On August 26, 2020, the government issued Decree No.98/2020/NĐ-CP prescribed penalties for administrative violations against regulations on commerce, production, and trade on counterfeit and prohibited goods, and protection of consumer rights. This is the latest legal document guiding this matter which has become effective since October 15, 2020 replacing Decree No.185/2013/NĐ-CP and Decree No.124/2015/NĐ-CP.
According to Decree No.98/2020/NĐ-CP, counterfeit goods has been defined clearly into 6 categories: (1) counterfeit goods which are useless or its function is not correct with its nature or name; (2) counterfeit goods which are low quality (under 70% compared to the quality of genuine products); (3) counterfeit drugs; (4) veterinary drug or pesticide which are low quality (under 70% compared to the quality of genuine products); (5) goods having forging information on their label or packages; (6) Counterfeit stamps, labels and packages of goods.
Entities facing administrative penalties mainly included Vietnamese or foreign organizations and individuals that commit administrative violations specified in this Decree within the territory of Vietnam, representative offices and branches of foreign traders in Vietnam; representative offices of foreign trade promotion organizations in Vietnam;
Primary penalties are warning and fines, however additional penalties are also applied for example suspension of license or practicing certificates or license of operations for upto 24 months, and/or Confiscation of exhibits and instrumentalities used for committing administrative violations; Remedial measures are enforcing to destroy counterfeit goods, eliminating violated elements, recalling of low quality products, etc…However, the maximum fine for a violation in the field of production and trade in counterfeit and prohibited goods only VND 200.000.000 (~10,000 USD) if it is imposed on an individual or VND 400.000.000 (~20,000 USD) if it is imposed on an organization;
When the counterfeit goods are seized, the determination of their value as a basis for determining the fine frame and sanctioning competence is mainly carried out on the principle of basing on the market price of the genuine goods which are having the same features and uses at the time of detecting administrative violations.
Penalties for administrative violations in commercial activities, production and trading of counterfeit goods include:
Article 9. Trade in goods whose uses are forged
Article 10. Production of goods whose uses are forged
Article 11. Trade in goods whose labels or packages are forged
Article 12. Production of goods whose labels or packages are forged
Article 13. Trade in counterfeit stamps, labels and packages
Article 14. Production of counterfeit stamps, labels and packages
The provisions from Articles 9 to 14 also specify the penalty frame, the form of aggravation with the double in fines, the form of additional sanctions, as well as related remedial measures.
Enforcement authorities having power to impose penalties include Chairpersons of People’s Committees at all levels, Market Surveillance Forces, People’s Public Security Forces, Customs Agencies, Border Guard Forces, Marine Police Forces, Inspectors of specialized fields. Each government enforcement body and each personnel with different levels of position having different competence of handling.
Usually, when activities of trading and producing counterfeit goods were detected, if seized counterfeit goods having the value under 30 million VND or over 30 million VND (~ 1,500 USD) and/or obtained more than 50 million VND (~2,500 USD) illegal profit but not liable for criminal prosecution would be applied for administrative sanction. In other words, depending on each case, the enforcement bodies are not only based on the value of seized counterfeit goods but also the seriousness and/or the negative effect of the activities to apply the appropriate sanctions.
Although the administrative sanctions applied for the activities of trading and manufacturing are not a high deterrent method due to the monetary fine being low, and there is no compensation mechanism for damages, administrative sanctions can be applied quickly, promptly and at low cost to the requesting party.
