6 Sales promotions in the internal market
| (25704)
9474/04
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| Amended draft Regulation concerning sales promotions in the internal market
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| Legal base | Article 95 EC; co-decision; QMV
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| Deposited in Parliament | 3 June 2004
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| Department | Trade and Industry
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| Basis of consideration | EM of 8 June 2004
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| Previous Committee Report | None; but see (23932) 13637/02: HC 63-xvi (2002-03), para 8 (26 March 2003)
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information awaited
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Background
6.1 Proposals for a Regulation on sales promotions in the internal
market have been under discussion since October 2001. The main
point of difficulty has been application of the principle of mutual
recognition to national legislation concerned with the use of
sales promotions and references to them in commercial communications.
In March 2003 we cleared an amended draft of the proposed Regulation.
That draft would limit what Member States may impose by way of
restrictions on sales promotions or restrictions on the provision
of services or free movement of goods on the grounds of the use
of sales promotions. It would require promoters to make certain
information on the promotion available to clients on request,
make provision in respect of the protection of children and adolescents
and provide for redress by promoters in case of complaint, and
was intended to facilitate cross-border redress.
The document
6.2 The present amended draft Regulation has emerged from Council
Working Group discussions and has been referred back by the Competitiveness
Council to the Working Group for further consideration. It differs
from the previous amended draft Regulation in that it provides
for:
- a four-year case-by-case temporary derogation from the application
of mutual recognition;
- exclusion of promotional games or contests included
in the editorial content of the media from the scope of the Regulation;
- exclusion of promotional games where participation
is exclusively linked to purchase and where games have individual
prizes that exceed €100,000 in value;
- further elaboration of rules relating to the
protection of minors, with the explanation that a child's health
is to be understood to cover its physical and mental health as
well its moral wellbeing and with a description of the conditions
under which prior consent requirements would be met;
- a prohibition on charging any associated costs,
other than non-premium rates of postage or telecommunications,
for participation in a promotional game;
- exclusion of sales promotions of tobacco products
and alcoholic beverages from the scope of the Regulation; and
- extension of a revision clause to incorporate
those elements otherwise excluded from the Regulation (e.g. tobacco;
alcohol; sales below cost; certain promotional games).
The Government's view
6.3 The Minister for Employment Relations, Competition
and Consumers, Department of Trade and Industry (Mr Gerry Sutcliffe)
says:
"The Regulation largely reflects the UK's approach
to sales promotions, which does not operate any general restrictions
on sales promotions. The removal of restrictions in other Member
States would undoubtedly enable promoters to engage more easily
in cross-border promotions. Given the wide definition of sales
promotions and the application of mutual recognition and the 'country
of origin' principle, this should in turn enhance the functioning
of the internal market. For these reasons, the Government has
supported the proposed Regulation as an internal market measure,
which is central to the Commission strategy for an internal market
in services and the Lisbon agenda on economic reform.
"The Regulation will restrict the ability of
national governments to apply rules to promotional games and competitions
— though importantly, as currently drafted, it will not
apply to gambling activities and lotteries. This should not unduly
interfere with Government policy, as set out by the Department
of Culture, Media and Sport's draft Gambling Bill.
"In recent Council discussions, the Government
has met with some considerable success in meeting its negotiating
objectives. As currently drafted, the proposal will not now undermine
UK controls on promotions of financial services and tobacco products.
Similarly, the new texts reflect the Government's priorities
of supporting the Regulation's consumer protection measures (redress;
information requirements; and rules on the protection of children)
whilst making them more workable. Further, after some debate
about a new link between certain promotional games and registered
charities, this has now been removed from the proposal, thereby
ensuring that the Regulation does not undermine proposed changes
to the Department of Culture's draft Gambling Bill.
"The Government has not succeeded in prohibiting
the promotions of certain dangerous products (e.g. knives; firearms;
airguns; fireworks) to all individuals. Nonetheless, promotions
of such products will be banned to children under 14; and to all
individuals where such prohibitions can be justified on health
and safety grounds; or where such products are subject to separate
requirements for marketing authorisations. The Government has
also succeeded in excluding promotional games and contests that
form part of the editorial content in the media from the scope
of the Regulation. Inclusion of such games and contests would
have had a detrimental impact on this sector, to little added
benefit to the internal market.
"Of greater concern are some of the newer features
of the Regulation. Whilst recognising that some compromise will
be necessary in order to reach agreement, the Government does
not welcome the proposed derogation to mutual recognition. In
forthcoming negotiations, the Government will also be seeking
to ensure that the proposal does not unduly undermine the UK controls
on pharmaceutical products. Further, whilst the Government welcomes
the exclusion of promotional games and contests in the editorial
content of the media, it has not yet had time to reflect fully
on the implications of the new exclusions relating to promotional
games with individual prizes exceeding €100,000; and those
games with an exclusive link to purchase. Whilst the Government
does not believe that the prohibition on premium rate calls will
adversely affect the UK's premium rate industry — as games
and contests in the editorial content are outside the scope of
the Regulation — it will nonetheless use the opportunity
provided by the cessation of negotiations to reflect further on
these changes. The same also applies to two new exclusions, to
sheet music; and printed press products. Finally, national laws
regulating discounts on books continue to remain unaffected by
the Regulation. Though this is unsatisfactory, the Government
would support this exclusion if this secured agreement to the
Regulation.
"Reactions of member states to these proposals
continue to be divided. At the 18 May Competitiveness Council,
Germany, Austria, France, Portugal and Italy all opposed the Regulation;
and Belgium and Finland abstained. Opposition primarily centred
around concerns linked to the application of mutual recognition.
However, Member States also raised a number of other concerns,
including: the inclusion of pharmaceutical products and regulated
professions; concerns over overly-burdensome information requirements;
and question marks over the relationship between this proposal
and other legislation. Conversely, the UK, Luxembourg, Netherlands,
Denmark and Ireland have responded most positively to the Regulation
in the past."
6.4 The Minister also tells us that his Department
is preparing a revised partial Regulatory Impact Assessment on
the proposal.
Conclusion
6.5 We have noted previously that the aim of this
proposal, of enhancing the working of the internal market, is
important, but we have also noted the need to ensure consumer
protection issues are dealt with adequately.
6.6 We are grateful to the Minister for the information
he has given us on progress on this proposal. But before considering
the matter further we shall await the new partial Regulatory Impact
Assessment. When he sends us that assessment we should be grateful
to receive also an account of progress in negotiations, including
his latest assessment of the balance of advantage to the UK of
the proposal.
6.7 Meanwhile we do not clear the document.
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