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Debates
Tuesday, 3 September 2002 - Strasbourg OJ edition

Sales promotions in the internal market
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  President. – The next item is the report (A5-0253/2002) by Mr Beysen, on behalf of the Committee on Legal Affairs and the Internal Market, on the proposal for a European Parliament and Council regulation on sales promotions in the Internal Market [COM(2001) 546 – C5-0475/2001 – 2001/0227(COD)].

First of all, Mr Bolkestein will speak on behalf of the Commission. I would warn everyone that, given the number of speakers scheduled, we will obviously be unable to conclude this debate before the vote. On behalf of the Presidency, I would like to apologise to those Members who will have to return this evening to speak.

 
  
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  Bolkestein, Commission. – (NL) Mr President, it is a great pleasure to introduce, albeit briefly, the topic of today, indeed of the moment, in the knowledge that I shall have another opportunity to explain the Commission's opinion on this matter at the end of the MEPs' interventions.

I should like to say the following by way of introduction. The draft regulation on sales promotions aims to establish an internal market in the area of discounts, free gifts, premiums and promotional contests and games. The Commission has established that the current regulatory fragmentation in this field hinders the cross-border provision of these services. Parliament has, in this connection, requested swift measures. The proposed regulation aims to respond to this request by harmonising information requirements and lifting obsolete national restrictions in this field.

I am delighted with Parliament's motion for a resolution drafted by Mr Beysen. Although quite a few amendments have been tabled on the Commission's text, the result is in line with the planned modernisation and the internal market's goals. The proposal's objective is to lift a number of limits on the value of sales promotions and to harmonise a series of information requirements at the same time. This balanced approach must be retained. In fact, the need for this is recognised in most of Parliament's amendments, but the Commission is less impressed with the amendments in which a limit on the value of sales promotions is re-introduced, as in Amendment No 29, or the amendments in which the information requirements are deleted, as in Amendments Nos 49 and 54.

This proposal has caused concern in the following four areas: the handling of national bans on below cost resale; the connection between this proposal and the Commission's current activities concerning a much wider initiative with regard to fair trading practices; the provisions governing promotional games, in which connection the Commission has been accused of encouraging illegal gaming activities; and finally, the Commission was also criticised for making too much use of mutual recognition as a basis.

I should like to confine myself to these introductory remarks. As I already mentioned, at the end of the MEPs' interventions, the Commission will be given another chance to discuss these four major objections in more detail. Before the Commission does this, it would like to hear MEPs' opinions. This would enable the Commission to give better responses this evening.

 
  
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  Beysen (ELDR), rapporteur. – (NL) Mr President, Commission, ladies and gentlemen, allow me first of all to say a word of thanks to all my fellow Members of this House, and particularly the shadow rapporteurs, with whom I have worked closely in order to pilot the report on sales promotion into the plenary. It has been a long journey with many obstacles along the way, which started in 1996 with the first publication of the Green Paper, followed by the Commission's follow-up communication in 1998. Further to extensive consultation, the Commission introduced a pragmatic and clearly defined proposal in October 2001, for which I was appointed rapporteur in November 2001.

In the field of sales promotions, this draft regulation aims to eliminate obsolete measures and major discrepancies in the relevant legislation of the fifteen Member States. These many discrepancies prevent particularly small and medium-size enterprises from breaking through on the various European markets. It goes without saying that when enterprises cannot communicate across their borders, they cannot do any business at international level. In addition, sales promotion has many facets and can be tailored to different circumstances. It can be used to launch innovative products onto the market, to promote customer relations, to stimulate short-term campaigns by giving them a competitive edge, to react promptly to falling sales figures and as a means of effective stock management.

Furthermore, this regulation will also put the consumer in a considerably stronger position. Not only will consumers receive far more information, but they will also, via the development of the internal market, be able to take full advantage of better pricing. After all, a bigger internal market increases competition, which leads to lower prices, partly brought about by the euro.

This is why I consider this proposal to be a very important initiative for the internal market's future development. It is also a first step towards translating the fine words spoken at the Lisbon Summit into action. After all, nobody can deny that two years after this much-debated summit, disappointingly little progress has been made. Did Europe not want to become the most competitive knowledge-based economy? I believe that the time has come to make another step in the right direction with a regulation of this kind on sales promotion.

