Pay special attention to the five "don'ts" when doing business in the EU

Firms doing business in the EU market need to strictly comply with the EU legal system, including competition law. Photo: Nguyen Thanh

The EU-Vietnam Free Trade Agreement (EVFTA) not only opens up opportunities to help Vietnam become an important "link" in the global supply chain, but also creates opportunities for Vietnamese businesses in the EU market.

However, firms doing business in the EU market need to strictly comply with the EU legal system (including competition law). Violations of competition law in the EU mean businesses could face legal risks, as well as financial losses to pursue if the case is investigated and tried in the EU.

The Department of Competition and Consumer Protection (Ministry of Industry and Trade) has issued a series of recommendations for Vietnamese businesses when doing business in the EU market.

The first is to develop rules when communicating with competitors. Enterprises require employees at all levels not to exchange information with their competitors such as: information related to sales in the EU market (ask competitors to participate in competition; the price of a certain item; discount or other content related to the price of the product that the enterprise is doing business in the EU).

Communicating with competitors about the products that your business is trading in the EU (for example, inventory in the EU market; production costs; resources or production processes).

Second, be wary of joining a trade association. Trade associations are one of the information channels to help businesses capture the market. However, acts of anti-competitive agreements often lurk under the activities of associations.

Therefore, when Vietnamese enterprises participate in associations in the EU market, they will be not allowed to perform acts such as exchanging any information related to prices and output during meetings with associations or meetings between members of the association.

Participate in surveys to find out whether members should exclude any business from the industry it is producing or doing business in the EU market.

The third is to develop rules when communicating with customers and product suppliers. In the relationship between the enterprise and its customer partners (distributors) or raw material suppliers, enterprises should not perform acts such as forcing distributors to comply with certain prices.

Talking to businesses at different stages (suppliers or distributors) about not dealing with a particular customer. For example, a Vietnamese enterprise requires a distributor in Paris, France, not to sell to customers from Lyon and vice versa.

"These acts may violate competition law if the competition authority proves to have a significant anti-competitive effect on the EU market," said a representative of the Department of Competition and Consumer Protection.

The fourth is to review contracts signed between enterprises and distributors or material suppliers in the EU market. For Vietnamese enterprises that have a dominant position in a certain market in the EU, enterprises are not allowed to perform acts if such acts cause harm to competition.

For example, imposing unreasonably high prices on the market; impose unreasonably different prices on buyers; or output restriction.

Enterprises need to review contracts between businesses and distributors or suppliers of raw materials in the EU market to remove terms that show signs of violating competition law.

Finally, the Department of Competition and Consumer Protection warns businesses about participating in the leniency program if they commit acts of anti-competitive agreements.

In case enterprises believe that they have unintentionally participated in anti-competitive agreements in the EU market, they should declare and participate in the leniency program under EU competition law to enjoy exemption from fines.