Prize competitions used by marketers to drive sales could cost companies twice as much under new European Commission proposals for a directive on harmonising rules governing sales promotions, industry bodies have warned.
The latest draft of the directive contains a clause which says that before being allowed to run a prize promotion, a company must link up with a registered charity and donate to that charity a sum equivalent to the total prize value.
Institute of Sales Promotion (ISP) director-general Edwin Mutton says: “This rule would increase costs associated with prize promotions. The problem is the UK Government may not want to oppose it because it would be seen as depriving charities of cash.”
Most EU states restrict or ban many of the tactics used in Britain, and if such restrictions were adopted as EU law, the UK sales promotion industry – which employs 25,000 people and generates annual sales of &£20bn – would be badly hit (MW November 28, 2002).