Its far-reaching consequences and the many interests involved have meant that this proposal has spawned quite a reaction, to which the Commissioner referred earlier. I should like to underline the key challenges.

As far as the legal basis is concerned, I have always taken the view that a regulation, thanks to the swifter entry into force and its direct applicability, is a much more effective legal instrument than a directive.

The issue of sale below cost is being temporarily deferred because the positions in the different Member States vary too widely. I have tabled a compromise amendment on this, in which I ask the Commission to carry out a thorough investigation into the subject. The reason for tabling such an amendment is that I do not want the liberalisation of sale below cost to have a detrimental effect on small and medium-size enterprises. I have therefore tabled an amendment with regard to the latter, which contains the explicit request to protect them.

In this proposal, mutual recognition or – in other words – the principle of the country of origin, is of major importance. This principle is also the internal market's keystone. It simply means that Members have to recognise that they cannot apply their own national legislation to incoming promotions. This mutual recognition of each other's legislation is a flexible means of avoiding overregulation. In addition, it is already a commonly used form of legislation in our Community legislation. The television without frontiers directive and the e-commerce directive are two cases in point.

Finally, I should like to comment on the stipulation of an age limit for children. I have always been in favour of the age of fourteen, unless specific products require other age limits. Following extensive bilateral consultation with fellow MEPs from the various committees, I have managed to resolve these challenges in a pragmatic manner. I am pleased with the outcome, even though I realise that further adjustments will need to be made in the course of further discussion on the motion for a resolution. I hope that Parliament has bowled the Council an important first ball, and I look forward to this debate with great interest.

 
  
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  Langen (PPE-DE), draftsman of the opinion of the Committee on Economic and Monetary Affairs. – (DE) Mr President, the regulation on sales promotions is a problematic and controversial dossier, as has been made clear by what Commissioner Bolkestein and Mr Beysen have had to say. I would like to thank Mr Beysen for such a useful result having emerged from such lengthy considerations. That was really difficult, as the discussion was dominated by consumer protection, completion of the internal market, the bureaucracy that is to be found in the Member States, and the concerns of smaller enterprises.

The European treaties established the principle of an open market economy with free competition. It is functioning markets rather than bureaucracy that best ensure the public interest. Enforcing these competition rules is a matter for the Member States on the one hand and for the European institutions on the other. It is precisely the introduction of the euro that makes it so necessary to harmonise in this area. All but a very few of the members of the Committee on Economic and Monetary Affairs welcomed the basic line of the Commission's draft regulation and delivered itself of an opinion that is more concerned with the Internal Market than is the final draft from the Committee on Legal Affairs and the Internal Market.

It was particularly with regard to the country of origin principle that we were more frank. Admittedly, we wanted to retain the national cartel rules and the rules against unfair competition, but also to go one step further. It is right that the provisions on cartel law in the Treaty establishing the European Communities and the essential national provisions on bargain sales should be maintained, as they protect smaller businesses against big groups of companies. Derogations for specific areas such as lotteries, members of the professions, and medicines are to be laid down, and they are justifiable. The explicit adoption of customer loyalty schemes alongside the customary discounts is likewise right and necessary, but the Commission did not take it into account.

The deletion of the rule prohibiting sales below cost price, as demanded by the Economic Committee and taken up by the Legal Affairs Committee, is right and proper. On this, I want to expressly contradict Commissioner Bolkestein's remarks. The Commission proposed transparency obligations as a precondition for the planned prohibition of sales below cost price, and these bear no relation to current practice, are questionable from the point of view of competition law and would lead to agreements to fix the resale price. That cannot be our objective, and so, Commissioner, I do not believe that you will find a majority in Parliament in favour of this scheme.

 
  
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  Patrie (PSE), draftsman of the opinion of the Committee on the Environment, Public Health and Consumer Policy. – (FR) Mr President, ladies and gentlemen, the least we can say is that the vote on this proposal for a regulation to liberalise sales promotions is taking place prematurely. Once again, the Commission has put the cart before the horse without waiting for the European Parliament’s point of view. The Commission has already favoured the open option in a Green Paper on consumer protection, which will not be examined by the House until several weeks’ time.

