Sources of Law on Sanctions for Unfair Competition

In principle, when referring to the basis of administrative responsibility, it is necessary to distinguish administrative violations from crimes as well as the transformation of administrative violations into crimes in current positive law. From there, it is possible to determine whether administrative sanctions or criminal sanctions are applied to violations.

Administrative violations and crimes are both acts that violate the law. However, determining the boundary between two completely different events and phenomena can be relatively easy, but the most difficult and complicated thing is determining the boundary between things and phenomena that have similar external signs. To be able to correctly identify and distinguish one from the other, it is necessary to find elements belonging to the nature of the boundary behavior to distinguish them in perception as well as in the practice of law application.

Accordingly, the distinction between administrative violations and crimes is based on the following characteristics:

Firstly, in terms of content, although administrative violations and crimes have the same nature of being dangerous to society, there is still a fundamental and most important difference between them, which is the level of danger to society. Thus, the difference in the level of danger to society of the behavior is the boundary that distinguishes administrative violations from crimes.

Second, in terms of the form of regulation, crimes are only regulated in the Criminal Code issued by the highest authority - the National Assembly, while administrative violations are regulated by the Government - the executive body. However, this distinction is only relative, because the regulation of administrative violations or crimes in a certain type of legal document can completely change depending on the viewpoint and legislative level of the State in each period.

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Third, the authority to handle and the order and procedures for handling administrative violations and crimes are also different. Accordingly, the authority to handle administrative violations

According to the current Ordinance on Handling of Administrative Violations, the authority to handle violations of unfair competition belongs to many agencies and competent persons, mainly state administrative management agencies. In the field of handling violations of unfair competition, the authority belongs to the Competition Management Agency. The handling of administrative violations by the Court is only implemented within a very narrow scope. The handling of offenders is assigned to the sole agency, the Court.

Correspondingly, the order and procedures for handling administrative violations and crimes are also different in that the offender is prosecuted in court according to judicial proceedings. The procedure for handling administrative violations is mostly unilateral power from the executive agency, although the law stipulates the right to complain and denounce of the subjects being handled for administrative violations, and the right to file a lawsuit in court according to the provisions of Section 7, Chapter V of the Competition Law 2004. This stems from the fact that administrative sanctions are less severe than criminal sanctions. Administrative sanctions are more educational and preventative than punitive. Meanwhile, criminal sanctions mostly include measures to restrict or deprive the offender of his or her freedom.

The practice of law enforcement shows that in many cases, the boundary between administrative violations and crimes is very fragile and beyond that limit, administrative violations can be transformed into crimes. Therefore, the question is, on what basis can administrative violations be transformed into crimes?

It can be seen that the social danger of an act is determined by socio-economic conditions and will change when there are changes due to those conditions. Therefore, the transformation of an administrative violation into a crime can only take place on the basis of a change in the quality (nature, importance) of the violated social relations in a more complex and serious direction.

Accordingly, the transformation of administrative violations into crimes is associated with the adjustment in the State's criminal policy towards criminalizing a number of illegal acts to meet the requirements and demands of the practice of fighting and preventing crime in the new situation.

The transformation from administrative violations into crimes only occurs in groups of subjects protected by criminal law, which are: social relations in the field of protecting citizens' freedom and democracy; ownership relations; marriage - family; economic management order; environment; drug prevention; public safety and order and administrative management order.

Unlike crimes, the objective aspect of administrative violations mostly does not require the occurrence of damaging consequences as well as the relationship between the act and the consequences. In other words, administrative violations mainly only constitute the form which is sufficient basis for applying handling measures to violators. Based on this characteristic, lawmakers have used a series of specific criteria to transform administrative violations into crimes such as regulations on signs of consequences or value of property appropriated, quantity of violated goods, etc. Thus, the same act of violating social relations of the same nature, but if the violation is the first time or the act has not caused serious consequences, it is only considered an administrative violation, but if the violation is repeated or recidivism, it will be considered a crime.

For unfair competition, there is no transformation between administrative violations and crimes as the theory mentioned above. Consequences are not a prerequisite for determining the application of administrative sanctions or criminal sanctions, because damage is always a mandatory sign in determining unfair competition. The dangerous nature of the behavior is not based on the analysis of the importance of the social relationship that the behavior violates, but on the citations of the Law. If the competitive behaviors are regulated in Article 39 of the Competition Law, the main sanctions are applied.

Administrative sanctions are prescribed in Article 117. If the act of unfair competition shows signs of constituting a crime prescribed in Articles 156, 157, 158, 159, 162, 168, 170, 171, 181a, 181b, 181c of the Penal Code, the corresponding criminal sanctions shall be applied, according to criminal proceedings.

Sanctions of material liability can often be applied concurrently with other sanctions. Article 117 of the Law on Competition of Vietnam stipulates: "Organizations and individuals who violate the law on competition, causing damage to the interests of the State, the legitimate rights and interests of other organizations and individuals, must compensate for the damage according to the provisions of law". Thus, regardless of whether the unfair competition act that the enterprise has committed will be subject to administrative or criminal sanctions, as long as that act causes damage to another entity, it must be subject to civil liability. That is, the sanction of compensation for damage can be applied concurrently with administrative sanctions or criminal sanctions.

