Three years ago it was to be the magic bullet that would end EU sales promo law disharmony. Since then, the draft EU sales promotion regulation has made disappointing progress. But now the Irish Presidency seeks to revive it with a revised draft.
Topic: Promotion marketing
Who: The European Commission
When: April 2004
The European Commission has published an "Amended proposal for a Regulation of the European Parliament and of the Council concerning sales promotions in the internal market."
Long term marketinglaw readers will remember that from time to time we have reported on the halting progress towards signing off this proposed Regulation. It was designed for a laudable purpose, namely to reduce discrepancies in the laws affecting promotion marketing across the European Union. Unlike a Directive, the Regulation can have immediate legal effect in all EU member states without the need for implementing rules state by state.
Unfortunately, perhaps partly because of this, there have been huge difficulties in achieving consensus on its terms. Undaunted, however, the Commission has now published an amended proposal in a further attempt to achieve agreement.
One of the changes leapt upon by UK marketing industry trade bodies is a suggestion that before being allowed to run a prize promotion, a company must link up with a registered charity and donate to that charity a sum equivalent to the total prize value. The proposal, which marketinglaw suspects will not survive scrutiny, is actually slightly narrower than this and reads:-
"A promoter, when using promotional games in which participation is exclusively subject to a prior obligation to purchase a promoted good or service, must ensure that the promotional game is linked to a registered charity which shall, before the promotional game is communicated to potential customers, receive an amount corresponding to the total value of all winnings in such a promotional game."
A related provision which was already in the draft regulation requires that any prizes awarded following a promotional game must be awarded within 6 months after the results are announced.
On pack premium call control
Another new proposal which has come under industry criticism has been reported as a rule which "could scrap on pack premium telephone numbers." The relevant rule actually reads as follows:-
"A promoter shall not charge any associated costs, other than non-premium rates of postage or telecommunications, for participation in a promotional game".
But is there a major problem?
But is the industry fear justified? It is worth checking the definitions.
"Promotional game" is defined in the Regulation as "a game, in which the winner is designated by any element of chance and the exclusive purpose of which is to encourage the sale of goods or services".
The definition of a "promotional contest" is much the same, except that the winner must be designated exclusively by means of skill.
The effect of these definitions however is that recent industry complaints appear misconceived. The fact is that at least so far as the UK is concerned, and probably in most other EU states, purchase to enter random prize draws, without an alternative genuine, realistic and unlimited free entry route, are illegal. Accordingly, the introduction of a rule as proposed, where such an event would be legal so long as an amount equivalent to the value of the prize was given to charity, would significantly free up this area for promotion marketers and create huge opportunities with a positive benefit for good causes.
Exactly the same applies to prize draws where entry is only by way of a premium rate telephone call. Under current UK law these are completely illegal, so the proposed new law here would make no change at all to the position domestically.
Unfair commercial practices directive
Once of the reasons for the delays in signing off this Regulation has been the parallel debate going on around a directive on unfair business to consumer commercial practices. There were concerns about inconsistencies between the two measures. The revised preamble to the proposal for the Regulation now attempts to address some of these concerns.
It says that until the implementation of the unfair B2C commercial Practices Directive, this promotion marketing regulation foresees that there may be cases in which "country of origin" (in other words the rule that if a promotion is legal under the laws of the EU state from which it emanates, it should be immune from legal challenge in any other EU member state where it might be run) might be disapplied if it is felt that a promotion arriving in an EU member state has been inadequately policed by the source state and constitutes unfair competition. This saving (which appears to destroy at a stroke the principle of "country of origin") would apparently be phased out 2 years after the regulation comes into force to allow for the directive on unfair business to consumer commercial purposes to be adopted and implemented.
Promotional events in editorial content
In a gesture towards EU media such as TV, an amendment to the Regulation suggests that promotional contests as that term is defined in the Regulation should not include "contests in the editorial content of the media". It might otherwise be thought that this would affect the sort of competitions that are run within TV programmes such as coverage of Formula 1 Grand Prix. But "promotional contests" are defined in the Regulation as being exclusively skill, and very few if any such contests as they are run in editorial content the UK media would fit into that category.
Another new provision seeks to introduce a blanket ban on allowing under 14s to participate in any "promotional contest" or "promotional game" without the prior consent of that child's legal guardian. The draft document does not go on to define "prior consent" and without such further definition there will inevitably be doubts as to whether, in an on-line contest for example, ticking a box to confirm that the parent has consented will be regarded as sufficiently verified parental consent.
In the section of the Regulation which lays down minimum requirements for prize promo rules, new obligatory areas it is proposed all EU rules should cover include the closing date for receipt of entries, any geographical or personal restrictions such as location or age, any need to obtain permission to enter from another or employer, the number of prizes which may be won and the number of prizes of any one type (if more than one type of prize is on offer) and how and when the results will be announced.
Why this matters:
These amendments are by no means far-reaching and will have very little material affect on the position under UK law should the Regulation be signed off in its current form. On the other hand it is unclear whether these changes will increase the draft Regulation's chances of being approved. The draft includes a projected coming into force date of 1 January 2005. Whether this is realistic remains to be seen, but we suspect not.