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October 8, 2019

Vietnam Issues Penalties for Violations of Competition Law

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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].

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