Ireland's main concerns with the original proposal were articulated at the European Council working group of meetings in 2002 and at the Council of Ministers for the internal market, consumer affairs and tourism in May 2002. Those concerns related mainly to the issues of below cost sales of alcohol and tobacco. Ireland has a reservation on the amended proposals as a whole. The main Articles about which we are concerned are Articles 3 and 5. Article 3 deals with the use and communication of sales promotions and it has now been amended following discussion in the European Parliament. Our main objection to the original article related to the fact that it states that "member states shall not impose a limitation on the value of a sales promotion". If such a provision remained, below cost sales would have to be allowed. This would have had implications for our sectoral ban which is in operation arising from the existence of the Restrictive Practices (Groceries) Order 1987, which imposes a ban on the below cost selling of groceries. The amended draft excludes below cost selling from the cost of the draft regulation.
The Commission had insisted that its original proposals are in the interests of consumers and the completion of the internal market, and that the ban on below cost sales should be lifted. However, along with us, a number of other member states, including Germany, France, Italy and Greece, were opposed to a ban on prohibitions on below cost selling. The European Parliament's amendments made an exception for below cost sales. The result is the present draft which is acceptable to the Commission and which is now before us.
Another aspect of Article 3 about which we were concerned is that related to a mutual recognition. The article imposes the principle of mutual recognition on the application of remaining national restrictions relating to sales promotions. This means that member states are obliged to respect the right of firms to promote and sell within the EU. This is in the interests of the internal market where the treaty provides that there should be minimum restriction on the movement of goods and services. In practice, that means Ireland cannot prevent consumers - be they wholesale or retail - availing of promotions in another member state, and selling those goods in this State or buying the goods for final use.
In so far as groceries are concerned, under the Groceries Order below cost advertising by or on behalf of a retailer and selling groceries below cost by a retailer in Ireland, would continue to be banned. The key provision of the order is that goods are not sold below the net invoice price. A retailer cannot sell goods in Ireland if he is doing so at a price below his net invoice price. We have reserved our position on this aspect, as we have on the whole regulation. However, on this we need to work through some practical examples with the Commission to ensure that we understand fully how the draft will apply here before we indicate any agreement to the provision.
Another aspect of Article 3, even though it is not stated directly in it, relates to promotional games and contests. This is a responsibility in terms of our briefing of the Department of Justice, Equality and Law Reform. That Department has expressed concerns that scope exists in the draft regulation for lotteries which have a sale promotion focus and which we would be prohibited from banning under the draft currently before us. These lotteries would normally either be prohibited or carefully regulated under our gaming and lotteries legislation. Ireland will, therefore, push our view that an amendment to ensure that we continue to be able to regulate all gambling activities or games of chance, be taken on board.
Article 4 of the draft regulation is a transparency provision, designed to protect consumers and companies, particularly small companies, by ensuring that the sales promotion is presented in such a manner that an informed decision can be made as to whether the relevant sales promotion makes it worthwhile to purchase the promoted product or service. Most of the debate at the Council meetings focused on whether the information should be available up front or on request. Discussion on this matter has not finished yet and a balance on this point will be discussed further at the Council's working group.
Article 6 relating to redress is another transparency Article that places on the promoters the burden of proof as to the accuracy of information provided. It is there for the protection of consumers.
Article 7, which concerns sales below cost. There is an amendment which excepts sales below cost, but within two years of the regulation coming into force, Article 7 provides for an assessment of the internal market effects of the differing national prohibitions on below cost selling, and for an assessment of the potential liberalisation of those sales.
That is a run-down from the viewpoint of the Department of Enterprise, Trade and Employment.
