Vinapco to cough up

After a dispute over a price increase, JPA had its fuel supply cut off by Vinapco on April 1, 2008. This caused a delay that grounded 30 flights with some 5,000 passengers affected.

The government intervened and ordered Vinapco to resume supplying fuel to JPA. The state-owned airplane petrol supplier was also fined more than VND3.3 billion ($165,000) for violating the nation’s Competition Law, which was calculated based on the percentage of Vinapco’s turnover in 2007 and would be handed to the state coffers.

The Vietnam Competition Council said at a public hearing in April 2009 that the air fuel firm had abused its monopoly and flouted the Competition Law when cutting off supplies to Jetstar Pacific Airlines without justification on April 1, 2008.

Vinapco, an affiliate of state-owned Vietnam Airlines, then protested the ruling. But a court in Hanoi recently rejected the appeal and ordered the fuel supplier to pay the VND3.3 billion fine.

The Hanoi People’s Court said the penalty handed down by the Vietnam Competition Council in 2009 was appropriate and it also rejected Vinapco’s claim that the amount was unfair.

Vinapco’s general director Tran Huu Phuc said that the firm had handled multiple business lines other than aviation fuel supply and its core services such as transport, petrol retail sale and financial business, which generated the firm high revenue must not have been included in the gross revenue on which the fine was imposed.

“If Vinapco infringes upon the law, when imposing a fine, the judging panel must count the revenue derived from aviation fuel supply only, and not Vinapco’s gross revenue,” said lawyer Nguyen Huy Thang from the Hanoi Lawyer Association, which represented the fuel firm in court.

His argument was backed by a representative from Hanoi City People’s Procuracy. “Vinapco still has to abide to decisions made by the Vietnam Competition Council as the Competition Law is yet to be revised to make it more compliant with the practices,” said Tran Thi Thanh Ha, a prosecutor from the Hanoi People’s Procuracy.

In this respect, deputy head of the Vietnam Competition Council Tran Mai Hien said that the fine level of 0.025 per cent of Vinapco’s 2007 revenue was tolerable for the violator as sanction regulations in the Competition Law allow competent state agencies to impose fines of up to 10 per cent of the violator’s total revenue in the fiscal year prior to the year the business incurs a violation.