WHAT IS DUMPING? HOW ENTERPRISES WILL BE PENALIZED FOR DUMPING?

Dumping is a fundamental concept of international trade. Products sold into a market at prices below cost of production are considered dumping and may be subject to investigations and sanctions. So what is dumping? Let's find out with OTIS LAWYERS in the article below!

What is dumping?

According to the provisions of Article 2, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade - GATT (1994) (ADP Agreement), a number of dumped products are construed as follows: A product is considered dumped when it is placed in the commerce of another country at less than its normal value.

Thus, it can be understood that dumping is the act of selling at a price that is not the actual value of the goods. A commodity is exported to another market (Import market) and sold at a selling price below the cost of production, or the export price is lower than the domestic price but higher than the cost of production; If the export price is lower than the lowest price being sold on the world market, it is considered dumping.

Sanctions for dumping enterprises

Where dumping is considered an abuse of a dominant market position

According to the provisions of Article 8 of Decree 75/2019/ND-CP, specific acts and sanctioning levels are as follows:

Firstly, an enterprise that commits one of the following acts shall be subject to a fine ranging from 01% to 10% of the total turnover in the relevant market in the fiscal year immediately preceding the year in which enterprises dominated the market or used to be in a dominant group committed violations

• Selling goods or providing services at a price below full cost leading to or likely to lead to the exclusion of competitors;
• Enterprises impose unreasonable purchase and sale prices of goods or services or fix minimum resale prices, causing or likely to cause damage to customers;
• Obstructing technical and technological development, restricting production and distribution of goods and services, limiting markets, causing or potentially causing damage to customers;
• Enterprises apply different commercial conditions in similar transactions that lead to or are likely to lead to preventing the participation of other enterprises, restricting market expansion or eliminating other enterprises;
• When entering into a contract to buy and sell goods or services, the enterprise imposes conditions on another enterprise or requires another enterprise, the customer accepts obligations that are not directly related to the subject matter of the contract. to or is likely to prevent another enterprise from entering, expanding the market or eliminating another enterprise;
• Performing acts that prevent other enterprises from entering or expanding the market;
• Enterprises that abuse their dominant market position are prohibited under other laws.

Secondly, the additional form of sanction for enterprises abused their dominant market position, the profits earned from the commission of violations will be confiscated.

Thirdly, remedial measures to enterprises committing the above acts, including: Forcing to remove illegal terms from contracts, agreements or business transactions; Forced restructuring of enterprises that abuse their dominant market position.

The case of dumping is considered an abuse of a monopoly position

Pursuant to the provisions of Article 9 of Decree 75/2019/ND-CP, the specific sanction for abuse of monopoly position when there is an act of dumping:

Firstly, an enterprise that commits one of the following abusive acts shall be subject to a fine ranging from 01% to 10% of the total turnover in the relevant market in the fiscal year immediately preceding the year in which the enterprise dominated position commits its violations for the following abuses:

– Acts such as imposing unreasonable buying and selling prices of goods or services or fixing minimum resale prices that cause or are likely to cause damage to customers; restricting the production and distribution of goods and services, limiting the market, obstructing the development of techniques or technologies that cause or are likely to cause damage to customers; applying different commercial terms in similar transactions that lead to or are likely to prevent another enterprise from entering, expanding the market or eliminating another enterprise; imposing conditions when entering into a contract to buy or sell goods or services, or requiring another enterprise, customers to accept obligations that are not directly related to the subject of the contract leading to or is likely to lead to prevent other enterprises from entering, expanding the market or eliminating other enterprises; prevent other enterprises from entering or expanding the market;

– Imposing conditions that are detrimental to customers;

– Taking advantage of the exclusive position of their business to unilaterally change or cancel the signed contract without a legitimate reason;

– The enterprise has acts of abusing the monopoly position prohibited by other laws.

Secondly, the enterprise must be subject to an additional sanction to confiscate the profit earned from the performance of the violation.

Thirdly, remedial measures applied to violating enterprises include:

- Forcing enterprises to restructure the abuse of monopoly positions;

- Forcing enterprises to remove illegal terms from contracts, agreements or business transactions;

- Forcing enterprises to restore technical and technological development conditions that enterprises have hindered;

– Forcing enterprises to remove unfavorable conditions imposed on customers;

- Forcing the enterprise to restore the terms of the contract, the contract has been changed or canceled without a legitimate reason.

In case the act of selling goods or providing services below the full cost in order to compete unfairly

Pursuant to the provisions of Article 21 of Decree No. 75/2019/ND-CP, the level of sanction for selling goods or providing services below full cost is as follows:

- For acts of selling goods or providing services below the full cost, leading to or potentially leading to the exclusion of other enterprises trading in that type of goods or services: A fine ranging from 800,000,000 VND to 1,000,000,000 VND shall be imposed

– For acts of violation specified in Clause 1 of this Article in case the violation is committed in two or more provinces or centrally run cities: A fine ranging from 1600,000,000 VND to 2,000,000,000 VND

In addition, dumping enterprises may also be subject to additional sanctions:

- Confiscation of material evidences and vehicles used by enterprises to commit administrative violations of competition;

- Confiscation of profits earned from the enterprise's conduct of violations.

Above are the legal provisions on dumping that OTIS LAWYERS sends to readers. It is hoped that the article will provide legal knowledge on dumping and sanctions for enterprises whose dumping acts negatively affect the market.

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