01 July 1999

THE HIGH COURT last month dealt a massive blow to the sales promotion industry, ruling that one of its favourite techniques - the ‘no purchase necessary’ prize draw - is illegal.

Promotional prize draws, which have an estimated annual value of £1bn, are beloved by major advertisers such as Nestlé, Coca-Cola, Mars and Carlsberg-Tetley. For the past eight years, promoters and agencies have proceeded with innumerable prize draw promos in the fond belief that they did not infringe the law provided that entry without proof of purchase was allowed - the magic ‘no purchase necessary’ mechanism [usually camou-flaged in seven-point type on the nethermost line of the ad or entry form].

The case that trig-gered the controversial judgement was that of a Bristol newsagent who had distributed a free scratchcard game on behalf of a newspaper. In his ruling, Judge Raymond Jack QC opined: ‘If it is right to prohibit un-exempted lotteries as contrary to the public good, it made no sense to hold that a scheme was not a lottery because some participants did not contribute - even though substantial numbers of others often did.’ Given the promotional efficacy of the prize draw technique, to say nothing of its relatively low operating costs, the sp industry is unlikely to accept the judgement without a ferocious fight. According to ISP head of legal services Philip Circus, the ruling contradicts written advice given in 1991 by the Crown Prose-cution Service: Scratchcard promotions were not an illegal lottery, the ISP was told, ‘so long as free entry routes were genuine, realistic and unlimited’. The ISP is considering offering financial assistance to the newsagent’s defence team if it decides to appeal.