WRITTEN QUESTION P-0092/02

by Mihail Papayannakis (GUE/NGL) to the Commission

(17 January 2002)

Subject: Sales promotions in the internal market

The Commission recently published a proposal for a regulation concerning sales promotions in the internal market COM(2001) 546 final. How will the Commission take account of the concerns which small and medium-sized businesses already have about the regulation and how can it ensure that the system of continuous offers and discounts which it promotes will not prove damaging to such businesses, which do not have the same capacity for mass markets and advertising campaigns as large companies?

Answer given by Mr Bolkestein on behalf of the Commission

(8 February 2002)

The Commission analysed this area in detail before proposing the Regulation on sales promotions in the Internal Markt. It adopted a Green paper in 1996(1) and a follow-up Communication in 1998(2). Many companies, including small and medium sized firms and trade associations representing their interests, complained about differences in

laws within the Internal Market that were preventing the use and communication of sales promotions across borders. Moreover, the Commission had a number of infringement complaints from direct marketing companies (often small and medium sized companies) who were finding it nearly impossible to develop their businesses across borders precisely because of disproportionate restrictions in this field.

The proposed Regulation by removing disproportionate restrictions and harmonising information requirements will allow small and medium sized companies to use sales promotions in cross-border actions.

It is of course true that because of their greater leverage and marketing budgets larger manufacturing companies and retailers may be able to offer more valuable sales promotions than their smaller competitors. However, qualitative and targeted sales promotions are often relied on by small, competitive and innovative companies to create new niche markets or break into existing non-domestic markets. Moreover, in the current fragmented regulatory environment large companies can afford to adjust sales promotion campaigns to tailor their campaigns to the differing national laws whereas this type of adjustment is beyond the reach of many small and medium sized competitors. This may prevent small and medium sized companies from extending their activities into neighbouring Member States. The Commission therefore believes that the proposed regulation, by liberalising the use of sales promotions across borders, will be particularly beneficial to such small, competitive and innovative firms seeking to develop new cross-border markets.

Finally, it should be noted that sales promotion campaigns are used by most if not all firms precisely because they are the most affordable type of marketing technique. The cost of advertising space on mass media implies that many small and medium sized companies cannot resort to cross-border mass media display advertising campaigns.

Thus, the Commission's proposal for a Regulation, by focussing on sales promotions and liberalising their cross-border use and communication, should be particularly beneficial to small and medium sized enterprises seeking to exploit the benefits offered by the Internal Market.

(1) COM(96) 192 final.

(2) COM(98) 121 final.