The laws of other countries also have similar provisions. Article 51 of the Thai Commercial Competition Law stipulates: Anyone who violates the provisions of Article 29 (i.e., conducts activities that are not free and unequal in competition, conducts activities that cause damage, obstruct or restrict the activities of other traders, etc.) shall be subject to criminal sanctions (imprisonment for a term not exceeding 3 years or a fine not exceeding 6 million baht or both). However, this does not limit the right of the injured party to claim compensation for damages:

A person who has suffered damage due to violations of Article 29 has the right to file a complaint for compensation for damage from the violator. The consumer protection board or an association under the law governing consumer protection has the right to file a complaint for compensation for damage on behalf of the customer or the members of the association [7].

The Korean Fair Trade Act and Monopoly Regulations provide:

The Fair Trade Commission may impose a fine on any business engaging in unfair business practices, and such fine shall not exceed 2% of the business's turnover as set forth in the Presidential Decree; however, in cases where turnover does not exist, the Fair Trade Commission may impose a fine of not more than 500 million won [6. Article 24-2].‌

Thus, in case of violation of regulations on fair business, the sanction will be a fine. However, regarding the liability for compensation for damages, the law stipulates that there is no restriction on the right to claim compensation of the violated person:

1. A business or trade association that violates this Act and thereby causes damage to any party shall be liable to compensate the injured party.

2. No enterprise or trade association liable to pay damages under paragraph 1 may exempt itself from such liability by proving that it did not intentionally cause or was negligent in causing damage to another person [6. Article 56].

Thus, the laws of the countries have similarities in that the provisions on civil compensation sanctions are relatively independent from administrative and criminal sanctions.

Chapter 2

STATUS OF VIETNAMESE LAW ON SANCTIONS

FOR UNFAIR COMPETITION CONDUCT

2.1. SOURCES OF LAW ON SANCTIONS AGAINST UNFAIR COMPETITION

The source of law on sanctions for unfair competition is legal documents containing regulations on sanctions for unfair competition. Accordingly, sanctions for unfair competition in current law are stipulated in the following legal documents.

2.1.1. Competition Law

Stemming from the need to control unfair competition, create a legal framework for business practices, ensure fair and equal competition; protect the legitimate business rights of enterprises; create similarities between Vietnamese law and international law in the integration process, the Competition Law was passed by the National Assembly on December 3, 2004 and took effect on July 1, 2005.

The Competition Law has approached the negative side of the competition issue. That is, the law does not regulate positive (healthy) competition behaviors, but on the contrary, the law protects healthy competition by prohibiting unfair competition behaviors, in accordance with the principle that "business entities are allowed to do what the law does not prohibit".

Thus, only those acts that are defined as unfair competition by the Competition Law will the subject performing the act be subject to corresponding forms of legal responsibility. The Competition Law has provisions prohibiting violations, listing and describing prohibited acts.

guess; and prescribes procedural rules and measures for handling violations. Therefore, the investigation and handling of cases related to unfair competition and the application of sanctions for violations must comply with the order, procedures and authority prescribed by the Competition Law.

Competition occurs in all areas of the market economy, so regulations related to unfair competition can appear in many different areas of law (Commercial Law, consumer protection law, Intellectual Property Law, regulations in specific areas such as advertising and promotion law, etc., and in different industries such as post, telecommunications, electricity, insurance, banking, etc.). The application of sanctions against unfair competition must be placed in the relationship between the provisions of the Competition Law and relevant legal documents. However, in case of conflict between the Competition Law and other areas of law, the Competition Law shall be given priority. Thus, the Competition Law is a source of general principles, regulating competition relations as well as the application of sanctions for unfair competition acts.

2.1.2. Decree on handling administrative violations

Competition theory has shown that a competition case, regardless of the subject involved, is within the scope of economic management of the State and is a function of the State. Therefore, handling competition violations is an activity that is essentially a process of implementing the State's regulatory function for the competitive market. Measures for handling violations are mainly administrative in nature, and the handling procedures are also specific. The State agency that conducts procedures for handling unfair competition is an agency of the executive apparatus (Competition Management Agency); the procedures are based on the principles of judicial proceedings (burden of proof, right to appeal, etc.).

Sanctions for unfair competition are basically stipulated in the Competition Law, in addition, the Ordinance on Handling of Administrative Violations also has related provisions. These are specific provisions on the forms of sanctions, specific fines for violations in different fields, remedial measures as well as procedures for applying sanctions to violators. The Ordinance also stipulates that in specific cases, if unfair competition shows signs of crime, the competent authority must transfer the case file for criminal prosecution. Forms of handling violations of unfair competition have been specified in detail in Decree 120/2005/ND-CP dated September 30, 2005 of the Government, including fines, additional sanctions, and remedial measures.

2.1.3. Civil Code

As analyzed above, the common source regulating transaction relations and resolving disputes in the market is civil law. Unfair competition is primarily a field of "private law", directly infringing on the legitimate rights and interests of competing entities. As one of the sources of law on unfair competition, the compensation regime stipulated in the Civil Code has contributed to regulating violations of competition, protecting the legitimate rights of violated entities.

However, the Competition Law does not specifically regulate the issue of compensation for damages caused by unfair competition, but only cites civil law. Therefore, when damage occurs from unfair competition, the injured party has the right to protect its legitimate rights and interests through the right to claim compensation for damages, which is specifically regulated in the Civil Code.

2.1.4. Criminal Code

Practice shows that unfair competition not only harms competitors, but also damages consumers.

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