Therefore, in addition to the slightly incoherent character of the approach taken, one cannot fail to condemn the lack of attention paid to Parliament’s point of view, which has been reduced to a mere rubber-stamping of the policies that have been predetermined by the Commission. The choice of legal instrument that makes up the regulation plays a significant part in this. A framework directive leaving a margin of flexibility for Member States could have been better adapted, but it would certainly have sparked off debates at national level once again, debates that had been concluded by the choice of regulation, which is something that the Commission did not desire.

I would particularly like to emphasise the issue of mutual recognition, a principle recommended by the Commission to improve the way the internal market works. The practical difficulties posed by applying this principle should be highlighted. The consumer has no knowledge whatsoever of foreign law, just as a judge in a national court has difficulty when it comes to applying the legal rules of one country other than his own. Secondly, there is a risk that mutual recognition will lead to deregulation that is harmful to both economic operators as well as consumers. Operators that are put at a disadvantage by this principle will evidently be tempted to put pressure upon their government to align their national legislation with legislation that is more liberal. This will therefore lead to a downward alignment of consumer policy throughout the European Union. That is why I proposed replacing this principle, which, incidentally, has been worded in an extremely vague manner in the proposal for a regulation, with a formula which is, in fact, that used in the established case law of the European Court of Justice.

As for the rest, I believe that the text, as it appears following the votes in the relevant committees, still contains the vital part of what the Member States consider necessary for the protection of their consumers. Nevertheless, the debate on a genuine European consumer policy has not been held and we certainly hope to hold this debate in the near future, when the Green Paper is presented to the House.

 
  
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  Fourtou (PPE-DE).(FR) Mr President, Commissioner, ladies and gentlemen, 10% more for the same price, a second pair of glasses for 1 extra euro, three for the price of two, a free gift with any purchase…these are the usual signs of so-called sales promotions.

When you take advantage of this type of opportunity, you probably do not realise the subtlety of a phenomenon that is as economic as it is cultural. The differences in the definition of free gift, bonus, discount and promotional game are extremely subtle, and what the French will consider to be fair will be unthinkable to a German, whilst the English will not understand why their neighbours are sticking to so many rules and will consider the consumer to be naive.

This report is a good example of how economic and cultural issues overlap, which partly explains the passionate response that it has evoked.

The initial response was to reject the report. However, given Mr Beysen’s determined attitude and following a conciliation process that was no less determined in nature by my colleagues in the PPE-DE, we opted for a position that is in line with our commitment to the Community.

We therefore came out in favour of regulation which, in a market regulated by the euro, liberalises and makes uniform sales promotions, whilst ensuring, however, that the same regulation protects both consumers as well as small and medium-sized businesses.

From this perspective, we dismissed sales liberalisation and below cost resale, by asking the European Commission to carry out a more detailed study on this specific subject. For the management of this Community promotion, we could only refer back to the principle of mutual recognition, which is fundamental and underpins the entire internal market infrastructure. That said, in this specific case, we had to clearly redefine the scope of the principle, since there are significant differences between the various national legislations.

The proposed text originally contained more than 300 amendments. These were finally cut down to 58, which not only represents a considerable effort but also a Community will to forge ahead. Do not forget that, at Lisbon, the Heads of State and Government made the commitment to make Europe the world’s most competitive nation. We all needed to keep an open mind, to show great willing and to listen carefully to others, and a clear sign has thus been sent to the governments of the Member States.

That is why we recommend adopting the text in the form that was approved by the Committee on Legal Affairs and to reject the amendments tabled in plenary.

The internal market has enormous potential and we can overcome any difficulty if we have to will to succeed.

(Applause)

 
  
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  McCarthy (PSE). – Mr President, we all agree on the need to allow companies across Europe to run the EU-wide sales promotions. Sales promotions are key tools to marketing goods and services and we need to get rid of restrictions and barriers so as to allow business and consumers to exploit the opportunities of the internal market.

