Basis for Applying Sanctions for Unfair Competition

By eliminating unethical business practices and illegal profit grabbing by enterprises, sanctions against unfair competition have contributed to protecting the freedom of business of business entities in the market, protecting the competitive environment and market relations, and accelerating the process of international economic integration.

1.2. BASIS FOR APPLYING SANCTIONS FOR UNFAIR COMPETITION CONDUCT

The basis for applying sanctions for unfair competition acts as well as the basis for applying legal liability in general, includes: the violation (unfair competition acts), the damage caused by the act, the causal relationship between the violation and the damage, and the fault in performing the act.

1.2.1. Unfair competition behavior

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As analyzed and explained above, competitive behavior is essentially the act of illegally appropriating competitive advantages, destroying the competitive advantages of other businesses, or creating fake competitive advantages.

Manifestations of acts of illegally appropriating competitive advantages of other enterprises include: Appropriating trade secrets that other enterprises have invested a lot of effort to obtain and which have become the assets of that enterprise; acts of imitating labels, packaging, designs, business slogans, brands, creating confusion among customers and causing direct damage to competitors... For example: In the beverage sector, the Lavie mineral water brand has been counterfeited by a number of other commercial names such as: Laville, Leville, Lavier... In the motorbike sector, the Wave brand of Honda, which is popular with many consumers, has been deceived by similar-looking Chinese vehicles such as Waver, Wake up...

Destroying the competitive advantage of another business is manifested in actions such as: Defaming competitors, disrupting the business activities of other businesses, etc., causing business competitors to lose reputation, waste time and money to restore their identity, and overcome the consequences.

The act of creating an artificial competitive advantage through false advertising, imitating other businesses' brands and product designs, etc., causes direct damage to competitors and consumers.

These unfair competitive behaviors are carried out by businesses to approach the customer market and gain profits as quickly as possible. This type of behavior does not encourage genuine businesses to strive for development, but on the contrary, it will eliminate the motivation for healthy competition and a fair playing field among businesses.

1.2.2. Damages in unfair competition

Damage is a basic characteristic of unfair competition and is the point of distinction between unfair competition and anti-competitive agreements. However, determining damage to distinguish between damage caused by legal competition and damage caused by unfair competition is not simple. Because businesses have the right to take all measures that are not prohibited by law to compete and attract customers to their side, when the competitor loses a certain number of customers (ie there is damage), there is no basis for filing a lawsuit. However, if the damage is caused by unfair competition, directly affecting the competitor, the damaged party has the right to file a lawsuit to protect its legitimate rights.

Sanctions against unfair competition are not primarily aimed at punishing the violator, but primarily at compensating the injured party for the losses caused by the violation. Therefore, determining damages is a mandatory and necessary requirement for the injured party to have

basis for claiming compensation and competent authority to apply compensation sanctions.

The Supreme Court of Justice of France on July 19, 1976 affirmed: "Unfair competition requires not only proving the defendant's fault but also proving the damage suffered by the plaintiff."

Damages in unfair competition are similar to those in civil law, which can be material damage (specific and determined by assets), or mental damage. Such damage must be proven to be real and have actually occurred. If it is material damage, the evidence will be shown through the loss of revenue due to the loss of a number of regular customers; the costs to remedy and limit direct damage or commercial damage (such as loss of brand). Mental damage is shown through the loss of the business's reputation, the business is inhibited in the restraint of unfair competition acts of the violating party. The level of compensation in such cases will be considered and decided by the competent authority.

Assessing damages is a very complicated issue. The injured party must provide sufficient evidence to prove the negative impacts of unfair competition that the competitor has carried out and caused disadvantages to itself in terms of profit, reduced competitiveness, attracting customers, etc.

The evidence stipulated in the Law on Competition of Vietnam must be "what is real". That requires the evidence to be objective, not falsified; to be legal, collected in accordance with the procedures prescribed by law; and to be related to the unfair competition behavior of competitors.

1.2.3. Causal relationship between unfair competition and damage

In sciences in general and legal science in particular, causality is the inevitable, natural relationship between a number of things and phenomena.

phenomenon in which these things or phenomena are the causes and other things or phenomena are the effects.

The causal relationship between the violation and the damage is a direct, intrinsic relationship, not a subjective inference. Unfair competition is the act that occurs first, the direct damage caused by that act occurs later. The party committing unfair competition is only required to carry out legal responsibility and corresponding sanctions when causing certain damage to a competitor, the direct cause of which is its unfair competition.

Not all competitive acts that cause damage to competitors are subject to sanctions. On the other hand, there are also damages that arise from many different causes. Therefore, when determining the damage caused by unfair competitive acts, it must be placed in a causal relationship with that unfair competitive act.

1.2.4. Errors in unfair competition

The purpose of the Competition Law is to protect competitive agents and consumers. In addition, the Competition Law also aims to protect employees in enterprises, ensure the normal operation of the market and social interests.

Fault is defined as the psychological state of the person who commits the violation, reflecting that person's perception of the behavior and consequences of the behavior they perform. Determining fault in competition often has to rely on professional practices. Competitive behavior is considered faulty and unhealthy when it violates professional practices, breaking the equality and fairness in competitive relations in the market.

The Korean Fair Trade Act also stipulates: "No business or trade association liable to compensate for damages may exempt itself from such liability by

"prove that he did not intentionally or only caused the act that caused harm to others due to negligence" [6. Article 56]. That means that all evidence must be proven, including the plaintiff and the infringing party. Otherwise, the lawsuit will lack a valid basis for a decision. Faults in unfair competition can be intentional or unintentional.

