EC Green Paper threatens to give UK marketers a headache

Single market aims could be stifled by ill-defined and contradictory rules

Two decisions from the European Commission this week have set European marketing circles abuzz with speculation over the future of pan-European marketing, and the prospects for regulatory harmonisation across the single market.

The two proposals, which are at different stages in the long process of passing into law, will have differing but important consequences for all forms of marketing in the European Union.

Of the two, the nearest to the statute book is probably the less controversial – at their weekly meeting yesterday the 20 commissioners rubber-stamped a proposal for an EU-wide law on sales promotions that is to do away with restrictive national bans on value offers, such as 50-per-cent-off promotions and free gift offers.

EC Green Paper

At the same time, however, the EU’s executive body adopted a Green Paper that aims to set a single definition of fair marketing practices for all 15 member countries, covering everything from advertising to sponsorship on the Internet and “lifetime” guarantees.

It proposes a form of co-regulation by consumer organisations, industry and national regulators, with legal sanctions against companies that breach the agreed national rules. A committee, probably comprising the European Commission and representatives from the national regulators for all 15 member states, would then work to find a common code for all the countries in the EU.

Although the Green Paper is only a consultation document, it has already provoked stark warnings from European marketing experts. There is a danger, they say, that if the commission’s definition of fair marketing is too general it will allow for differing interpretations at national level.

“This would fragment the single market in marketing and advertising,” says Philip Sheppard, EU affairs manager at the Association International des Marques, an association of international brands whose members include Coca-Cola, Procter & Gamble and Unilever.

Many countries have national restrictions on the marketing of specific products, and may draw on these restrictions in their application of a common code – for instance when defining what constitutes an “unfair” ad – if the wording is ambiguous. Sweden and France ban alcohol advertising, while Belgium does not allow TV ads aimed at children. Alastair Tempest, director general of the European direct marketing federation Fedma says: “The Green Paper encourages national interpretations like this.”

The authors of the Green Paper argue that the risk of fragmentation would be eliminated by the creation of an advisory committee of public officials from member states. This body would ensure that all countries stuck to common definitions.

Tempest is doubtful: “It could take years for this committee to agree a common code, and in the meantime countries are free to enforce any marketing bans they want, as long as they can claim it is in the interests of consumer protection. This is very worrying.”

Another concern about the Green Paper is that it proposes a framework law on consumer protection that could force all existing laws that favour the internal market – the broadcast directive and the e-commerce directive, for instance – to follow its line.

It might also put a stop to further initiatives by internal market officials to create a single market for commercial communicat

ions. Sales promotion was intended to be the first step in opening up Europe for marketing and advertising.

The next initiative is expected to be regulation covering sponsorship, but internal market experts now fear that the Green Paper, with its consumer orientation, will do away with any other liberalising measures.

“There is a real danger that other single market commercial communications regulations will be blocked by this Green Paper,” says Tempest.

Sales promotion harmonisation

The sales promotion regulation, once passed by ministers of national governments, will bring the countries with the most restrictive laws on discounts and free gift offers – such as Belgium and France – into line with more liberal countries such as the Netherlands and the UK.

France will no longer be allowed to ban promotions at below cost price. This will encourage online book retailers that want to break into the French market from abroad.

Germany, Finland, Belgium and France will no longer be able to insist that promotional gifts must be directly linked to the product they promote. This will help Air Miles in its four-year fight against Belgium’s ban on its points scheme. Belgian laws ban it on grounds that air miles can only be offered by airlines.

The regulation will also do away with the pre-vetting of promotions by regulators. The UK’s Financial Services Authority will no longer be able to pre-vet financial services ads featuring consumer promotions, such as cash incentives for students opening bank accounts.

The sales promotion initiative was welcomed by advertisers. Sheppard says: “Companies of all sizes will benefit from this regulation.” Restrictive national laws have served as barriers to entry for companies in foreign markets, and have stifled pan-European marketing, he adds.

“It is very tricky for a company like Coca-Cola to run promotions in more than one country because of the differences in laws. The new regulation is a necessary enabler for pan-European promotions,” he says.

The sales promotion regulation includes a clause outlawing the collection of personal information from minors without the prior consent of a parent, and another banning promotions that are harmful to children’s health.

However, it excludes any specific measures to curb tobacco sponsorship.

Consumerist backlash

The Brussels-based European consumer organisation BEUC welcomed the publication of the Green Paper on Consumer Protection, but voiced strong opposition to the commission’s proposals for the regulation on sales promotions.

“We ask the commission to withdraw its proposal on sales promotions in favour of the genuine consultation which was apparently promised in the Green Paper,” said BEUC director Jim Murray.

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