Close on three years after the first version appeared, a new draft of the EU sales promotion regulation has just been published. Apparently this version stands a better chance of adoption by member states, but at what cost? Osborne Clarke’s Nick Johnson reports on a recent DTI-convened stakeholder meeting.
Topic: Promotion marketing
Who: Council of the European Union, DTI
Where: Brussels, London
When: September 2004
Just when you thought this draft EC regulation was finally dead in the water after 8 years and countless revised versions, along come three new drafts in quick succession!! But is the renewed enthusiasm of the Dutch presidency matched by other member states? And are we any closer to reaching agreement on the proposed text?
At a recent stakeholders meeting at the DTI in London, one of the UK's negotiators on the draft Sales Promotion Regulation gave an interesting update on recent developments. He revealed that, in spite of significant outstanding issues, the various delegates on the EC Working Group are generally now much more positive about the proposed legislation and there is apparently an increasing sense that agreement can be reached. The positions of the member states that opposed or abstained when the last version of the Regulation was put to Council (Germany, Italy, France, Belgium, Finland, Portugal) appear to have changed. Germany is now in favour of a liberalisation in this area. Italy and France remain opposed, but the position of Belgium, Finland and Portugal has become less clear.
Areas that are currently the subject of debate include the following:
· Should the Regulation be repositioned as a Directive?
· Are the information requirements in the current draft too narrow/too broad?
· Issues over mutual recognition and the proposed derogation process.
Further negotiation is ongoing, and by the time you read this a Council meeting will have taken place on Friday 24 September.
Why this matters:
The UK has always supported the draft Regulation on the basis that it looked like it should lead to a less restrictive position throughout Europe without significantly changing the reasonably liberal existing position in the UK. However, the latest drafts of the Regulation contain more and more extensive carve-outs to their scope, and serious questions should now be asked as to whether the UK's support is still merited.
In the current draft, all of the following are excluded from the Regulation's scope: (a) promotions where prizes worth more than Euros 100,000 can be won per year; (b) purchase-linked promotions; (c) promotions where the promoter is a media owner. This means member states would still be free to have their own local laws for any or all of these kinds of promotions – hardly the kind of harmonisation that pan-European marketers might have hoped for. In fact a recent ISP survey suggests that something like 75% of all promotions currently being run in the UK would fall outside the scope of the current Regulations.
And the potential move to a Directive would only make things worse. Directives of course don't have direct legal effect in the same way that Regulations do. With a Directive, each member state has to implement its own local legislation to give effect to the Directive. If each Member State gets to enact its own take on the legislation, are we really likely to achieve the desired outcome of marketers being able to run promotions across Europe without taking advice from 20+ separate jurisdictions? As matters stand, it doesn't look too promising…