11 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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| Department | Trade and Industry
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| Basis of consideration | Minister's letter of 3 September 2004
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| Previous Committee Report | HC 42-xxiii (2003-04), para 6 (16 June 2004)
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| To be discussed in Council | 24 September 2004
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
11.1 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.
11.2 We considered the present amended draft Regulation,
which had emerged from Council Working Group discussions and had
been referred back by the Competitiveness Council to the Working
Group for further consideration, in June 2004. We were told that
this draft contained some improvements but also had features to
which the Government continued to object. We did not clear the
document, saying that, whilst recognising the importance of enhancing
the working of the internal market, we also recognised the need
to ensure consumer protection issues were dealt with adequately.
We said our further consideration of the matter would await the
new partial Regulatory Impact Assessment then in preparation,
an account of progress in negotiations and the latest assessment
of the balance of advantage to the UK of the proposal.
The Minister's letter
11.3 The Secretary of State for Trade and Industry
(Ms Patricia Hewitt) now tells us that there have been further
changes to the draft Regulation, which the Government thinks are
improvements from the UK's point of view. She says:
"The amendments to the proposal notably include
the following:
— The exclusion of medicinal products. This
removes any residual risk that the Proposal might inadvertently
have undermined UK controls on pharmaceutical products, and as
such is to be welcomed.
— The exclusion of games and contests where
a media is the promoter. This is an extension from the previous
exclusion of games and contests which were in the editorial content
of the media.
— Further elaboration of the circumstances
under which Member States can derogate from their mutual recognition
obligations. This also includes a reduction in its length from
4 to 3 years. The Government is considering the precise legal
effect of this change, but does not regard it as so significant
to hamper efforts to reach agreement.
— The deletion of the prohibition on charging
any associated costs, other than non-premium rates of postage
or telecommunications, for participation in a promotional game.
This again removes any residual risk that the Regulation might
have impacted on the UK's premium rate industry.
— Further elaboration of child protection rules
stating that promoters shall not use or communicate a sales promotion
to directly exhort minors to buy a good or service by exploiting
their inexperience or credulity.
— Some changes to the information requirements."
11.4 The Minister also sends us the revised Regulatory
Impact Assessment. As she says, this highlights the benefits from
the draft Regulation associated with more opportunities for business
to carry out promotions across borders and with reduced costs,
and more choice and protection for consumers participating in
promotional activities. But she also notes that, although existing
rules regulating sales promotions in the UK require promoters
to provide similar information, some of the information requirements
are likely to create some additional — and as yet unquantifiable
— costs for business. The assessment says "The ….
analysis of benefits and costs to business and benefits and impact
on consumers demonstrates that the benefits of the Regulation
outweigh the potential costs".
11.5 The Minister also tells us that the Dutch Presidency
has the intention — ambitious but possibly feasible —
to reach political agreement on the revised draft Regulation at
the Competitiveness Council on 24 September 2004. She indicates
that should the draft Regulation continue to meet UK's negotiating
objectives the Government would wish to support the political
agreement.
Conclusion
11.6 We are grateful to the Minister for this
latest information about improvements to the draft Regulation
and about potential costs and benefits. We now clear the document.
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