Hard hitting fines for firms which compete unfairly

Decree 120 stated that the “fine on violators of monopoly and competition regulations could reach 10 per cent of the previous year’s turnover during the time the monopoly and competition-violating behavior occurred.”
According to the competitiveness law that came into effect in July, violators of monopoly and competition regulations are enterprises or individuals that use their dominating market share of more than 30 per cent to damage the consumers’ benefits by raising prices or illegitimately reducing prices to defeat rivals, thereby creating an unhealthy competitive environment.
“Such a fine on violators of monopoly and competition regulations, the biggest ever, is considerable progress for the government,” said Dinh Thi My Loan, director general of the Competition Administration Department under the Ministry of Trade.
Under current regulations the highest fine for violators of monopoly regulations is just VND10 million ($660), a fine too small to make violators worry about their behavior.
“Ten per cent of the previous year’s turnover will be a very big amount to some big- and medium-sized enterprises,” Loan said.
An economist who preferred to remain anonymous said for large enterprises such as Bao Viet insurance, Viettel corporation and Vinamilk, which have a turnover of up to hundreds of billions of VND (roughly dozens of millions of USD), 10 per cent of turnover would be a large fine and could thwart monopoly and competition-violating behavior.
“Such a strict fine will allow private-owned enterprises which have a small capital to secure from the unhealthy competition of big rivals,” he said.
However, experts still said the government should do more in its efforts to create a fair business environment for all businesses.
Tran Tuan Phong, a lawyer from the Vietnam International Law Firm, said under the competition law, some large state-owned enterprises “remain protected by the state for their existing monopolistic behaviors.”
The law stated that under the current context, “some kinds of state monopoly remains to be accepted and are controlled by the state.”
“It means that some state-owned monopolistic enterprises like electricity, petroleum, oil and gas, water and telecommunications (international dial-up service) would be exempt from regulations or fines,” Phong said.
He added that such cases are exclusive and would be considered by the government on a case-by-case basis.
“There are still many things for the government to do to create a fair playing ground for business of all kinds,” he said.
However, Loan said even enterprises in state monopolistic sectors such as electricity and water could be considered in violation of monopoly regulations if customers petition concerned agencies about monopolistic behavior that damages consumer benefits.