Cartel conduct criminalised in Vietnam from July 2016

HANOI - From July 1, 2016 onwards, Vietnam’s New Penal Code criminalises cartel conduct and holds both individuals and commercial legal entities liable. For cartel conduct, the main difference between violations of Competition Law and Criminal Law is that the New Penal Code requires additional elements to be proven – that is, gaining from illicit benefits of VND500 million or more (approx. US$22,841)1 or causing losses to other persons of VND 1 billion or more (approx. US$45,683).

In a Client Alert, lawyers Baker & McKenzie say that under Article 217 of the New Penal Code, those who directly participate in or carry out the following anti-competitive agreements may be subject to criminal liabilities:
• Agreements on price fixing, market allocation, output fixing, etc., when the parties’ combined market share is 30% or more of the relevant market; or
• Other agreements, comprising of the boycotting of another competitor or the preventing of a potential competitor from entering into the market, regardless of the parties’ market share.
The applicable sanctions for this offence are severe. Notably, penalties for individuals include a fine of up to VND 3 billion (approx. US$137,048) or five years imprisonment plus a monetary fine and a ban on holding positions or practising certain activities of up to five years.
For commercial legal persons, applicable penalties include a fine of up to VND 5 billion (approx. US$228,414) or suspension of business of up to two years plus a monetary fine and a ban on participating in certain businesses or raising capital of up to three years.
On a related note, under the New Penal Code, bid rigging (which is an anti-competitive agreement under the Competition Law) will be treated as a violation of Bidding Law. Article 222 of the New Penal Code on violations of bidding regulations causing serious consequences, applicable to individuals only, covers the act of collusion in bidding, punishable by criminal penalties of up to 20 years imprisonment. www.bakermckenzie.com (ATI).