UNFAIR COMPETITION PRACTICES Cao Xuan Quang – Deputy Head of Unfair Competition Division EXPERIENCES FROM VIETNAM Viewpoints in this presentation do not necessarily express those of the VCA Hanoi, March 2011

CONTENTS 1. VIETNAM COMPETITION AUTHORITY 2. REGULATIONS ON UNFAIR COMPETITON 3. CASES HANDLED BY VCA

CONTENTS 1. VIETNAM COMPETITION AUTHORITY 2. REGULATIONS ON UNFAIR COMPETITON 3. CASES HANDLED BY VCA

1. Vietnam Competition Authority  A governmental agency under Ministry of Industry and Trade.  Functions: Competition; Anti-dumping, anti-subsidy, application of safeguard measures; Consumer Protection.  VCA’ functions, duties and powers are regulated by the Government.  Vietnam Competition Agencies: Vietnam Competition Authority and Vietnam Competition Council

1. VCA - Functions and duties  Competition:  Investigate competition cases on competition restriction acts.  Investigate and handle competition cases on unfair competition acts and other violations against competition law.  Control the process of economic concentration.  Detect and recommend relevant agencies to settle upon authority issued documents with inappropriate content according to competition law.  Build competition law and policy.

1. VCA - Organization  Leaders  Director General: appointed by the Prime Minister upon the recommendation of Industry and Trade Minister.  Deputy Director Generals: appointed by Industry and Trade Minister.  6 Boards  International Cooperation Board ( Board I).  Trade Remedies Board (Board II)  Consumer Protection Board (Board III)  Competition Policy Board (Board IV)  Unfair Competition Investigation Board (Board V)  Antitrust Investigation Board (Board VI)

1. VCA - Organization  3 Offices:  General Office in Hanoi.  Branch office in Ho Chi Minh city.  Branch office in Da Nang city.  2 Centers  Center for Competition and Information Data.  Center for Investigator Training.

1. VCA - Human resource HUMAN RESOURCE Number of Staffs Average age Major field Law Economics Other1015 Gender Male Female Tile Bachelor Master61017 Ph. D111

CONTENTS 1. VIETNAM COMPETITION AUTHORITY 2. REGULATIONS ON UNFAIR COMPETITON 3. CASES HANDLED BY VCA

2. Law enforced  Competition Law:  Adopted by the National Assembly in December 2004 and took effect since July 1 st  Guidance documents:  Decree No. 116/2005/ND-CP by the Government dated September 15 th 2005 on enforcing some articles in Competition Law.  Decree No. 120/2005/ND-CP by the Government dated September 30 th 2005 on handling violations against competition law.  Decree No. 110/2005/ND-CP by the Government dated August 24 th 2005 on management of multi- level sale practices.

2. Related Regulations  Intellectual Property Law:  The IP Law 2005: Took effect since 1 July  The law on Amendments to the IP Law 2005: Took effect as from 01 January  Decree No. 97/ND-CP by the Government dated September 21 st 2010 on sanctioning of administrative violations in industrial property.  Law on Commerce:  Law on Commerce 2005: January 21 st  Decree No. 06/2008/ND-CP by the Government dated January 16 th 2008 on dealing with breaches in Commercial Activities.  Decree No. 37/ND-CP by the Government dated April 4 th 2006 on detailing the Commercial Law regarding Trade Promotion activities.

2. Related Regulations  Law on Advertisement  Ordinance on Advertisement: Took effect since 1 May  Decree No. 24/2003/ND-CP by the Government dated March 13 th 2003 on detailing articles of the ordinance on advertisement.  Decree No. 56/2006/ND-CP by the Government dated June 6 th 2006 on sanctioning of administrative violations in cultural and information activities.  Decree No. 02/2011/ND-CP by the Government dated January 6 th 2011 on sanctioning of administrative violations in press and publication activities.

2. Related Regulations  Law on Consumer Protection: (shall take effect since July 1 st 2011 ) -Decree on detailing articles of the law: Drafting; -Decree on sanctioning of administrative violations: Drafting;  Other regulations: -Insurance; -Banking and finance; -Electricity; -Others.

2. Unfair Competition Acts  Definitions: (Article 3.4 – Competition Law 2005): “ Unfair competitive practices means competitive practices by an enterprise during the business which are contrary to general standards of business ethics and which cause or may cause damage to the interests of the State and/or to the legitimate rights and interests of other enterprises or of consumers”.

2. Unfair Competition Acts  Unfair Competition Acts (Article 39 – Competition Law): 1.Misleading indications; 2.Infringement upon business secrets; 3.Constraint in business; 4.Discrediting other enterprises; 5.Disturbing business activities of other enterprises;

2. Unfair Competition Acts  Unfair Competition Acts (Article 39 – Competition Law): 6.Advertising for the purpose of unfair competition; 7.Sale promotion for the purpose of unfair competition; 8.Discrimination by associations; 9.Illicit multi-level sale; 10.Other acts prescribed by the government.

2. Unfair Competition Acts - Fines  Decree No ND-CP  A fine of from 5 millions VND to 20 millions VND can be imposed for breach of provisions on : -Misleading indications; -Infringement upon business secrets; -Constraint in business; -Discrediting other enterprises; -Disturbing for the purpose of unfair competition;

2. Unfair Competition Acts - Fines  A fine of from 15 millions VND to 50 millions VND can be imposed for breach of provisions on: -Advertising for the purpose of unfair competition; -Sale promotion for the purpose of unfair competition; -Discrimination by associations;  A fine of from 50 millions VND to 100 millions VND can be imposed for breach of provision on illicit multi-level sale.  In addition to these fines, with differences for each breach, some other penalty or measures can be applied….

CONTENTS 1. VIETNAM COMPETITION AUTHORITY 2. REGULATIONS ON UNFAIR COMPETITON 3. CASES HANDLED BY VCA

3. Competition cases -2006

3. Competition cases -2007

3. Competition cases -2008

3. Competition cases -2009

3. Competition cases( )

3. Cases on misleading indications  Complainant:  Center A:  Product: Wat-Clean  Investigated party:  Company B:  Product: Bitico  Violations:  Misleading indications on packing

3. Cases on misleading indications  Complainant:  GlaxoSmithKline  Product: Zinnat  Investigated party:  Company B:  Product: Zaniat  Violations:  Misleading indications on packing

3. Discrediting other enterprises  Investigated party: Saigon Petro.  Sector: Gas  Violation: Sending leaflets to customers to discredit other enterprises by incorrect information on price and quality of products.

3. Unfair Advertisements  Investigated party: Company A.  Product: Functional foods (Vitamins)  Violation: Providing false and incorrect information on nature and use of products to customers.

3. Unfair Advertisements

HOW TO REGULATE  How to regulate effectively unfair competition practices in Vietnam: 1.Enhancing the capability of the implementing agencies; 2.More regulations: Detailing the definitions (General standards of business ethics)…; 3.Dealing with unfair competition issues in other sectors; 4.Co-operating with regulatory agencies and other domestic agencies; 5.Co-operating with international organizations and foreign competition agencies…

Cao Xuan Quang – Deputy Director of Unfair Competition Board