In the UK it is commonplace that consumers can and do benefit from sales promotions, for example coupon vouchers. In 2000, for example, 531 million coupons were redeemed in the UK; between 1999 and 2000 there was a 122.5% increase in consumer use of Internet coupons and promotions. So they are popular and we need to regulate and open up this area for consumers and business.

It is, however, important that the Commission addresses some of the concerns of Members of the European Parliament and of my political group on the issue of sales below cost in particular. We also tabled the amendment to require the Commission to come forward with a study in this area.

There are legitimate concerns, because sometimes sales below cost can be abused to squeeze out competitors by means of predatory pricing; this does not help small business, nor does it help the consumer. That is why, in the spirit of better legislation called for by Commissioner Prodi recently, my group will give the Commission conditional support for the regulation if it agrees to carry out an evaluation study to examine exactly how sales below cost can benefit both small businesses and consumers. This study should also address the need to strengthen competition policy instruments to prevent predatory pricing and its unwanted side effects.

The internal market should not be a free-for-all for big business, leading to SMEs being squeezed out of markets with the result that consumers have less choice. We must also make sure that the information requirements in the annex are clear. It is important that business is clear about its obligations to provide information on promotions. It is also important that consumers have sufficient information and legal redress, either through the law courts or through ADR systems. The PSE Group has therefore tabled an amendment asking the Commission to work in consultation with consumer groups and industry to ensure the clear and unambiguous execution of the information requirements. As they are currently drafted, they are misleading and have led both to business lobbying MEPs and complaining about the lack of clarity and to consumers letting us know that there are information gaps. If this regulation is to achieve legal certainty then the requirements must be clear. However, I agree with the Commissioner that the answer is not, as the PPE-DE Group has proposed, to delete those requirements and, like the Commission, we will be voting against those deletions.

The PSE Group has taken a strong line to protect minors against harmful promotions relating to alcohol and tobacco. I hope those will be taken on board.

Finally, a very brief point on mutual recognition. I personally believe that mutual recognition already works. Every day on the Internet, cross-border sales and business are alive and thriving, using the principle of mutual recognition. We cannot bury our heads in the sand and deny the fact that this is already happening.

 
  
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  MacCormick (Verts/ALE). – Mr President, this is an important piece of legislation which will really help to improve and consolidate the single market by ensuring that we do not have excessive cross-border differences about sales promotion rules. It is justifiably a regulation because it simply removes certain sorts of bans on sales promotions while leaving it to the states to pursue their own particular legal, economic and political preference in other cases.

So in this sense it is an important contribution to the consolidation of the single market and my group will support it in much the same spirit and also support much the same amendments as Mrs McCarthy has just done on behalf of the PSE.

I would like to stress a few points. First of all, this is not an attack on consumer protection. Indeed some of the amendments make it absolutely clear that we want to see the maximum liberty of sales promotions that is consistent with proper consumer protection laws. Secondly, there is a degree of concern about the fate of small businesses faced with large retail organisations whose forms of sales promotion may be thought to encourage the closing down of the corner shop and the aggrandisation of the supermarket. We are certainly against that and we underline in the amendments we support and in those we supported in committee that the sales promotion laws must be seen to be wholly in conformity with competition law and with the avoidance of abuse of dominant position in markets.

Given these safeguards, including the safeguards for minors, my group will with great goodwill vote for this measure today.

 
  
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  Esclopé (EDD).(FR) Mr President, ladies and gentlemen, the Commission’s proposal for a regulation shows that the obsession to make everything uniform with no regard for subsidiarity will affect those on the lowest incomes. The elected representatives of the CPNT [Chasse Pêche Nature Traditions] group are not prepared to abandon small retailers and smallholders to the sharks of the mass distribution sector, which is free to embark on the anti-competitive practice of sales below cost. Several national laws forbid this type of underhand behaviour. The consumer will actually suffer on two counts. Below cost sales is not an act of charity, but the taking over of a market share, which will have to be compensated elsewhere. Citizens will also suffer from the closure of local facilities, which are already in great difficulty in rural areas and town centres. The quality of the work carried out by our fellow Members in the Committee on Legal Affairs is not in question and many negative details have been eliminated, but there is a risk that the Commission, as on many other matters, will ignore this work and will, for the most part, stand by its original position.

