Phan Thi Viet Le[1]
Legal expert
Vietnam Satellite Digital Television Company Limited
Promotion means an act of commercial enhancement by a business entity aimed at boosting the sale of goods or the provision of services by giving specified benefits to customers[2]. On May 22, 2018, the Goverment issued Decree 81/2018/ND-CP on commercial enhancement activities (Decree 81). Decree 81 took effect on July 15, 2018. New provisions on promotion in Decree 81 compared to previous regulations aim to create favorable conditions for business entities.
Business entities that may carry out promotions include (i) goods producers or traders, (ii) service providers directly conducting promotions or via other business entities being distributors (wholesalers, retailers, agents, franchisees or other distributors as defined by law), (iii) business entities being promotion service providers and conducting promotions for goods and services of other business entities under agreements entered into with the latter[3].
There are eight forms of sales promotion, including (i) giving free sample goods and providing free sample services to customers for trial use, (ii) giving goods as gifts and providing free services, (iii) selling goods or providing services at prices lower than prior selling prices or service charges, applicable within the announced promotional period (a promotion in the form of price reduction), (iv) selling goods or providing services together with coupons for purchase of goods or for use of services, (v) selling goods or providing services together with contest forms for customers in order for some customers to be selected as winners of announced prizes (or other similar forms of holding a contest and awarding prizes), (vi) selling goods or providing services together with participation in a lucky draw program associated with purchase of goods or services and where winning prizes depend on luck in accordance with the rules and prizes announced by the business entity (lucky draw program), (vii) holding programs for regular customers in which prizes awarded to customers are based on the volume or value of goods or services purchased by the customers as shown on the customer cards or coupons recording the purchases or expressed in other forms, and (viii) promotion of goods or services involving the use of the Internet, electronic facilities or equipment, and application of information technology[4].
The period of a promotional program is unlimited except for promotion in the form of price reduction. The total time of a promotional program in a year for any type of goods or services must not exceed 120 days, except a promotional program in the form of price reduction within the scope of centralized promotion and commercial enhancement activities or programs permitted by the Prime Minister[5].
In order to carry out a promotional program, the value of items used to promote a unit of the promoted goods or services must not exceed 50 percent of the price of such unit prior to the promotion, except for promotions in the forms specified in Article 92.8 of the Commercial Law (organizing customer participation in cultural, artistic or entertainment programs or other events) or in the forms specified in Articles 9.2, 12, 13 and 14 of Decree 81. Likewise, the total value of goods and services used in a promotion must not exceed 50 percent of the total value of the promoted goods or services, except for promotions in the forms specified in Article 92.8 of the Commercial Law and Articles 8 and 9.2 of Decree 81.
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| Customers select discount clothes at Co.opmart__Photo: Internet |
However, when a promotional program is concentrated (held for an hour, a day, week or month or for a promotional season) the maximum value of goods and services used in the promotion may be 100 percent of the promoted ones. This maximum value provision also applies to promotional activities within the scope of commercial enhancement programs and activities permitted by the Prime Minister. Concentrated promotional programs mentioned above include (i) programs organized by state agencies (at the central or provincial level) within a specified timeframe (a number of hours or on a day, in a week, month or promotional season aimed at implementing targeted economic developmental policies of the country or locality); (ii) programs on the occasion of public holidays and Tet festival (within the last lunar month). The duration of a promotional program on the occasion of a public holiday must not exceed that of such public holiday as prescribed in the labor law. The State encourages the holding of concentrated promotional programs. All business entities have the right to participate in promotional programs.
The maximum discount does not apply when price reduction is given for (i) goods or services used for implementing the price stabilization policy of the State; (ii) fresh or raw goods and products; (iii) goods and services sold or provided in case of enterprise bankruptcy, dissolution, relocation or change of the industry in which goods production or service provision is carried out.
Before a promotional program, business entity has to announce and register the promotion with the competent state agency. A business entity shall carry out administrative procedures for announcing its promotional activity[6] to provincial-level Industry and Trade Departments of localities where the promotion is to be held in one of the forms specified in Article 92.8 of the Commercial Law (organizing customer participation in cultural, artistic or entertainment programs or other events for promotional purposes) and Articles 8, 9, 10. 11, 12 and 14 of Decree 81.
