The very wide definition of “sponsorship” in up and coming tobacco ad-ban laws could cause mayhem. Osborne Clarke’s Nick Johnson investigates
Topic: Sponsorship
Who: Department of Health, European Sponsorship Consultants Association
Where: United Kingdom
When: November 2002
What happened:
The Department of Health’s consultation process on transitional provisions for the governments’ proposed ban on tobacco advertising, sponsorship and promotion has now come to a close.
The European Sponsorship Consultants Association (“ESCA”), of which Osborne Clarke’s Nick Johnson is a board member, has voiced serious concerns about the proposed legislation.
Some of those concerns are to do with the likely commercial impact of the proposed transitional provisions, not just on those events and entities currently sponsored by cigarette companies, but also on sponsorship generally.
However another key worry is the unrealistically broad definition in the Tobacco Advertising and Promotion Bill of a “sponsorship agreement”. The Bill defines this as
“an agreement under which, in the course of a business, a party to it makes a contribution towards something, whether the contribution is in money or takes any other form (for example, the provision of services or of contributions in kind)”
Clearly, the legislation needs to have a broadly drafted definition in order to avoid creating loopholes. However, this proposed definition is so wide that it potentially catches pretty much any commercial agreement!
Why this matters:
This is the first time that UK legislation has sought to define the term “sponsorship agreement”, and it is disappointing that a more appropriate and realistic definition has not been proposed. One key concern is that the definition may be adopted in contexts which have nothing to do with tobacco promotion, or that it may be referred to outside the tobacco context as an interpretative aid in determining whether a document is a “sponsorship agreement”.
The existence of the proposed definition could open the door to arguments that it should take precedence over a common sense “every day English” interpretation. And this could lead to some very unfortunate results.
For instance, one could imagine an exclusivity provision in a sponsorship agreement might prohibit the sponsored party for a specified period from entering into any other “sponsorship agreement” with certain named competitors of the sponsor. Applying the statutory definition would potentially prevent the sponsored party from entering into any commercial contract with those named competitors.
A better, but still imperfect, definition of a sponsorship agreement can be found within the International Chamber of Commerce “International code of sponsorship”, namely:
“Sponsorship: any communication by which a sponsor, for the mutual benefit of sponsor and sponsored party, contractually provides financing or other support in order to establish a positive association between the sponsor’s image, brands, products or services and a sponsored event, activity, organization or individual.”
or, in the current proposed revised version of the Code (on which ESCA has been providing assistance):
“Sponsorship: any commercial agreement by which a sponsor, for the mutual benefit of the sponsor and sponsored party, contractually provides financing or other support in order to establish a positive association between the sponsor’s image, brands, products or services and sponsorship property (eg event, activity, organization, individual or venue) in return for the right to promote this association and for the granting of certain agreed benefits.”)
