Vietnam: Is the act of defaming competitors a violation of competition law?

Every business wants to have a high position in the market for the products they sell. They think of all kinds of ways, from improving product quality, customer treatment, to continuously enhancing the good image of the business through charitable activities. However, besides such positive efforts, it is impossible not to have "unclear" actions.

In fact, the more fierce the competition in the market, the more likely it is that unfair competitive acts will occur. Especially according to recent information, insurance companies "defame" each other to lower the reputation of their opponents. This act is considered an act of defamation of other businesses, which is one of the unfair competitive practices specified in Article 39 of the Law on Competition 2004 of Vietnam.

Article 39. Unfair competitive practices

Unfair competitive practices in this Law comprise:

1. Misleading instructions;

2. Infringement of business secrets;

3. Coercion in business;

4. Defamation of another enterprise;

5. Causing disruption to the business activities of another enterprise;

6. Advertisement aimed at unfair competition;

7. Promotion aimed at unfair competition;

8. Discrimination by an association;

9. Illegal multi-level selling of goods;

10. Other unfair competitive practices stipulated by the Government determined in accordance with the criteria stipulated in clause 4 of article 3 of this Law.

Acts of defamation of other enterprises, that is, direct or indirect acts of providing untruthful information, adversely affecting the reputation, financial status and business operations of other enterprises. This information may be false, unconfirmed content about product quality, about the financial situation, about the reputation and ethics of the manager, and about the stocks of direct competitors.

Decree No. 71/2014/NĐ-CP of Vietnam’s Government regulates administrative penalties for vilification of other enterprises, specifically as follows:

Any enterprise shall be fined from VND 50,000,000 to VND 100,000,000 when:

- It vilifies other enterprises by directly giving incorrect information which badly affects the reputation, financial conditions and business activities of other enterprises;

- It vilifies other enterprises by indirectly giving incorrect information which badly affects the reputation, financial conditions and business activities of other enterprises in case such violation is committed in more than one province.

The violation that an enterprise vilifies other enterprises by directly giving incorrect information which badly affects the reputation, financial conditions and business activities of other enterprises shall be fined from VND 100,000,000 to VND 150,000,000 if it is committed in more than one province.

Thus, if the act of “defaming” distorts customers' thoughts about their competitors, it is considered an unfair competitive practice and shall be fined up to VND 150,000,000 according to the provisions of competition law of Vietnam.

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