91997E4212

WRITTEN QUESTION E-4212/97 by Bryan Cassidy (PPE) to the Commission (21 January 1998)

Subject: Judgment of the European Court of Justice (ECJ) on 26 October 1996 in the case of Elida Gibbs Limited (Case C-317/94)

This ECJ judgment appears to be frustrated by its non-application in Germany and its partial application in France and Greece.

Is there any rule in Germany which prohibits certain types of promotion scheme, such as the use of manufacturers' money-off coupons or manufacturers' cash-back offers? If so, what is the logic behind the prohibition and is such a prohibition acceptable in the Single Market?

If there is such a rule and it is not acceptable, what action has been taken by the European Commission, and under what provisions of the Treaty?

Answer given by Mr Monti on behalf of the Commission (10 March 1998)

There are very strict rules in Germany governing the granting of discounts and premiums.

The Zugabeverordnung (Order governing free gifts), which is dated March 1932, prohibits with very few exceptions the giving of any gift of whatever kind in connection with the sale of a good or service. The exceptions concern, for instance, packaging or gifts of insignificant value (of less than 50 pfennigs or so). The Rabattgesetz (Law on rebates), which dates from November 1933, prohibits discounts of more than 3%.

According to the information in the Commission's possession, the logic applied at the time by the legislature was twofold: to protect consumers by encouraging them to base their buying decisions on the intrinsic qualities of the product or service and on its price, and to ensure fair trading by preventing practices deemed likely to distort competition. In the 1920s premiums were offered particularly by large stores in Germany and, following the depression years, it was deemed expedient to protect small and medium-sized businesses by what was intended at the time as a temporary measure.

The German Government sought to propose the repeal of those two instruments in 1993/94, but its proposal was not adopted following opposition from the Upper House of Parliament and has not resurfaced since.

There can be no denying that the legislation in question, which has no counterpart elsewhere in the Community, might not be compatible with the principles of the single market. For, businesses are unable to adopt a pan-European promotional and advertising strategy in so far as they would have to rethink radically the content and nature of their advertising in order to comply with legislation in one of the largest markets in the Community. The Commission has received numerous complaints in this connection (see, for example, the answer to Written Question No 64/98 by Mr de Vries ((See page 26. ))).

In the absence of any Community harmonisation in this matter, the Commission is examining the possible restrictive effects and the proportionality of the German legislation as part of its investigations into the aforementioned complaints and in the light of the case law of the Court.