The announcement of the promotional activity must be carried out at least three days before the promotion is held. This time limit is shorter than the previously prescribed one as a favorable condition for business entities wishing to carry out a promotion. An announcement file must include a written notification made according to the set standard form provided together with Decree 81.
Cases where administrative procedures are not required to be carried out for announcing a promotional program to be held (except for selling goods or providing services together with participation in lucky draw programs) include: the business entity carries out the promotional program with the total value of prizes of under VND 100 million; and the business entity only carries out the promotional program via an e-commerce transaction floor or an online promotion website[7].
A business entity may announce a promotional program by sending a set of announcement file by post or directly (in person) or via email (with its head’s digital signature and a seal) or via the online public service system to Industry and Trade Departments of localities where the promotional program is to be held.
Any modification or addition to contents of a promotional program must ensure that they do not adversely impact interests of customers previously participating in such program prior to the modification or addition.
For a lucky draw program: Business entities have to carry out the procedures for registering their promotional programs which must then be certified by the competent state agencies prior to the commencement of those programs. The competent state agencies include provincial-level Industry and Trade Departments in case of promotion held in the form of lucky draw programs within one province or centrally run city and the Ministry of Industry and Trade in case of promotion held in the form of lucky draw programs in two or more provinces or centrally run cities and for promotional programs in other forms.
A business entity may register a promotional program by sending a set of registration file by post or directly (in person) or via email (with its head’s digital signature and a seal) or via the online public service system to a competent state agency in charge of commerce.
Such a file must comprise (i) a written registration made according to a set form provided together with Decree 81; (ii) a copy of the promotional program rules made according to a set form; (iii) an evidence of how prize winners are chosen or identified or detailed description of the proof of winning a prize; and (iv) a certified copy of a document on quality of the promoted goods or service made in accordance with law.
Within five working days after receiving the registration file, the competent state agency in charge of commerce will reply in writing with confirmation or non-confirmation of registration of the promotional program.
A business entity wishing to modify or add new contents to a promotional program for which the registration has been confirmed has to, prior to making such changes, carry out procedures for registering the modification or addition of new contents with the state agency that has confirmed the registration. The application file for registration of changes must contain a written request made according to a set form provided together with Decree 81.
Within five working days after receiving the registration file, the competent state agency in charge of commerce will reply in writing with confirmation or non-confirmation of registration of changes to the promotional program, and state reasons for confirmation refusal.
In case of selling goods or providing services together with contest forms for customers in order for a percentage of customers to be selected as winners of announced prizes or lucky draw programs, business entities have to announce winning results and present prizes to winners within 45 days after the end of the promotional programs.
Within 45 days after the expiration of the above time limit for presenting prizes won in a promotion held in the form of lucky draw program, the business entity that holds the program is required to report in writing on results of the promotional program to the state agency in charge of commerce.
A business entity holding a promotional program other than lucky draw program is responsible for publicly announcing results of promotion in localities where it was carried out or in the mass media or on its website.
A business entity holding a promotional program may not terminate it before the expiration of its duration as announced or confirmed by the competent state agency in charge of commerce, except in the following cases: (i) in a force majeure event, in which case the termination of the promotional program before the expiration of the announced or confirmed duration must be notified to customers and the competent state agency in charge of commerce; (ii) the business entity holding the promotion runs out of promoted goods or services or of goods or services used for the promotion, or has issued all of coupons for prize winners as announced or confirmed by the competent state agency. In this case, the business entity has to notify the termination to the competent state agency and guarantee the rights and benefits of customers having participated in the program.
If the competent state agency requires the termination of part or the whole of a promotional program of a business entity, such business entity is responsible for publicly notifying the termination. A business entity is required to terminate its promotional program in the following cases: (i) it violates Article 100 of the Commercial Law and Article 3 of Decree 81; (ii) it fails to properly or fully observe the promotional program rules registered with the competent state agency in charge of commerce.
During the process of holding a promotional program, a business entity has to comply with the relevant provisions of Decree 81. If it fails to do so, it may be imposed a penalty specified in Article 48 of Decree 185/2013/ND-CP dated November 15, 2013, on sanctioning of administrative violations in commercial activities.-
