The inconsistency of current regulations on alcohol sales promotions

Sales promotion is an activity of commercial advertising activity used by merchants to encourage the purchase and sale of goods and the provision of services by offering certain benefits to customers[1]. However, not all goods can be promoted or intended for a sales promotion. One of the goods that enterprises are often interested in in the field of sales in promoting is alcohol. In fact, the sales promotion of alcohol or the use of alcohol in sales promotion is also a common problem faced by many enterprises. These shortcomings are mainly due to the inconsistency in the provisions of the current laws. In this article, HM&P will analyze this inconsistency, thereby assisting enterprises as well as competent authorities to have a clear view of the sales promotion of special commodities, especially alcohol, in order to make appropriate adjustments.

Prior to the entry into force of Decree 105/2017/ND-CP[2] on 01 November 2017

According to the provision of Article 100 of Law on Commercial 2005, prohibited acts in sales promotion activities include:

“…

2. Using, for the purpose of sales promotion, goods and services that are prohibited from business or subject to business restrictions;

…

4. Promoting or using cigarettes or alcohol with an alcohol content of 30% ABV or higher for sales promotion in any form;

…”

Simultaneously, prior to the entry into force of Decree 105/2017/ND-CP on 01 November 2017, the trade of alcohol was regulated by Decree 40/2008/ND-CP[3] and Decree 94/2012/ND-CP[4], respectively.

According to the provisions of Clause 1 Article 4 of both Decree 40/2008/ND-CP and Decree 94/2012/ND-CP, alcohol belongs to the group of goods whose trade is restricted by the State. Therefore, pursuant to Clause 2, Article 100 of Law on Commercial 2005 as mentioned above, merchants are prohibited from using alcohol as a commodity for sales promotion.

Furthermore, in accordance with Clause 4, Article 100 of Law on Commercial 2005, traders are prohibited from promoting or using alcohol with an ABV of 30%  or higher for sales promotion in any form.

Therefore, merchants can only promote alcohol with an alcoholic content of less than 30% ABV. This interpretation is appropriate because Clause 3, Article 20 and Clause 7, Article 4 of Decree 37/2006/ND-CP dated 04 April 2006 detailing the Commercial Law on sales promotion activities when stipulating cases of suspension of sales promotion programs or goods not used for sales promotion do not mention cases of alcohol with content less than 30% ABV.

After the entry into force of Decree 105/2017/ND-CP until the entry into force of Decree 81/2018/ND-CP[5] on 15 July 2018

Since the effective date of Decree 105/2017/ND-CP, Clause 1, Article 4 of this Decree stipulates that "the trade in alcohol belongs to the list of business investments in conditional business lines", instead of belonging to the group of commodities restricted by the State as in previous Decrees. As a result, the use of alcohol as a commodity for sales promotion is no longer prohibited by Clause 2, Article 100 of Law on Commercial 2005. Instead, merchants are only prohibited from promoting or using alcohol with an alcoholic content by volume of 30% ABV or higher for sales promotion in any form as prescribed in Clause 4, Article 100 of Law on Commercial 2005. In other words, merchants can promote or use alcohol with an ABV of less than 30% for sales promotion.

After the entry into force of Decree 81/2018/ND-CP

If in the previous two stages, the sales promotion or the use of alcohol as a commodity for sales promotion was quite clearly regulated, since the effective date of Decree 81/2018/ND-CP, problems have arisen in relation to the difference in regulations between this decree and Law on Commercial 2005, Law on Prevention and control of harmful effects of alcoholic beverages 2019 have begun to occur.

Specifically, according to Clause 4, Article 100 of the Law on Commercial 2005, amended by Point a, Clause 3, Article 35 of the Law on Prevention and Control of Control of Harmful Effects of Alcoholic Beverages 2019, merchants are prohibited from "promoting or using cigarettes, alcohol or beer with an alcohol content of 15% ABV or higher for sales promotion in any form".

According to this regulation, it is crystal clear that the prohibition on promoting or using alcohol for sales promotion only applies to alcohol with an alcohol content of 15% ABV or higher, merchants are completely allowed to promote or use alcohol with an alcohol content below 15% ABV for sales promotion.

However, according to the provisions of Clause 1, Clause 2, Article 5 of Decree 81/2018/ND-CP, promoted goods or goods used for sales promotion do not include alcohol. This means that merchants are not allowed to promote or use alcohol as a commodity for sales promotion, regardless of the alcohol content.

Pursuant to the provisions of Clause 2, Article 93 and Clause 3, Article 94 of Law on Commercial 2005, the promoted goods or goods used for sales promotion must be those that are lawfully traded, so the question is, if the merchants are allowed to trade in alcohol, are they allowed to promote or use alcohol with an alcohol content of less than 15% ABV for sales promotion, since in this case, the merchants are not breaking the law[6]?

The Law on Commercial 2005 only stipulates that merchants are prohibited from "promoting or using cigarettes, alcohol or beer with an alcohol content of 15% ABV or higher for sales promotion in any form" but there is no clear provision on whether merchants are allowed to promote or use alcohol for sales promotion. Therefore, when Decree 81/2018/ND-CP stipulates that promoted goods or goods used for sales promotion do not contain alcohol, it cannot be considered as "different regulations on the same matter" with the Law on Commercial 2005. Therefore, in this case, the principle of legal conflict settlement in Clause 2, Article 156 of the Law on Promulgation of legislative documents 2015 is not applied. In other words, the sales promotion, or the use of alcohol as a commodity for sales promotion is not allowed under prevailing laws. This is also in line with the actual application of regulations by State authorities. Specifically, according to the information that we researched, when inquired about the possibility of sales promotion of alcohol (even if it is below 15% ABV of alcohol level), the Department of Industry and Trade in some localities answered that alcohol is not a part of promoted goods or goods used for sales promotion[7].

However, the above interpretation also has certain inconsistencies. Specifically, Law on Prevention and control of harmful effects of alcoholic beverages 2019 was promulgated on 14 June 2019, after the effective date of Decree 81/2018/ND-CP, but point a, Clause 3, Article 35 of this Law only replaced the phrase "alcohol with at least 30% ABV" with the phrase "alcohol, beer with at least 15% ABV" in Clause 4, Article 100 of the  Law on Commercial 2005. If this is understood to mean that merchants are not allowed to promote or use alcohol for sales promotion, regardless of the alcohol content, the question arises as to why this law does not amend the provisions of Clause 4, Article 100 of the Law on Commercial 2005 in the direction of completely removing the word "alcohol" from this provision. This is also repeated for the provision of Clause 4 Article 32 of Decree 117/2020/ND-CP dated 28 September 2020, which prescribes penalties for administrative violations in the medical sector, when this decree still mentions the phrase "alcohol, beer with less than 15% ABV ". Or in another case, the Clause 3, Article 22 of Decree 81/2018/ND-CP also mentions the phrase "using alcohol and beverages for sales promotion to persons under 18 years of age", which can be considered redundant if alcohol is not considered a promoted commodity or commodity used for sales promotion.

In conclusion, according to the above analysis and the practical application of the relevant state authorities, the understanding of the regulation that alcohol (regardless of the alcohol content) may not be promoted or used for sales promotion may be a reasonable interpretation. However, with the existence of inconsistencies and redundancies in regulations within legal documents, many enterprises may be confused or encounter problems in their sales promotion activities. Therefore, we recognize that a comprehensive review of the provisions of the laws related to alcohol sales promotion activities is necessary so that enterprises can approach them in a clearer way and avoid mistakes and potential risks that may occur during their operation.