Heavy fines imposed on organisations and enterprises in the draft amendments of the existing Law on Competition have stirred up much debate among lawmakers.

Under Article 114 of the draft amendments of the existing Law on Competition – discussed for the first time last week by the National Assembly – an authorised body shall impose a maximum fine of 10 per cent of the total revenue of the organisation, enterprise, or individual if the said entity is involved in a restraint of competition, an abuse of dominant market position or monopoly position, or a violation of an economic concentration. The revenue subject to the sanction is in the financial year preceding the year in which the violation took place.

The maximum fines are 5 per cent for violations against an economic concentration, and VND500 million ($22,727) for unfair competitive practices (see box for term definitions).

These new fines are clearer than those stipulated in the existing Law on Competition, which are general and make it difficult for authorised agencies to impose fines on violators.

However, the new fines have seen mixed responses from many lawmakers.

Deputy Pham Tat Thang, representing the southern province of Vinh Long, said, “I agree with the new fines,” saying that they were necessary because Vietnam needs to develop a fair, competition-based market.

“Fines equalling 5-10 per cent of enterprises’ total revenue in the financial year preceding the year in which the violations took place are suitable,” he said.

Deputy Nguyen Truong Giang of the Central Highlands province of Dak Nong, also said these fines are “suitable”, as they are in line with Clause 3 of Article 24 in the existing Law on Administrative Fines.

Still, Giang noted that fines for specific violations in the draft Law on Competition should be reconsidered because they are now contradictory to the competition-related fines in the current Criminal Code.

“All sanctions must be detailed so that they are easier to apply,” Giang said.

But deputy Tran Dang Ninh, representing the northern province of Hoa Binh, argued that the new fines are “unsuitable” because, while Article 114 is applied to violations at the time of discovery, the fines are based on the percentage of enterprises’ total revenue in the past.

“Thus the fines fail to correctly reflect violators’ legal responsibility and violation levels,” Ninh said. “Besides, I think fines of 5-10 per cent of enterprises’ total revenue are too heavy for firms.”

Deputy Thach Phuoc Binh, representing the southern province of Tra Vinh, shared the same view as Ninh, saying that the fines are too big and may be “unsuitable”.

“Enterprises can trade in many kinds of goods or services, and make violations in only one category. Thus, fines based on the percentage of enterprises’ total revenue should be reconsidered,” Binh said.

Deputy Tran Van Minh of the north-eastern province of Quang Ninh also proposed that the fines, which are relatively high, should be reconsidered as they cannot be calculated based on the percentage of enterprises’ total revenue.

“They should be calculated based on the violating items of enterprises,” Minh said.

“All the fines should be reviewed so that they can be in line with the Law on Administrative Fines and the Criminal Code.”

Deputy Pham Van Tuan, representing the northern province of Thai Binh, also said, “The new fines are too heavy and can drive enterprises into major difficulties. Also, the fines are irrational as they can be imposed on all items of an enterprise when there has been only one item with a violation.”

VIR