The following is a summary of Chapter B from the book by Thanos Masoulas:
"Theme and Scheme advertising" Athens 1971


THE LEGAL ASPECTS OF THE ďSCHEMEĒ ADVERTISING IN GREECE
© 1971 Thanos Masoulas 




By contrast to theme advertising, it is a basic feature of scheme advertising that it is of a gratuitous nature inasmuch as consumers or prospective clients are given benefits or a promise of receiving benefits free of charge.

The various forms of scheme advertising known to date fall into three basic categories:

a) The promise to give or the actual giving of gifts over and above the principal product sold or regardless of the sale thereof.

b) The award of prizes as a result of some form of some competition and

c) The free distribution of small quantities of the advertised product to the consuming public for the purpose trial (Door to door distribution).


The advertising, being by definition a means intended to produce a psychological effect on the individual, seeks to win him over for a certain definite purpose. This objective, particularly as regards scheme advertising, is subject to certain restrictions which define more closely the meaning of the term <accepted rules of conduct>. These restrictions will merely be listed immediately herebelow, but will also be considered in greater detail later on in our evaluation of each form of scheme advertising.

a) It is a primary rule, to which all subscribe, that the consumerís option should remain free without in any way been biased by factors lying outside the product on sale.

aa) The factors associated with the product are those of price and quality on which competition should concentrate. This is consistent with the view that competition fosters and should foster economic progress. Against the background of this view, the factors associated with the product should also be reckoned to include arrangements to provide after sales services, e.g. the maintenance by the producer or his agents of work-shops intended to keep under review the operation and maintenance or products etc. sold at any one time.

bb) Hence advertising, and in particular scheme advertising with which we are concerned here, so long as it remains a function auxiliary to the distribution of the principal goods and services, intended to attract the consumerís attention to quality and the market value of the advertised product, is not considered subject to the prohibition of the general clause of article 1, Law 146/1914.

b) Another principle, deriving from Law 146/1914 ( articles 3 and 5) itself, is that of truth in carrying on competition in general. This involves an obligation that the public should not be misled by the advertising campaign in its appraisal of the business relations of an enterprise.

c) The law moreover forbids that the public should be led to make up its mind by being bribed in any way, whether directly or indirectly, by the businessman concerned of he should provide any special advantages, irrelevant to the advertised product, which might in themselves influence the publicís decision to buy.

d) Akin to the above, there is a rule which forbids any attempt to lure the public and achieve desired sales by exploiting the gambling propensity of the public.

e) Lastly, there is a basic principal, deriving from the very concept of competition, which commands that within one and the same market all competitors should have a chance to publicise and carry on their competitive effort, that is that there should be freedom of competition. The limits of such freedom of competition lie at precisely that point at which interference in the interests of the community and of other competitors is attempted by methods which conflict with the sense of justice and ethics.


I. Extra benefits upon the sale of advertised product (free gifts)

In several countries, it is prohibited to give the consumer any extra benefits free of charge on top of the product sold.

The prohibition of scheme by the enactment of special legislation was initiated in these countries, notably in Germany which possesses legislation kindred to ours in this matter, for reasons of economic policy which clearly lies outside the problem of the lawfulness or otherwise of giveaways. There was need to pass separate legislation regulating the matter precisely because the general prohibition of giveaways could not be grounded on the provision of paragraph 1 of the UWG, corresponding to article 1 of Law 146 in this country. It follows that, in the absence of a corresponding legislative regulation of the matter in this country, the relevant enactments in force in foreign countries, notably Germany, can be of only negative use in Greece, particularly as regards the fact that not every case of a giveaway is in the nature of a competitive act contrary to the accepted rules of conduct.

In this country it is therefore important to proceed to an appraisal of the problem of extra benefits on top of the product sold within the scope of the general clause of article 1, Law 146/1914, which has been done on the first place by our jurisprudence the findings of which are analysed below. Recourse to foreign jurisprudence and scientific interpretation should be had with great care because of the special legislative regulation prevailing in the foreign countries concerned.

1.1. In the conformity with the rule given above, extra benefits (free gifts) fall within the prohibition of article 1, Law 146, each time that following upon attending circumstances they cease to be an auxiliary means of attracting the attention of the public in order to become an end itself for the consumer.

In such a case, and this is where the unethical element creeps in, competition oversteps the limits of the principal product, the main object being now to destroy the other competitor by means of giveaways, precisely because consumers attach importance to such giveaways and are led to buy the principal product not because they desire to purchase the same for reasons of quality and market value and following upon a comparison with similar items available on the market, but solely because by buying the principal product they will be entitles to an extra benefit. This being so, the respective roles are reversed, the accessory taking place of the principal product and vice versa.

