2019 22 October

Vietnam Legal Update: New Penalties Decree – 22 October 2019

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Vietnam has issued the Decree Regulating Penalties for Administrative Breaches in the Competition Sector (Decree No. 75/2019/ND-CP) (“Decree 75”) dated 26 September 2019. Decree 75 sets out the forms of administrative breaches regarding competition, levels and forms of penalties and related procedures, measures and authority for imposing administrative penalties under the Competition Law (Law No. 23/2018/QH14 dated 12 June 2018) which came into effect 1 July 2019 (“Competition Law”) and essentially replaces Decree 71/2014/ND-CP dated 21 July 2014 which provided similar functions under the previous Competition Law. Decree 75 takes effect 1 December 2019.

While Decree 75 sets out specific potential penalties for the substantive offences under the Competition Law as well with respect to other provisions, it also sets out a general framework for administrative penalties that include warnings, fines, additional sanctions (such as suspension of operations, confiscation of profits or revocation of enterprise registration, etc.) and remedial measures (such as correction of false information, restructuring of dominant entities, removal of illegal terms, etc.).

Decree 75 sets out different maximum levels of fines depending on the type of offence:

  • For anti-competitive agreements or abuse of dominance or monopoly, 10% of the previous financial year’s total turnover in the relevant market immediately preceding the year of the breach; subject to being less than the lowest penalty applicable under the Criminal Code;
  • For beach of economic concentration provisions, 5% of the previous financial year’s total turnover in the relevant market immediately preceding the year of the breach;
  • For unfair competition practices, VND 2 billion (approximately USD 86,000); and
  • For breach of other provisions of Decree 75, VND 200 million (approximately USD 8,600).

If the previous financial year’s total turnover in the relevant market is zero, then under Decree 75 the fine shall be from VND 100 to VND 200 million (approximately USD 4,300-8,600). In addition, where parties are in a vertical relationship, the turnover is to be calculated from all markets relevant to the breach. Finally, the maximum amounts stated above are halved if the offender is an individual as opposed to a juristic entity.

Finally, we note that as of the date of writing, the implementing decree of the Competition Law that is to provide relevant thresholds and standards and to clarify various provisions of the Competition Law has not been issued. Further Vietnam’s National Competition Committee, the proposed regulator as provided in the Competition Law, has not been appointed. In these circumstances, we understand that enforcement of the merger control regime is currently on hold. Interestingly, while the regulator has not yet been appointed, we also understand that the other substantive prohibitions of the Competition Law are being enforced under auspices of Vietnam’s Ministry of Industry and Trade.

For more information with respect to Decree 75 or the Competition Law, please contact Jerome Buzenet (jerome.buzenet@dfdl.com) or David Fruitman (david.fruitman@dfdl.com).


DFDL Contacts

Jerome Buzenet 

Partner & Vietnam Managing Director

jerome.buzenet@dfdl.com

David Fruitman

Regional Competition Counsel & Senior Consultant

david.fruitman@dfdl.com


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