Brussels Deal Greenlights Pan-European Price Promos

22 August 2002

Within two years marketers within the European Union should be able to run price-based and free gift promotions across all the EU’s fifteen member states – free at last from the labyrinth of local restrictions imposed by individual nations.

The liberalization deal, reached Wednesday, is the result of a compromise between the European Commission, the European Parliament and national governments. Under the terms of the agreement, governments will cede the right to impose an upper limit on the value of discounts offered by retailers or others – a limit currently applied by eight EU countries. Such limitations effectively outlaw free offers and ‘two-for-one’ deals.

The EC view is that the abolition of controls will boost the retail sector and at the same time benefit the EU’s 370 million consumers. The current value of price promo activity within the EU is estimated at €40 billion ($39.05bn; £25.59bn) annually.

Comments an EC official: “Sales promotions are key tools to market goods and services. If a company cannot communicate efficiently across national borders . . . it will not be able to exploit the benefits of the internal market.”

But there’ll be no overnight transformation into a promotional Liberty Hall. As part of the deal, bans on sales below cost [in those member states where they apply] will remain in place for at least two years. Thereafter, an EC study will decide if, when and how the bans should be dismantled.

The scrapping of 'below cost' bans is not assured. According to the parliament’s internal market committee: “The prohibition of loss-making sales … is a useful instrument that not only serves consumer interests but also helps to prevent unfair trade practices.”

The pact is expected to be approved by parliament and the fifteen member-states before the year end.

Data sourced from: Financial Times; additional content by WARC staff