Regulation on commercial promotion and some notes for traders who conduct the commercial promotion

1. Regulation on the promotion programs

1.1 Definition 

Commercial promotion is commercial enhancement of traders which aim to promote the sale of goods and services by providing the clients with certain benefits . The entities are entitled to conduct the commercial promotion including: 

• The traders performing the manufacture, sales of goods and services and directly conducting the commercial promotion or conducting the commercial promotion via distributors (wholesalers, retailers, agents, franchisors and other distributors according to the laws); 

• The traders doing the business specializing in commercial promotion conduct the commercial promotion for goods, services of other traders as per the bilateral agreement between two parties. 

1.2 The method of commercial promotion 

According to the promotional laws, the methods of commercial promotion are carried out as follows:

• Sampling giving, sampling supply, in order that the clients to try out the products without payment; 

• Goods giving, goods supply without payment (attaching or not accompanying the purchase of goods and services)  

• Selling goods and providing services for the client with the price being under the price previously, applying in the promotional period has been announced (commercial promotion via discounts);  

• Selling goods and providing services accompanied by voucher for purchasing the goods, or voucher for using the services;  

• Selling goods and providing services accompanied by contest entry forms for customers to choose award givers according to announced rules and prizes (or other equivalent forms of organizing contests and awarding prizes); 

• Selling goods and providing services accompanied by the participation in the game of chance which the participations attached with the sales of goods, services and the reward based on the luck of the participants and published rules (sweepstake program); 

• Organising the programs for regular customer, accordingly, the awarding for the clients based on the quantity or value of the goods, services which the clients conducting under the customer card, receipt of purchasing the goods, services or other means; 

• Organising for the clients to participate the culture, art, entertainment events or other activities for the promotional purpose; 

• Promoting the goods, services which the engagement of internet, electronic means, electronic devices, technological-informative approaches.

1.3 The goods, services in commercial promotion 

Promotional goods, services are goods, services which are used by traders under the means of commercial promotion aiming to enhance the sale, providing the goods and services, those do not including wines, lotteries, cigarettes, milk replaced breast milk, human medicines, including medicines that have been permitted for circulation according to regulations of the Ministry of Health (excepting the commercial promotion for the medicine traders), health care services of public medical facilities, public educational service facilities, public vocational education facilities, goods and services which are banned for circulation in Vietnam and other banned goods and services for promotion in pursuant to the laws. 

Goods, services used for promotion are goods and services used by traders to give, reward, or provide free of charge to clients. The goods, services used for promotion might be goods, services which the traders is trading or other goods and services, excluding: wines, lotteries, cigarettes, medicine for human including the medicine that has been permitted to circulate under the regulations of Ministry of Health (excepting the commercial promotion for medicine traders), goods, services which are banned to circulate in Vietnam and the goods, services are banned pursuant to the law. 

1.4 Maximum limits on the value of goods, services in commercial promotion 

The value used for promotion for one unit of goods, service which are promotional shall not exceed 50% the price of one unit of itself promotional goods, services prior to the promotional period, excluding the foregoing listed promotional means in Section 6.1.2 (a), (b), (e), (f), (g), (h). 

The total value of goods, services used for promotion in one program could not exceed 50% of total price of the promotional goods, services, excepting the foregoing listed promotional means in Section 6.1.2 (a), (b), (g). 

The rate of discounts for goods, services used for promotion shall not exceed 50% the price of those goods, services prior to the promotional period. 

In case that the organising the focus sales (promotional hours, dates, weeks, months, seasons) as regulated in Article 6.5 Decree 81/2018, the maximum limits for value of goods, services used for promotion is 100%, 10 and simultaneously, the maximum limits for discounts for promotional goods, services is 100%. 

1.5 Maximum limits for promotional period

The total period of time for commercial promotion under the discounts program for one brand of goods, services as mentioned in Section 6.1.2 (c) shall not exceed 120 days in one year, excluding the period of time for focus sales.

