2019, the government of Vietnam issued Decree No. 75/2019/ND-CP on sanctioning of administrative violations in the field of competition (“Decree 75”). Decree 75 will take effect on December 1, 2019, replacing Decree No. 71/2014/ND-CP. The new decree primarily provides guidance on the forms, levels, and procedures of administrative penalties found in the updated Law on Competition, which took effect on July 1, 2019.

The new Law on Competition mainly governs four groups of activities: (1) competition-restricting agreements, (2) abuse of dominant market position or monopoly position; (3) economic concentration; and (4) unfair competitive practices. Violators of the Law on Competition, depending on the nature and seriousness of the violation, can be subject to an administrative penalty or prosecuted for criminal liability. Additionally, if loss or damage is caused to other parties, compensation must be paid. Under the Penal Code, criminal penalties in the field of competition include fines of up to VND 3 billion (approximately USD 129,000) and a term of imprisonment of up to five years.

The main administrative penalties under Decree 75 are warnings or fines. In addition to the main administrative penalties, the violator may be subject to additional penalties such as confiscation of profits earned from the violation, revocation of its Enterprise Registration Certificate or similar license, or suspension of business activities from six months to one year.

Violators may also be subject to remedial measures, such as public correction, restructuring of an enterprise which abuses its dominant market position or monopoly position, or removal of illegal clauses from an agreement or contract.

Some key provisions on administrative penalties in Decree 75 are as follows:

(a) The maximum fine for violations on competition-restricting agreements and abuse of market dominance/monopoly position is 10% of the violating company’s total turnover in the relevant market in the financial year immediately preceding the year in which the violations were committed, but shall be lower than the lowest level of fines applicable to violations of corresponding regulations in the Penal Code.

(b) The maximum fine for violations of the provisions on economic concentration is 5% of the violating company’s total turnover in the relevant market in the financial year immediately preceding the year in which the violations were committed.

(c) The maximum fine for violations of the provisions on unfair competition is VND 2 billion (approximately USD 86,000).

If the violating company’s total turnover in the relevant market in the financial year immediately preceding the year in which the violations were committed in items (a) and (b) above is 0, the fine will be imposed in the range of VND 100 million to VND 200 million (approximately USD 4,300 to USD 8,600).

It is worth noting that the Decree 75 removed some overlapping penalties for violations related to intellectual property, multi-level marketing, and unfair competition in advertising and promotions, as these violations are governed by specific laws.

For more information on penalties in the field of competition, please contact [email protected].

Related Professionals

Practices

Antitrust and Competition

Location

RELATED INSIGHTS​ 

December 9, 2020
Thailand’s Trade Competition Commission (TCC) has issued new rules governing business relations between food delivery platform operators and the restaurants operating through those platforms. The guidelines identify various arrangements, that are sometimes imposed upon restaurants by digital platforms, as unfair and damaging to restaurant operators, and restrict them accordingly. This is the fourth time that the TCC has deemed it necessary to intervene in a specific industry by restricting certain unfair trade practices in accordance with the Trade Competition Act B.E. 2560 (2017) (TCA), and is indicative of the TCC’s greater drive to quell unfair practices using its powers under the TCA. It also shows their willingness to react quickly to new developments in the market—in this case, the substantial increase in restaurant operators selling their products through online platforms in recent months. The Guidelines on Unfair Trade Practices between Digital Platform Operators for Food Delivery and Restaurants were published in the Government Gazette on November 23, 2020, and take effect on December 23, 2020. Key Definitions Digital platforms mean online services which establish a trade linkage between restaurant businesses, food deliverers, and consumers—in other words, applications or websites that allow consumers to use restaurants via food deliverers. Digital platform operators for food delivery means the business operators that provide digital platform services, acting as an intermediary to accept the purchase order and deliver food between restaurant operators, food delivery service providers, and consumers; or between restaurant operators and consumers in accepting the purchase order for food. Put simply, they are the companies operating food delivery platforms. Unfair Conduct  The main principle set forth in the TCC’s food delivery guidelines is that business conduct between food delivery platform operators and restaurant operators must respect the freedom of each party; must be fair, noncompulsory, and nondiscriminatory; and must not obstruct another
Read More
December 7, 2020
With virtually all business operations in Thailand affected by the fallout of the COVID-19 pandemic, the government has been keen to provide relief measures to limit the economic damage. In addition to implementing broad economic relief, this has also meant changes to the government’s own internal operations, and in recent months, the Public Procurement and Supplies Administration Ruling Committee has issued two circular letters prescribing guidelines on how government authorities should handle their procurement operations during this period. The circulars, which were issued under the Public Procurement and Supplies Administration Act B.E. 2560 (2017), detail the relief measures for government procurement contracts that cannot be fulfilled because of the disruptive effects of the COVID-19 pandemic. Most significantly, the circulars clarify that the impact of COVID-19 should be deemed force majeure under government procurement contracts and government procurement law, which affects the penalties levied on contractors for late performance of required duties under government procurement contracts. The Ruling Committee specified the start of the force majeure period as March 26, 2020 (the date when the government first announced a nationwide state of emergency). This official designation enables contractors to cite disruption from COVID-19 when requesting additional time to perform their duties under a contract, or exemption from or reduction of penalties incurred due to the delay. For contracts that have not yet reached their maturity date, the Ruling Committee granted relief measures by directing the relevant government authorities to count the number of days that COVID-19 has affected performance of the contract, and use this number as the basis for determining an extension of the timeframe for performing the contractual duties. For contracts that have already reached their maturity date, the contractual party that failed to perform according to the contract would normally be subject to an assessed fine for
Read More
May 15, 2020
On March 24, 2020, the government of Vietnam issued Decree No. 35/2020/ND-CP detailing a number of articles of the Competition Law (Decree 35). Decree 35 took effect on May 15, 2020, and provides much-needed elaboration on various ambiguous issues under the 2018 Competition Law, which has been in effect since July 1, 2019. Notably, it clarifies the conditions triggering the restrictions on anti-competitive agreements and economic concentration (e.g., M&A transactions).1. Definition of Relevant Market
Read More
May 5, 2020
The Global Attorney-Client Privilege Guide, published by Lex Mundi, provides information on what constitutes attorney-client privilege in over 65 jurisdictions around the world. The Thailand chapter of the guide was written by Michael Ramirez, counsel in the dispute resolution group of Tilleke & Gibbins’ Bangkok office.
Read More