More Flexibility For Promotional Campaigns

In a series of recent decisions, the European Court of Justice (ECJ) held that national provisions laying down a general prohibition on sales with bonuses are precluded under the Unfair Commercial Practices Directive.1 The respective Austrian provision has been found as precluded by the Directive.

"Buy 2, get the 3rd for free!"

"Get a free laptop with your newspaper subscription!"

"Get a ten Euro-purchase voucher when buying our product!"

"Get a free car-wash with every 10th full tank!"

"Get a free mobile phone with every new network contract!"

1. Prohibition of Sales with Bonuses

   In the past, legislatures saw a need to prohibit sales with bonuses. The objectives were threefold:

   Protection of competitors, as weaker competitors may not be able to give the same bonuses. Protection of consumers, because an effective price/value comparison may be tainted. Protection of the fairness of competition in general, because consumers should not be attracted by bonuses but make their purchase decision according to the value or quality of the product or service. In Austria, a very strict prohibition of sales with bonuses with only very limited exceptions is provided for under unfair competition law (Sec 9a(1)(1) Austrian Act against Unfair Competition; UWG).

   In 2001, the European Commission made an attempt to regulate sales promotions in the EU with a proposal for a regulation concerning sales promotions in the internal market.2 Yet, in 2005, the European Commission withdrew such proposal.3 Consequently, many of the interested circles believed that sales with bonuses will not be addressed by EU-law in the near future. They erred:

   In 2005, a directive concerning unfair business-to-consumer commercial practices in the internal market (the above-cited Unfair Commercial Practices Directive) was enacted. Such directive provides for a broad regulation of activities, which are dealt with by national legislations concerning unfair competition. It sets out the criteria on the basis of which unfair commercial practices are to be prohibited. The directive further expressly provides that member states may not adopt stricter rules than those provided for in the directive, even in order to archive a higher level of consumer protection.4

2. The ECJ Cases

   In a line of cases5 the ECJ was asked by national courts for a preliminary ruling on whether the Unfair Commercial Practices Directive applies to sales with bonuses and whether general prohibitions on sales with bonuses...