In brief

On 26 August 2020, the government released the new Decree No. 98/2020/ND-CP ("Decree 98"), which will replace Decrees Nos. 185/2013/ND-CP, 124/2015/ND-CP, 141/2018/ND-CP  and will come into force on 15 October 2020.  Decree 98, including four Chapters and 91 Articles, regulates the penalties for administrative violations in commercial activities, the production of and trading in counterfeit or banned goods and protection of consumer rights.


Contents

  1. Key takeaways
  2. In Depth
    1. “Intellectual property counterfeit goods” is no longer listed in the definition of "counterfeit goods"
    2. Restructured the provisions on the administrative penalties and remedial measures and increase the amount of some monetary penalties
    3. New provisions related to several industries
      1. Provisions to prevent the use of beer and alcoholic beverages
      2. Provisions related to the tobacco industry
      3. Provisions related to e-commerce sites
  3. What to expect

Key takeaways

Decree 98 generates the following key changes:

  • Changed the definition of "counterfeit goods";
  • Restructured the provisions on the administrative penalties and remedial measures and updated the amount of monetary penalty;
  • New provisions related to several industries, namely: (i) beer and alcoholic beverages; (ii) tobacco industry; and (iii) e-commerce sites.    

In Depth

“Intellectual property counterfeit goods” is no longer listed in the definition of "counterfeit goods"

According to Article 3.7 of Decree 98, the definition of “counterfeit goods” has removed “intellectual property counterfeit goods” as stipulated in Article 213 of the IP Law from the list, compared to the previous Decree 185/2013/ND-CP.  This removal is reasonable due to the following grounds:

  • The previous Decree No. 185/2013/ND-CP only mentions the term "intellectual property counterfeit goods" once in the definition of “counterfeit goods” but does not provide any penalties for the violations related to those goods.
  • Meanwhile, the penalties for those violations are already stipulated in Decree 99/2013/ND-CP on sanctioning of administrative violations in industrial property.

Thus, this change is in compliance with existing Vietnamese laws, which ensures the consistency in the regulations on sanctioning of administrative violations in the field of intellectual property and the regulations of the Criminal Code 2015 (amended and supplemented 2017).

Restructured the provisions on the administrative penalties and remedial measures and increase the amount of some monetary penalties

The provision of the administrative penalties and remedial measures in the Decree are more concentrated and organized in Article 4. 

The maximum monetary fine levels are specifically stipulated as below:

  • in the field of commerce and protection of consumer rights: VND 100,000,000 for individuals or VND 200,000,000 for organizations;
  • in the field of production of and trading in counterfeit and banned goods: VND 200,000,000 for individuals and VND 400,000,000 for organizations.

Decree 98 raises the monetary penalty amount to a number of violations, including but not limited to the following:

  • Individuals who trade in counterfeit product stickers, labels or packaging, will be fined, with amounts ranging from VND 300,000 to VND 30 million, while the current rates of fines vary, with amounts ranging from VND 200,000 to VND 20 million, depending on the quantity of fake stamps.
  •  As to the act of trading illegally imported goods, the Decree abandons the warning penalty and increases the amount of fines in cases that illegally imported goods valued lower than VND 3,000,000 (with amounts ranging from VND 200,000 to VND 500,000 minimum and from VND 600,000 to VND 1,000,000 maximum).
  • Regarding violations related to multilevel marketing operation, the Decree also abandons the warning penalty and increases the amount of fines applied to both individuals and organizations (e.g.,  an act of failure to present the card on participation in multilevel marketing before introducing goods or marketing goods is subject to a fine that ranges from VND 3,000,000 to VND 5,000,000 according to Article 73.1(b) of the new Decree while the current fine ranges from VND 500,000 to VND 1,000,000).

New provisions related to several industries

Provisions to prevent the use of beer and alcoholic beverages

This Decree includes a number of new regulations related to beer while the previous decree only mentioned the violations as regards alcohol.  For instance, Article 30.1 of the Decree put a fine of VND 500,000 - VND 1,000,000 to individuals selling beer and alcohol to persons under 18 years old.

This policy is in line with the Law on Prevention and Control of Harmful Effects of Alcoholic Beverages No. 44/2019/QH14.

Provisions related to the tobacco industry

The section related to the tobacco industry has been reorganized, compared to the previous Decree 185/2013/ND-CP.  Specifically, Articles 22 to 25 of the old decree have been removed and the corresponding sanctions have been incorporated and modified in Article 6 and Article 8 of the new Decree 98.

Notably, Article 8 of Decree 98 regulates a fine ranging from VND 1,000,000 to VND 3,000,000 for the act of trading illegally imported cigarettes having quantities of under 50 packs in lieu of the warning sanction and a fine of VND 500,000 to VND 5,000,000 according to Article 25 of the Decree No. 185/2013/ND-CP, amended and supplemented by Decree 124/2015/ND-CP.

Provisions related to e-commerce sites

In general, the modification of provisions related to e-commerce sites concentrates on the change of violation description, which seeks to ensure the applicability and compliance with the provisions of Law on Invest 2014, Law on Enterprise and Decree No. 52/2013/ND-CP on e-commerce sites and other documents.

Thus, the amount of monetary fine seems unchanged, except for several violations. For example, the amount of fine for violation on information and transaction on e-commerce websites remained the same as with the previous decree, but the new Decree adds more acts to be considered violations, i.e., providing information, trading counterfeits, goods, services infringing IP rights, banned goods, services on the internet (Article 63.3(b)).

Notably, the violation as regards the provision of e-commerce services in Article 64 of the new Decree is more specifically regulated and the amount of fine is divided into smaller ranges.

In addition, Decree 98 also provides a new remedial measure, which is the forcible removal of mobile application from application stores for several acts of violations regarding e-commerce operations.

What to expect

In general, Decree 98 provides more tightening grounds and a higher amount of fines applied to the violations in commercial activities, the production of and trading in counterfeit or banned goods.  Thus, this is a firm basis which the authorities can use to deal with the violations in the abovementioned fields, as well as to enhance consumer rights protection.