7 Unfair Competition Practices and Administrative Penalties

This English version is translated from the Vietnamese original. In case of any discrepancy, the Vietnamese version prevails.

What is Unfair Competition Conduct under the 2018 Competition Law?

According to Clause 6, Article 3 of the Law on Competition 2018 (No. 23/2018/QH14), unfair competition conduct is defined as follows:

Unfair competition conduct is an act of an enterprise that violates the principles of good faith, honesty, commercial customs and other standards in business operations, causing or potentially causing damage to the lawful rights and interests of other enterprises.

This is the legal basis for determining whether a conduct constitutes unfair competition, thereby applying corresponding penalties and sanctions.

What are the 7 Types of Prohibited Unfair Competition Conduct under Article 45 of the 2018 Competition Law?

Article 45 of the Law on Competition 2018 (No. 23/2018/QH14) comprehensively lists 7 categories of prohibited unfair competition conduct, specifically:

1. Infringement of Trade Secrets (Clause 1): This includes acts of accessing or collecting trade secrets by circumventing the security measures of the owner; or disclosing or using trade secrets without the owner's permission.
2. Coercion of Customers or Business Partners (Clause 2): Using threats or coercion to compel customers or business partners of another enterprise to refrain from transacting or to cease transactions with that enterprise.
3. Providing Dishonest Information about Another Enterprise (Clause 3): Directly or indirectly providing dishonest information about an enterprise that damages its reputation, financial condition, or business operations.
4. Disruption of Business Operations of Another Enterprise (Clause 4): Directly or indirectly obstructing or interrupting the lawful business operations of another enterprise.
5. Improper Customer Solicitation (Clause 5): This comprises two forms — (a) providing false or misleading information to customers about an enterprise, goods, or services in order to attract customers of another enterprise; (b) comparing one's goods or services with similar goods or services of another enterprise but failing to substantiate the comparison.
6. Selling Goods or Providing Services Below Full Cost (Clause 6): This conduct leads to or is likely to lead to the elimination of another enterprise engaged in the same type of goods or services business.
7. Other Unfair Competition Conduct (Clause 7): Prohibited under the provisions of other relevant laws.

Are There Other Entities Besides Enterprises Prohibited from Engaging in Unfair Competition?

According to Article 8 of the Law on Competition 2018 (No. 23/2018/QH14), not only enterprises but also state agencies, organizations, and other individuals are strictly prohibited from engaging in conduct that restricts or facilitates unfair competition. Specifically, Clause 2, Article 8 provides:

Organizations and individuals that provide information, advocate, incite, coerce, or organize enterprises to engage in conduct that restricts competition or constitutes unfair competition.

This means any organization or individual — whether or not an enterprise — that promotes, coerces, or organizes an enterprise to engage in unfair competition conduct may be subject to legal sanctions.

What Are the Administrative Penalties for Violations of Unfair Competition Provisions?

According to Clause 3, Article 111 of the Law on Competition 2018 (No. 23/2018/QH14) and Clause 5, Article 4 of Decree 75/2019/NĐ-CP on Administrative Penalties for Violations in the Field of Competition:

The maximum fine for violations of unfair competition provisions is 2,000,000,000 Vietnamese Dong.

The specific penalty levels are applied as follows (according to Clause 7, Article 4 of Decree 75/2019/NĐ-CP):

• For organizations: maximum fine up to 2,000,000,000 Vietnamese Dong.
• For individuals committing the same violation: maximum fine of one-half of the maximum fine for organizations, i.e., up to 1,000,000,000 Vietnamese Dong.

Furthermore, the specific fine for each conduct is the average amount of the penalty range prescribed for that conduct (Clause 8, Article 4 of Decree 75/2019/NĐ-CP). The Government has the authority to prescribe specific penalties for each individual conduct (Clause 6, Article 111 of the Law on Competition 2018).

Which Authority Has the Power to Impose Penalties for Unfair Competition Conduct?

According to the provisions of the Amended Law on Administrative Violations 2020 (No. 67/2020/QH14), the authority to impose penalties for unfair competition conduct rests with the National Competition Commission. The exercise of this authority for unfair competition violations is conducted in accordance with the provisions of the Law on Competition 2018.

What Should Enterprises Note to Avoid Violations of Unfair Competition Provisions?

To avoid legal risks, enterprises should pay particular attention to the following points:

• Do not collect or use trade secrets of competitors by any unlawful means.
• Do not disseminate false or misleading information about other enterprises on any platform, including social media.
• Exercise caution in comparative advertising campaigns — if comparing with competitors in the same industry, sufficient evidence must substantiate the comparison.
• Do not apply pricing policies below full cost for the purpose of eliminating competitive rivals.
• Legal departments or in-house counsel should review business strategies, marketing initiatives, and pricing before implementation.

If an enterprise believes it is a victim of unfair competition conduct, it may file a complaint with the National Competition Commission for consideration and handling in accordance with the provisions of the Law on Competition 2018 (No. 23/2018/QH14).

A&D Law Firm provides comprehensive business legal advisory services, including advice on competition law compliance, assessment of business conduct risks, and assistance in resolving unfair competition disputes. Enterprises requiring specialized consultation are welcome to contact A&D Law Firm for timely support.

This article is for general informational purposes regarding competition law and does not substitute for official legal advice applicable to the specific circumstances of individual enterprises. Please contact a lawyer for advice tailored to your actual situation.