To sum up, we believe that the only appropriate and responsible political option, as has been proposed to you, is to reject the Commission’s proposals, as this will be in everyone’s interests. If you agree to let the rot set in, you should not be the first to complain when all goes wrong in the future.

 
  
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  Montfort (NI).(FR) Mr President, every freedom is based on a balance. Economic freedom is based on a balance between the interests of consumers and that of entrepreneurs and distributors. This freedom will certainly be lost if we establish an inequality that will benefit one or another party. This is what the Commission has quite simply attempted to do under the misleading pretext, once again, of forced harmonisation.

By attempting to remove restrictions on sales promotions put in place by the Member States, the Commission is removing the essential safeguards that the national legislations had put in place in order to protect both the interests of consumers, of small producers and retailers. Dangerous and irresponsible commercial practices would come about from resale below cost or the deregulation of sale periods and conditions, and our economies would eventually suffer. Furthermore, the changeover to the euro should not serve as an excuse to increase prices.

Therefore, I can only welcome the amendments which were adopted in the various parliamentary committees that were involved in this text and which continue to observe national legislation in this respect. Downward harmonisation, which is what the Commission appears to desire, runs counter to common sense and to healthy business for economic players, and in particular for the most fragile players. Local businesses and small businesses are the driving force behind our economy. I think it is necessary to emphasise this and to reiterate that, without them, the diversity of supply and the guarantee of quality would disappear. However, they also play a role in providing a social and economic balance in our society. Be careful not to disrupt this balance, this would not be in anyone’s interest, not in our capacity as consumers, nor in our capacity as politicians.

 
  
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  President. – Thank you very much.

The debate is adjourned. I shall now give the floor to Mr Harbour to move a point of order before we commence voting time.

 
  
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  Harbour (PPE-DE). – Mr President, on a point of order. I am sure I speak on behalf of all my colleagues in the Committee on Legal Affairs and the Internal Market, some of whom are still here. Can I protest to you on behalf of all my colleagues working on this dossier about the quite unacceptable way in which this debate has been scheduled? We started this debate at 11.30 a.m.. The session services knew it would not be finished and there are other debates scheduled later which you know from your computer system could have been slotted in there. We now have to adjourn the continuation of this debate until 9.30 p.m. Mrs Montfort and my colleague from the EDD have spoken under quite unacceptable circumstances. This is not the right way to run a chamber that is supposed to be having a serious debate on these subjects. It is not necessary to do this; there is no reason to split debates. You have the information and I suggest that it is not right to allow proper contributions while people are coming into the chamber. I hope all colleagues will support me in saying we should seriously get a grip on how business in this chamber is run.

 
  
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  President. – Mr Harbour, I have taken careful note of your complaint, which will be forwarded to the services responsible for scheduling our order of business. Whilst you have been talking, your fellow Members have taken their seats and we shall now proceed to the vote.

***

 
  
  

IN THE CHAIR: MR COX
President

 
  
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  Rack (PPE-DE).(DE) Mr President, we have taken over ten minutes to get from the ninth floor down to the Chamber. The lifts are absolutely useless – either that or the architects who planned them are.

(Loud applause)

My fellow Member sitting next to me has made a very good comment. He said, 'We have the safest lifts in the whole of Europe. They are so safe because they no longer work. That way, nothing can go wrong.' But perhaps they should do the job they were designed to do.

(Laughter)

 
  
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  Callanan (PPE-DE). – Mr President, on a point of order, the reason why the lifts did not appear to be working was that the security guards were standing at the bottom with about three of them blocked off, apparently for some delegation that is visiting Parliament! Because this building is so badly designed, the lifts barely have enough capacity for Members as it is, without the security guards taking over two or three of them at precisely the time when everybody is coming down to vote. The sessional services should get themselves better organised.

(Applause)

 
  
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  Vlasto (PPE-DE).(DE) Mr President, I would like to say that I was stuck in a lift for 15 minutes, so the lifts really are not working.

 
  
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  President. – We will have the services look into all of that. The only assurance I can give you is that the President was not blocking a lift.

 
Last updated: 27 July 2004Legal notice