Is it goodbye to the ban on combined offers? Implications of the ECJ judgment finding the ban on combined offers involving competitions to be incompatible with European law

By Attorney-at-law Yasmin Farhumand, Hambach & Hambach law firm

“Win a holiday to the Caribbean! Only if you buy a packet of 10 chocolate bars today!” or “Sign a broadband contract today and win concert tickets to see your favourite singer” – companies have been playing with fire by using advertising slogans such as these ones. Although tying a competition to the purchase of a certain product is nothing new, in the past companies have always had to offer an alternative means of taking part in the competition (e.g. by sending in a postcard). Otherwise the advertisement was deemed to breach the ban on combined offers.

Now, in its judgment of 14 January 2010 (file ref.: C-304/08), the European Court of Justice (ECJ) has ruled that the general ban contained in section 4, number 6 of the German Act Against Unfair Competition prohibiting the tying of a competition to the sale of a good or service is contrary to European law.

The matter was referred to the ECJ for a preliminary ruling as a result of proceedings between the Wettbewerbszentrale (Centre for Protection against Unfair Competition) and a supermarket chain hoping to entice customers to purchase its products by advertising a bonus point offer. Customers who collected 20 points were allowed to play the lottery free of charge. This offer was advertised with the slogan “Your chance to win a million.” The Wettbewerbszentrale deemed this to breach the ban on combined offers laid down in section 4, no. 6 of the German Act Against Unfair Competition and won at first and second instance. The German Federal Court of Justice doubted whether the provision was compatible with European law and referred the matter to the ECJ.

The ECJ held that the ban on combined offers was not consistent with the European Unfair Commercial Practices Directive (UCPD) which, it held, already conclusively regulated all per se bans on unfair commercial practices. It considered that the general ban on combined offers, which made no provision whatsoever for checking on a case-by-case basis, constituted an inadmissible addition to the list of prohibited commercial practices (black list). Because of the UCPD’s goal of complete harmonisation, the Member States were not entitled to impose stricter rules than the measures laid down in the Directive, not even if these measures served the purpose of protecting consumers.

Caution is advised, however! The ECJ’s ruling does not mean that all advertising campaigns tied to a competition are now legal. Instead, it must be checked in each individual case whether the advertising measure unfairly influences the consumer’s purchase decision by offering the prospect of a specific prize, or whether the consumer is still able to make a rational decision. This is likely to depend on the value of the prize and the purchase price of the product or service. The decision as to the point at which a tied competition becomes inadmissible has been left to the German courts.

Source: TIME LAW NEWS 1/2010 ( Hambach & Hambach Law Firm