Decree No. 120/2005/ND-CP (“Decree 120”) on handling violations in the sector of competition was issued on 30 September 2005. After more than 9 years of the implementation of Decree 120, certain inadequacies for resolving competition issues have occurred in practice. In addition, recent changes in related legal documents have made a number of provisions in Decree 120 inconsistent with the amended legal documents. Therefore, on 21 July 2014, the Government issued Decree No. 71/2014/ND-CP on the same matter (“Decree 71”) which will take effect from 15 September 2014 and rescinds Decree 120.
Decree 71 specifies the way to calculate the fine level imposable for a violation of provisions on control of competition restriction acts. The fine level is based on the following factors, in priority order:
- a percentage of revenue or sales of the related goods/ services; or
- an enterprise’s total revenue of the preceding year.
Such percentage will be determined by the competent authority based on certain elements, including the extent of the completion restriction caused by the violation, the level of damage caused by the violation, the possibility of the subjects in violation causing competition restrictions, the violation time, the profit earned from the violation, etc. Such percentage must not exceed 10% of the enterprise’s total revenue in the preceding year.
For violation of provisions on unfair competition and other provisions on competition, the minimum fine level is increased from VND500 thousand as stipulated in Decree 120 to VND2 million in accordance with Decree 71. The maximum fine level as provided by Decree 71 is VND100 million for individual infringers, or VND200 million for organizational infringers. An act of advertising for the purpose of unfair competition may be subject to a fine of up to VND140 million, meanwhile a fine of up to VND80 million will be imposed for a commercial promotion for the purpose of unfair competition. This fine will be increased to VND100 million in cases where such promotion is conducted in two or more provinces.
Extenuating or aggravating circumstances may adjust the fine by up to 15% in either direction.
Decree 71 maintains the Competition Administration and Competition Council as the competent authorities for handling violations in the sector of competition. The Competition Council has competence to handle violations in competition restrictions, and the Competition Administration has competence to handle violations in unfair competition and other competition related issues.