SELLING COUNTERFEIT FOOD, ENTERPRISE IS SUBJECT TO ADMINISTRATIVE SANCTIONS OR CRIMINAL PROSECUTION?

Recently, a large-scale case involving the production and distribution of counterfeit powdered milk with nearly 600 fake product types has shocked public opinion. This conduct not only infringes upon consumers’ rights regarding product utility and quality standards but also poses a serious threat to public health. In addition to administrative sanctions, enterprises engaged in selling counterfeit food may also face criminal liability.

What constitutes counterfeit food?

Pursuant to Decree No. 98/2020/NĐ-CP, counterfeit food is defined as including the following categories:

– Counterfeit in terms of utility or function: products whose utility or function does not correspond to their natural origin or designated name; products that possess no utility or function; or products whose declared or registered utility or function is misrepresented. This also includes products that meet only 70% or less of at least one of the core quality indicators, technical specifications, or quantitative components that determine their declared utility or function, compared to the minimum standards prescribed in applicable technical regulations or registered/declared quality standards, or those stated on the label or packaging.

– Counterfeit in terms of product information: products that bear labels or packaging that falsely indicate the name or address of the manufacturer or distributor; use counterfeit registration numbers, declaration numbers, or barcodes; or provide misleading information regarding origin or provenance.

– Product with use of counterfeit stamps, labels, or packaging: products that carry counterfeit stamps, labels, or packaging, including decals, product labels, packaging materials, quality stamps, certification marks, traceability labels, warranty cards, shrink seals, or other items that misrepresent the name or address of another business entity. This also includes counterfeit trade names, commercial names, barcodes, registration numbers, or declaration codes belonging to other organizations or individuals.

Administrative penalties for enterprises selling counterfeit food?

Depending on the nature and severity of the violation, corresponding administrative sanctions may vary. The primary bases for determining the level of violation and applicable administrative fines include the value of the counterfeit goods and/or the amount of illicit gains obtained from the violation.

It should be noted that the monetary fine imposed for the act of trading or distributing counterfeit food may reach up to VND 200 million, following the principle of “double penalty” compared to that applied to ordinary counterfeit goods. This is due to the particularly dangerous and sensitive nature of counterfeit food products. In addition, offending enterprises may be subject to mandatory destruction of the infringing goods, or in the case of imported counterfeit food, compelled to re-export such goods out of the territory of Vietnam. Furthermore, violators must return all illicit profits derived from the infringing conduct.

However, these administrative sanctions are only applicable in cases where the violation has not yet reached the threshold for criminal prosecution under the applicable legal provisions.

Enterprise engaged in selling counterfeit food may be subject to criminal liability?

In cases where the act of trading or distributing counterfeit food is recognized to have caused serious harm to the health or life of consumers, or resulted in substantial economic losses, the enterprise may be subject to criminal prosecution in accordance with applicable laws.

Enterprise involved in selling counterfeit food may face criminal fines ranging from VND 1 billion to VND 18 billion, depending on the gravity of the offense. Factors considered include the amount of illicit profits gained, the value of the counterfeit goods, the extent of harm caused to property, health, or human life, and whether the conduct was professional or organized in nature.

In cases involving particularly severe consequences, such as illegal profits exceeding VND 500 million or incidents resulting in death, the enterprise may be subject to temporary suspension of operations (ranging from 3 to 6 months) or even permanent shutdown.

Additionally, offending enterprises may be prohibited from conducting business, operating in specific sectors, or raising capital for a period of up to 3 years.

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