According to government insiders, the European Commission’s recent ruling that e-tailers are bound only by the laws of the member state in which they are based has forced the German federal cabinet to abandon the country’s draconian restrictions on promotional rebates and giveaways.

Many of the current restrictions were imposed before the second World War in an effort to protect small-to-medium retailers from the power of major retail chains. They were also intended to shield consumers from obscure or misleading pricing.

But in the light of the EC ruling, German economics minister Werner Mueller argued for the scrapping of the laws which, he said, would now place German companies at a disadvantage. He also recognized the “real danger” that New Economy companies vital to the nation’s job market would move out of the country if the law remained unchanged.

Abandonment of the laws, enacted in 1932 and 1933, has also won the support of justice minister Herta Daeubler-Gmelin – a former proponent for their retention.

The European sales promotion sector will also hail the lifting of the restrictions, which have long imposed on marketers shackles that are out of step with the rest of Europe and the USA.

The laws are expected to become history early in 2001.

News source: Wall Street Journal