Moreover, it is now unanimously agreed that these extra benefits then become an end in themselves and hence conflict with the accepted rules of conduct when they are particularly substantial.

The element of <substantiality> is gauged both independently and also by comparison to the principal product. It should be noted that the test applied by Greek jurisprudence is based particularly, if not solely, on this latter view. Whether or not the giveaway is substantial or not may be judged both from its value and by other standards, such as the difficulty with which it can be obtained on the market, the ignorance or innocence of the public and in one word the general impression that it produces.

1.2. Now as regards the test relating to the value of such free gifts, there is yet no hard and fast rule. It is accepted in our jurisprudence that if the value of the free gift is as high as 32-38%, then this is held to be extremely substantial. However, no minimum has been laid down to date. In order to be on the safe side a free gift should not exceed a percentage of 15% to 20% of the value of the main product.

2. Competitions

2.1. Extensive use in now being made of competitions for advertising purposes. They offer an infinite number of possibilities for stimulating the interest of the public and have accordingly been speedily adopted in business transactions.
The institution of competitions is governed in part by the provisions of articles 709-712 of the Civil Code on offers for a reward and competitions and in part by the provisions relating to lotteries.

2.1.1. Under articles 1 of Law ΑΧΛí/30.12.1867 <re: lotteries>, it was forbidden to institute any lotteries. Article 2 clarifies that this prohibition covers issue, transfer or bringing into circulation of any benefits additional to some other obligation or to confer other advantages depending on the drawing of lots or other modes of casting lots. Any infringement of the prohibition entails the penal sanctions provided by article 5.

The prohibition referred to is extremely general in its wording and for a long period of time view had prevailed that the grant of any advantages dependant on the drawing of lots was totally prohibited.

This view grounded the contract of lottery on two elements alone; namely, that of the grant of an advantage, on the one hand, and the casting of lots, on the other.

2.1.2. This view has undergone a change of late having been replaced by another which, by placing a restrictive interpretation on the above provision, has proceeded to add yet another element, inasmuch as it accepts that a lottery contract of chance subject to the prohibition of Law exists if one of the parties to the contract gives a comparatively small consideration, while the other party offers the promise of a gain which is relatively large but uncertain in accordance with the lottery programme concerned. This third element is that of the payment of a small amount, it being added that the expected large gain should come from the sacrifice to be suffered by the rest of the participants.

Accordingly we are not faced by a prohibited lottery contract of chance whenever a concern distributes to such persons as buy its product numbered tickets upon the drawing of which it distributes particularly high-priced articles, since these articles come from its own resources and it could have distributed them even without the drawing of any lots.

2.2. Any assessments of competitions on the basis of the provisions relating to unfair competition originally met with practically hostile caution on the part of science and jurisprudence, but it is at present widely accepted under certain conditions:

2.2.1. Thus in conformity with the principle that the consumer should not be constrained in any way to buy the advertised product, a competition is held to be illicit if participation therein depends on the purchase of the product involved.

This is of course the most conventional method of constraining people to buy. But all such methods as induce the public to buy the product not because they find it suitable for their needs but simply in order to share in the prospects of gain are considered illicit. A case in point is where the solution to the problem is to be looked for in certain particular book or periodical where it has been inserted.

2.2.2. What is more, psychological compulsion to buy is likewise prohibited, as happens in cases where the terms of participation in any particular competition have to be obtained from the store which is responsible for the advertising or where the solutions to be provided must be handed over to the store concerned, since in such cases it is obvious that the public feel under obligation to buy something.

It is to be noted, however, that stores are laid out in such a way nowadays that the better part of their floor space is used as a show room and that moreover in such matters there has been a radical change in the mentality of the public which, particularly in big cities, does not feel it a duty to do any shopping without fail every time a visit is paid to a shop. In these circumstances, there is no case of any psychological pressure where the competition contains a term requiring as a sine qua non that intending participants should visit the shop ( since the aim may very well be to give the public a chance to become acquainted with the goods offered to the public) or a term which requires intending participants to apply for a prize offered at the shop which is carrying on the advertising campaign.

2.2.3. Another aspect akin to psychological compulsion is that of bribing the public so to speak. A principle has in fact emerged to the effect that no attempt should be made to bribe the public under the guise of a competition. This relates to cases where persons desirous of sharing in the expectation of gain are not required to perform any specific act, make any intellectual contribution or exercise their imagination, and where the prize or gain offered is extremely substantial. In such cases, apart from the fact that the ultimate aim may well be the financial ruin of business competitors, it is clear that the public is lured by the expectation of a very large gain and is in a manner of speaking being bribed, unless what we are dealing with is a special case involving for example the official opening of any business premises etc.

