Vietnam Legal Alert: New Penal Code Enters Into Force

In 2015, Vietnam’s National Assembly approved Penal Code No. 100/2015/QH13 dated 27 November 2015, (“Penal Code”). The Penal Code was due to take effect on 1 July 2016 and included new offences that criminalized certain anti-competitive practices that would otherwise be dealt with through the Competition Law. The Penal Code has important implications for participants in anti-competitive agreements or individuals engaged in bid-rigging activities, including penalties ranging up to potential imprisonment. It is still not clear how these new criminal competition offences will be interpreted or applied; particularly where there is overlap with practices that also infringe the Competition Law.

On 30 June 2016, the National Assembly voted to delay implementation of the Penal Code while it considered further amendments.

More recently, the National Assembly adopted Resolution No. 41/2017/QH14 dated 20 June 2017 which made the Penal Code effective as of 1 January 2018. We set out the relevant provisions below and note that there have been almost no amendments to the described Penal Code provisions since their initial introduction other than clarifying the application of bid-rigging provisions to situations where administrative sanctions have already been imposed.

Article 217 of the Penal Code penalizes parties that reach certain forms of agreements where such conduct results in illicit profits of VND 500 million to 3 billion (approximately USD 22,000 to 132,000) or damages of VND 1 to 5 billion (approximately USD 44,000 to 220,000). The prohibited subject matters of these agreements are:

  • Preventing participation or development of other businesses in a market;
  • Removing a non-party from a market; and
  • Where the parties to the agreement have a combined market share of at least 30%:

  1. Price fixing, directly or indirectly;
  2. Allocating markets or supplies;
  3. Limiting or controlling volume;
  4. Limiting technology development or investment; 
  5. Imposing obligations not directly related to the subject matter of the contract.

Potential penalties for engaging in such conduct include fines from VND 200 million to 1 billion (approximately USD 9,000 to 44,000), non-custodial reform for up to two years, or a term of imprisonment from three months to two years. The potential penalties may be increased to a fine of VND 1 to 3 billion (approximately USD 44,000 to 132,000) and a term of imprisonment of one to five years where any of the following aggravating circumstances apply:

  • The offense has been committed on multiple occasions;
  • Sophisticated deceptions are used;
  • An abuse of dominance or monopoly is involved;
  • Illicit profits of at least VND 5 billion (approximately USD 220,000); 
  • Damages caused amounting to at least VND 3 billion (approximately USD 132,000).

Sanctioned individuals may be fined from VND 50 to 200 million (approximately USD 2,200 to 9,000) and may also be prohibited from holding certain positions or practicing certain occupations from one to five years.

Legal entities may be penalized as follows:

  • If there are no aggravating circumstances, from VND 1 to 3 billion (approximately USD 44,000 to 132,000);
  • If the aggravating circumstances described above apply, from VND 3 to 5 billion (approximately USD 132,000 to 220,000) and potential suspension from operations for a period from six months to two years;
  • Additionally, fines from VND 100 to 500 million (approximately USD 4,400 to 22,000) may be imposed or the entity may be banned from operating in certain sectors or from raising capital for one to three years.

Bid-rigging is addressed in Article 222 of the Penal Code. The Penal Code penalizes certain conduct by individuals where damages are caused from VND 100 to under VND 300 million (approximately USD 4,400 to 13,200), if damages are under VND 100 million (approximately USD 4,400), while the individual has incurred a disciplinary penalty or is facing an administrative penalty for the same offence. The Penal Code does not appear to address bid-rigging by legal entities. The prohibited conduct includes:

  • Illegally interfering with bidding activities;
  • Colluding with other bidders;
  • Committing bidding fraud;
  • Obstructing bidding activities;
  • Violating regulatory or legal protections on bidding fairness and transparency;
  • Organizing contractor selection before capital sources are determined that result in an inability to pay contractors; 
  • Illegally transferring the bidding contract.

The potential penalty is a community sentence of up to three years, or a term of imprisonment of one to five years. However, if any of the following aggravating circumstances applies, the potential prison sentence increases to between three to twelve years:

  • The offence is committed for self-seeking purposes;
  • The offence is committed by an organized group;
  • The offence involves the abuse of the offender’s position or power;
  • The offence involves the use of deceitful methods;
  • The offence results in damage ranging from VND 300 million to under 1 billion (approximately USD 13,200 to 44,000).

If the infringing conduct causes damages of VND 1 billion (approximately USD 44,000) or more, the potential penalty increases to a term of imprisonment of ten to twenty years.

In addition to the above, a person convicted of bid-rigging may also be prohibited from holding certain positions or doing certain work for one to five years or have all or part of his property seized.

If you would like further information in regard to the above or would like to discuss these issues, please contact either Hoang Phong Anh ( or David Fruitman (

The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.

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