1.6 Steps, procedures for announcement, registration for commercial promotion 

According to the laws on commercial promotion, prior to conducting the promotional activities, the traders shall conduct the procedures for announcement/registration. Accordingly, the traders are obligated to carry out the procedures for announcement if conducting one of promotional activities foregoing listed in Section 6.1.2 of this Legal Advice (excepting the Section 6.1.2 (f), (i)). Regarding the sweepstake program aforementioned in Section 6.1.2 (f), the traders shall register the commercial promotion and be approved by competent authorities before the activation of that program.  

a. The steps conducting the promotional announcement are as per the following process:

Step 1: Based on the contents of the promotional program, The Company prepares the promotional announcement as per the Form 01 the Appendix attached with Decree 81/2018. Then, submitting 01 dossier to Industrial and Commercial Department where organises the promotion program. In case that the program is organised in more than 01 provinces, provincial cities, the dossier shall be sent to all the Industrial and Commercial Departments where the program takes place.

Step 2: Submitting the announcement in Industrial and Commercial Department where organises the commercial promotion no later than 03 working days from the date of program. 

Step 3: Reporting and announcing the reward finalist as per the Form 07 the Appendix attached with Decree 81/2018 (only applying for the promotional mean foregoing specified in Section 6.1.2 (e) 38: the period of reward finalist and rewarding the prize shall not exceed 45 days from the finishing date of promotional program. 

b. The steps conducting the promotional registration are as per the following process:

Step 1: The Company prepares one dossier for promotional registration, including: 

• The form for registering the promotion as per the Form 02 in the Appendix attached within Decree 81/2018; 
• The rules for promotional program as per the Form 03 in Decree 81/2018; 
• The proof of reward or description on the proof of reward (The card, The drawing lotteries, the lucky circle,…); 
• The copy without certification needed on the quality of the promotional goods as per the laws. 

The dossier is submitted in the Industrial and Commercial Department (if the promotional program is organised in one province, provincial city) or in Commercial Promotional Department – Industrial and Commercial Ministry (if the promotional program is organised from at least 02 provinces, provincial cities). 

Step 2: Submitting one dossier to Industrial and Commercial Department/Ministry prior to at least 05 working days, from the date of promotional program. 

Step 3: Reporting, submitting the reward which does not have the winner to the State Budget and announce the reward finalist within 45 days from the date finishing the reward handover, The Company is obligated to report details of the authority approved the promotional registration (The Industrial and Commercial Ministry/The Industrial and Commercial Department) as per the Form 07 in the Appendix attached with Decree 81/2018. 

In case that the reward does not have the winner or the rewarding not completely the prize has registered, The Company is obligated to submit the unobtained prizes to the State Budget. Within 07 working days from the date of receipt the reports of the traders, the competent authority makes the decision for collecting 50% published value of the prizes which have not the winner.  

Within 10 days from the date of submitting the State Budget, The Company is obliged to send the report on the results of conducting to submit the remaining value of prize to the State Budget as per the Form 09 in the Appendix attached with Decree 81/2018. 

1.7 The cases which are not required to make the promotional announcemen

As aforesaid in Section 6.1.5 (a), The Company shall carry out the promotional announcements in event of the promotion programs are organised under the means specified in Section 6.1.2 (excepting the Section 6.1.2 (f), (i)). However, in some certain circumstances, The Company is not necessary to carry out the promotional announcement, which are: 

a. The total amount of prizes, gifts under 100 million dongs; 

b. Only selling and promoting via e-commerce trading platforms, online promotional websites. 

2. Some notes on the legal agreement on commercial promotion 

2.1 Conducting the commercial promotions via internet and other media platforms

However, along with the development of modern society, to enhance the sale of goods and services, The Company organises not only the promotional activities in a fixed place but also via internet-based platforms and media means (facebook, instagram, website…). All the clients in 63 provinces, provincial cities access and approach the promotional information. Hence, the determination of the Industrial and Commercial where the promotion program organises meet troubles due to loopholes under the laws. Hence, the determination of the places for organising the promotion program rely primarily on the viewpoint of the in-charge staff.  

2.2 Distributors are entitled to make commercial promotion on their own 

In Article 2.1.a Decree No. 81/2018/ND-CP clearly stipulates “Traders conducting promotions include traders producing and trading in goods and services that directly promote or conduct promotions through distribution traders (wholesalers, retailers, agents, franchisers and other distribution traders as prescribed by law).”, thus, distributors (agent traders) can directly conduct promotions for the goods and services that you sell. At that time, the agent traders will become the trader conducting the promotion and will have to carry out administrative procedures for notification/registration of promotional activities according to current regulations.  

Apolat Legal Law Company Limited is proud to be a unit that supports promotions for many businesses across the country. We partly understand the difficulties that businesses encounter when conducting trade and we are ready to accompany and support businesses. If you need legal advice on promotions, please contact us for further information. 

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