2.2.4. Yet another principle governing the law of advertising as a whole enjoins that competitions should not have the effect of misleading the public, as in cases where the solution is intentionally misleading or where there is more than one solution or where an attempt is being made to mislead the public as regards the prize promised.

2.2.5. Then there is another principle, deriving from the very concept of competition, which enjoins that competition should be free and that it should not be obstructed while being carried on. Accordingly, any form of contest which might exclude competitors from the market or make it difficult for them to display their products is held to be illicit. For example, if I were to advertise for a shop window contest involving the offer of extremely valuable prizes, say for a period of three months during the summer season, on the subject of the best display of M bathing-suits, and flood shop windows with M bathing-suits, I would of necessity be depriving all competitors of the possibility of displaying their goods in the shop windows which would be unfair.

2.2.6. Lastly, a principle has been evolved according to which there should be no attempt to rouse the publicís tendency to gamble and make easy gains, nor that advantage should be taken of this tendency seeing that advantage should not minister to the shortcomings of the masses. It is of course true that one can minister to the shortcomings of the public by other means as well relating to theme advertising, without anyone taking any exception to this. But the fact remains that a distinction should be made between cases where participation in a competition involves some kind of counter-consideration either in cash or the purchase of the advertised product or in some other way, and those where no counter-consideration is required. In the first cases an attempt is actually made, because of the collection of a counter-consideration, to make money by exploiting the publicís gambling propensity or compulsion is practiced to ensure the purchase of the product. This is why such attempts are illicit.

In the last cases where there is no demand for any counter-consideration, if the gift or prize is extremely valuable, then there may be a case of an attempt to bribe the public. Otherwise, if the object of the contest is simply to attract the special attention of the public or to stimulate the interest of the public in the advertised product, without practicing any compulsion for the purchase thereof, the contest should be considered lawful.

According to the rulings of jurisprudence, it is not enough that there should be no compulsion to buy in accordance with the terms of the offer. It is further required that there should be an express statement in this connection.

3. Distribution of small quantities for trial (Door to door distribution)

It is consistent with the rule that advertising should draw the attention of the public to the properties of the product, that small quantities of the advertised product should be distributed to consumers for trial and advertising purposes. This method too bears the main characteristic of free gift advertising that the grant of some benefit free of charge. However, in this case the dominant factor is not so much the grant of some benefit as that of the <article>, since the public is called upon to decide about the article itself.

3.1. At an early stage, distributions of such small supplies for trial were held to be prohibited as involving a prejudice to the community since the usual bilateral act of alienation does not intervene. This initial view of the German Highest Court of Appeal was soon modified and since then there has been a whole series of judgments which accept that on principle the free distribution of the product for trial is permissible.

3.2. It goes without saying that the lawfulness of this form of free gift advertising is subject is subject to certain pre-suppositions; namely:

3.2.1. The distribution articles should be the advertised products themselves. The distribution of goods which are different from those advertised does not come under this category.

3.2.2. It is only consumer goods that may be distributed, that is to say goods intended for consumption. The distribution of durable goods is precluded.

3.2.3. The object should not be to mislead the public by making such distributions or to constrain the public in some way to consume the goods distributed.

3.2.4. On the question of whether the distribution is illicit or otherwise no regard is paid to the fact that there may be some people among those to whom the small specimens for trial are provided, who do not wish these or who are acquainted with the product or at all events who are not anxious to try the product, on the grounds that it is quite impracticable to check whether there are actually such people.

3.2.5. Now as for the amounts distributed, there is a double rule applicable:
The amount should be sufficient for trial purposes but on the other hand it should be just barely sufficient for such a trial, that is for testing the effects of the product, but should not be more than this because otherwise it would be disallowed. What would be sufficient amount and whether such amount is actually distributed for trial purposes or whether the distribution disguises the giving away of goods on a larger scale are matters of fact to be weighed according to the nature and type of goods distributed.

3.2.6. Another problem that has arisen is that of what would be the right thing to do if the amount required for a trial of the product was that contained in the usual packages sold freely on the market. In such cases, would it not be the case that a large scale distribution of such packages for trial was as a matter of fact only pretext for the free distribution of the goods?

Such mass free distribution is held to be illicit in cases where it is carried out on such as a scale as to saturate the market, if only temporarily, thereby depriving other competitors of the possibility of ensuring consumptions of their own products, something which encroaches upon the very idea of competition.



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