The ECJ says member states should not have stricter laws than the European Union’s Unfair Commercial Practices Directive.
The ruling follows a challenge from advertisers to a ban on the practice in Belgium. Other countries, such as Finland, also currently apply a ban.
One case involved a garage which was offering free car break down cover to customers buying petrol. Another case involved a magazine giving away a coupon offering customers a discount on lingerie purchases.
Advertising trade body ISBA has welcomed the decision. “It is important to have this clarification of the law as companies need to know that commercial practices allowed by the directive can not be unilaterally banned in some countries which seek to protect their markets from competition,” it says.