According to Vietnamese law: "A person who fails to perform or improperly performs a civil obligation shall bear civil liability when there is an intentional or unintentional fault, unless otherwise agreed or otherwise provided by law. Intentionally causing damage is a case where one is fully aware that one's actions cause damage to others but still performs them and wishes or, although not wishing, allows the damage to occur. Unintentionally causing damage is a case where a person does not foresee that his or her actions are likely to cause damage, although he or she must know or could know that the damage will occur, or foresees that his or her actions are likely to cause damage but believes that the damage will not occur or can be prevented" [43. Article 309]. Usually, unfair competition is committed due to intentional fault.

Legal liability and sanctions are applied to the subject who commits a violation at fault to have a deterrent, preventive and educational effect. Unlike the fault in contractual liability (determined as a presumed fault), the fault in unfair competition does not rely on the principle of presumed responsibility to handle. In competition, damage may occur to a business due to the competitive behavior of one or more other businesses, but if that damage is completely caused by legal competitive behavior, there is no basis for filing a lawsuit. If based only on the loss of a number of regular customers and the decrease in revenue of the business due to the competitive behavior of the opponent, it cannot be concluded that it is an act of unfair competition. Therefore, to apply sanctions to a competing subject, the competitive behavior of that subject must be at fault and satisfy the conditions of unfair competition.

1.3. FORMS OF SANCTIONS FOR UNFAIR COMPETITION CONDUCT

Unfair competition acts, regardless of the form, cause damage to legitimate interests protected by law and the subjects committing the violation will be subject to corresponding legal liability. Competition acts are carried out in business and commercial activities, therefore, committing unfair competition acts is also considered a violation of commercial law. Article 321 of the 2005 Commercial Law of Vietnam stipulates the forms of handling violations of commercial law. Accordingly, depending on the nature, level of violation and consequences, organizations and individuals will be handled in one of the following forms:

- Penalties according to the provisions of law on handling administrative violations;

- In case the violation has sufficient elements to constitute a crime, the violator shall be prosecuted for criminal liability according to the provisions of law;

- In case the violation causes damage to the interests of the State, the legitimate rights and interests of organizations and individuals, compensation must be paid according to the provisions of law.

Thus, an act of unfair competition may be subject to administrative sanctions, criminal sanctions or civil sanctions depending on each specific case as prescribed by law.

1.3.1. Administrative sanctions

According to the traditional concept, legal responsibility is understood as the State's response to violations of the law and violations of the law are the basis of legal responsibility. The concept of administrative responsibility is considered in the narrow sense of legal responsibility. Administrative responsibility is the consequence of administrative violations, expressed in the application by state agencies or competent persons of administrative sanctions to the subject of administrative violations.

according to the procedures prescribed by the Administrative Law. It is the negative reaction of the State towards the person committing the administrative violation, resulting in the subject of the administrative violation having to bear adverse consequences, material and spiritual damages compared to their original situation.

Administrative sanctions are not identical to administrative responsibility. Administrative sanctions are only a part of administrative law. In which, the formal expression is the coercive administrative responsibility measures applied to the violator; in terms of content, it is the negative assessment of the State and society towards the violation and the person who committed that violation.

According to the provisions of the Law on Competition of Vietnam, the forms of sanctions for handling violations of unfair competition are mainly administrative sanctions, stipulated in legal regulations to punish and remedy the consequences caused by violations (Article 117). These forms of handling have been detailed in Decree 120/2005/ND-CP dated September 30, 2005 of the Government, including:

- Main penalty: Fine up to 100 million VND.

- Additional penalties include: Confiscation of exhibits and means used to commit the violation, including confiscation of all profits gained from committing the violation.

In addition to the above penalties, violators may also be subject to remedial measures: Forced public correction.

In the laws of some countries, the handling of competition violations mainly stipulates fines. These provisions can be seen in the competition laws of some countries such as: The Fair Trade Law and the Monopoly Regulations of Korea in 1980 (fines not exceeding 2% of the enterprise's revenue; in case of non-existent revenue, the fine is not exceeding 500 million won); The Commercial Competition Law of Thailand in 1999 (fines not exceeding 6 million baht)

For traders who engage in unfair and uncontrolled competition, causing damage, hindering or restricting the activities of other traders, preventing other traders from doing business or forcing other traders to stop doing business; in case of repeated violations, the fine will be doubled; a fine of not more than 100,000 baht will be imposed on a person who discloses information or data related to a trader or the trader's activities). The provision on fines is also found in many legal provisions of the Law Against Unfair Competition of the Federal Republic of Germany.

In addition to fines, other sanctions are also applied to violators such as: suspending, suspending or adjusting activities (in the Thai Commercial Competition Law); terminating the violation, restoring the status quo as before the violation (in the Turkish Competition Law); suspending the behavior, removing provisions related to unfair competition from the contract, issuing a notice to adjust the advertising activity in violation, publicly announcing the violation (in the Korean Fair Trade Law and monopoly regulations)...

It can be seen that the administrative sanctions for unfair competition acts under Vietnamese law also have similarities with the competition laws of many countries in the world. These sanctions have directly affected the interests and reputation of enterprises, contributing to deterring and preventing business entities from intending to commit unfair competition acts to gain illegal profits. However, the specific form and level of application for each violation are different in the laws of each country.

1.3.2. Criminal sanctions

Criminal sanctions are a part of criminal law, which stipulates the type and level of punishment for crimes. Based on the assessment

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