Is It Unhealthy Competition?

June 07, 2012

By Nguyen Tan

Disputes arose after a product image on the website of a company had been used for advertisement by its rival. Legal experts thought it was an act of unfair competition while the Department of Competition Management ruled that there was not sufficient evidence to conclude a violation.

Tien Tien Engineering-Construction-Trading Company (Tien Tien Co.) is a manufacturer and installer of steel buildings. In 2011, after discovering that two images of its products were used by Viet-My Industrial Company (Viet My Co.), a rival in the steel building industry, Tien Tien Company sent a letter to Viet My Co.,  requesting the latter to remove the images from its website, and Viet My did so. After that, however, Viet My continued using dozens of other Tien Tien’s images for the advertisement of the company’s products on its website.

Naturally, after seeing that this was unfair and possibly violating copywrite infringement law, Tien Tien took their case to the Department of Competition Management. After preliminary investigations, the agency suspended the investigation on the grounds of “insufficient evidence to conclude a violation of the Competition Law.” Tien Tien then appealed this decision. In its official response to Tien Tien, the Department of Competition Management on one hand confirmed Viet-My’s action as “non-violation,” but on the other hand reckoned that Viet-My’s action was not under its settlement authority. It suggested that Tien Tien “should contact other relevant authorities, i.e. journalism, publishing, information and media, intellectual property, advertisement and trading, for guidance.”

Unhealthy competition?

Vu Thi Ngoc Van, Head of the Trading Division of Tien Tien Co., said the images used on Viet-My’s website were pictures of Tien Tien products and construction works which were all taken by Tien Tien, and could be verified by its clients. Some of its works were An Bien Hospital, Ninh Thuan police office building, and a police training center.

Meanwhile, speaking to the Saigon Times, Nguyen Manh Thanh, general director of Viet-My Co., said that if Tien Tien wanted to have these images exclusive, they should have registered with the authorities. This was something the Department of Competition Management failed to clarify in its settlement.

Nevertheless, the exclusiveness of the images is not the dispute. The legal basis for Tien Tien’s complaint against Viet-My are articles 40 and 45 of the Competition Law on the prohibition of two unhealthy competition behaviours, i.e. “misleading information” and “advertisement leading to unfair competition.” According to Ngoc Van, the usage of the images has made a lot of Tien Tien’s customers confused. “For example, our toilet product is priced at VND29 million, but with this product’s image, Viet-My offers just VND23.8 million. Our customers are wondering why Viet-My offers a low price for the same product, and they do not know its product and ours are different,” explained Ngoc Van.

Most legal experts agree that the above act is one of unfair competition. However, it will be controversial to invoke articles 40 and 45 in this case. According to Dr. Nguyen Van Nam, a lawyer, it is good to cite either article. Unfortunately, Article 40 is not explicit enough, and there has not been any guidance from the Government yet. Also according to Dr. Nam, prohibition on “advertisement leading to unfair competition” under Article 40 does not make sense not comply with international practice. “Deceptive and misleading advertising is obviously an act of unfair competition and should be banned. Therefore, “advertisement leading to unfair competition” is unnecessary. It can be argued that “I make an advertisement to sell my product, not for any other purposes”, explained Dr. Nam.

Dr. Nguyen Anh Tuan of LCT Lawyers reckons this is misleading advertising, in violation of Article 45 of the Competition Law. Citing Article 40 is not appropriate because this article is limited within the scope of intellectual property.

Le Quang Vu, a lawyer from the Law Office for the Poor, shares the same opinion. He said that if a company uses images and designs of another company’s products on its own website for advertising purpose, it has deliberately misled information to customers, and can be deemed as “advertisement leading to unfair competition under Clause 3, Article 45 of the Competition Law.” Vu considered the Department of Competition Management’s decision unsatisfactory. Tien Tien Co. may appeal to the Ministry of Industry and Trade.