4. SALES PROMOTIONS IN THE INTERNAL MARKET
(23932)
13637/02
COM(02)585
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Amended draft Regulation concerning sales promotions in the internal market.
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| Legal base: | Article 95 (1) EC; co-decision; qualified majority voting
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| Document originated: | 25 October 2002
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| Deposited in Parliament: | 1 November 2002
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| Department: | Trade and Industry
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| Basis of consideration: | EM of 19 November 2002
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| Previous Committee Report: | None; but see (22759) 12614/01: HC 152-vii, (2001-02), paragraph 12 (21 November 2001)
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| To be discussed in Council: | Not known
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| Committee's assessment: | Legally and politically important
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| Committee's decision: | Not cleared; further information requested
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Background
4.1 In l996 a survey conducted by the Commission resulted
in a Green Paper on Commercial Communications.[16]
This concluded that outmoded and differing national legislation
created legal uncertainty for companies and was a barrier to sales
promotions within the Internal Market. The Green Paper was followed
two years later by a Commission Communication[17]
which identified sales promotion as a priority area for Community
legislative action. In October 2001 the Commission proposed a
Regulation on sales promotions in the Internal Market. We cleared
this document in November 2001.[18]
The present document
4.2 Following the first reading of its draft Regulation
by the European Parliament, the Commission has put forward an
amended draft. This draft provides that Member States shall not
impose:
- a general prohibition on the use or commercial communication
of a sales promotion unless required to do so by Community law;
- a limit on the value of a sales promotion;
- a prohibition on discounts preceding seasonal sales; or
- a requirement to obtain prior authorisation, or any requirement
having equivalent effect, for the use or commercial communication
of a sales promotion.
4.3 It also prevents Member States imposing restrictions
on the provision of services or free movement of goods on the
grounds of the use of sales promotions. It requires promoters
to make certain information on the promotion available to clients
on request, makes provision in respect of the protection of children
and adolescents and provides for redress by promoters in case
of complaint, and is intended to facilitate cross-border redress.
4.4 The document takes in 47 of the 57 amendments made
by the European Parliament, seven in part only. The principal
changes as a consequence of the adopted amendments are to:
- remove sales below cost and pharmaceuticals from the scope
of the Regulation (although we note that in the latter case the
exception is mentioned in the recitals, but there is no substantive
provision);
- tighten the definition of promotional games so that there
is no link between entry and purchase; and
- prevent free gifts of tobacco to children.
The Government's view
4.5 The Parliamentary Under-Secretary of State for Competition,
Consumers and Markets, Department of Trade and Industry (Miss
Melanie Johnson) told us, in relation to the earlier draft:
"The Government considers that it is in the
UK's interest to support measures taken by the Commission to remove
barriers to the free movement of services, including commercial
communication services, in the European Union. These are consistent
with UK policy in this area. The prohibition of restrictions on
the use of sales promotion in the EU will enable UK companies
to market their goods and services more widely and more efficiently
in the EU. Consumer choice and competition will increase as more
EU markets make use of sales promotion, and UK suppliers and consumers
will benefit from improved access to those markets."
4.6 On the revised draft the Minister's support is rather
more tentative and nuanced. She says:
"The UK does not operate any general restrictions
on sales promotions, although the Regulation's information requirements
go beyond what is currently in place and are a cause of concern
to business. The mutual recognition clause in the Regulation will
have wide effect and there are few exceptions — for example,
member states will not be able to apply specific rules to incoming
promotions of tobacco and alcohol. The Government has stated that
it will press for an exemption from the application of mutual
recognition to tobacco products, in line with established UK policy
in this area. The Regulation will also restrict the ability of
national governments to apply rules to prize competitions and
draws, although it should not apply to gambling activities and
lotteries. This should not unduly interfere with the Government's
policy, which is being developed by Department of Culture as part
of the Gambling Review.
"Reactions of member states to the proposals
has been divided. The UK, Luxembourg, Netherlands and Ireland
have responded most positively to the Regulation, although the
Netherlands does have some concerns about the treatment of prize
competitions. A number of member states, particularly those with
the most established restrictions in this area, are concerned
about the application of mutual recognition to sectoral regulations.
Concern has centred on the application of mutual recognition to
tobacco, pharmaceuticals and alcohol. Germany, Austria, France,
Belgium and Italy are also anxious about the Regulation and its
relationship with the Green Paper on EU Consumer Protection.
"A number of other member states, including Italy, Germany,
France and Belgium, have sought a legal basis which allows for
consumer protection concerns to be given greater importance. At
a recent Council Working Group, Council Legal Services advised
that this should be decided when the detail of the Regulation
is agreed. To meet the concerns of other member states, the Government
would be content with the whole of Article 95, which recognises
consumer protection, acting as the legal base rather than just
Article 95(1). The Government would not want to lose an internal
market legal basis for this proposal and considers it unlikely
that this would happen."
4.7 The Minister also tells us that her Department issued
a consultation document together with an initial Regulatory Impact
Assessment (RIA) in August (both on the earlier draft), with a
closing date for comments of 25 October.
Conclusion
4.8 Enhancement of the working of the Internal Market
is an important objective. But the Minister suggests that this
document raises consumer protection and other issues. Before considering
the document further we should like from the Minister information
about the outcome of the consultation process, a more conclusive
Regulatory Impact Assessment and more definite information on
what approach the Government intends to take on the various points
she mentions. Meanwhile we do not clear the document.
16 (17226)
7595/96; see HC 51-xxiii (1995-96), paragraph 10 (26 June 1996).
Commercial Communications are any form of communication designed
to promote, directly or indirectly, the goods, services or image
of a company, organisation or person pursuing a commercial or
craft activity or exercising a regulated profession - in short
advertising, marketing, sponsorship and sales promotion. Back
17 (18995)
6842/98; see HC 155-xxvi (1997-98), paragraph 20 (29 April 1998). Back
18 (22759)
12614/02; see headnote. Back
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