Consumer law/free movement of goods: Commission decides to send Germany reasoned opinion on restrictions on direct marketing of CDs

United Kingdom

The Commission has decided to send Germany a reasoned opinion pointing out that German legislation which prohibits promotional selling such as discounts and gifts, impedes the supply of services from other Member States. The decision follows a complaint lodged by a firm which has launched various CD clubs offering members services such as information, catalogues and special offers in several Member States.

The German legislative provisions prohibit the granting of promotional gifts and discounts. The Commission takes the view that these rules make it virtually impossible for a new Community entrant on the German market to provide direct marketing of goods and services on economically viable terms. Such legislation is incompatible with Article 59 of the EC Treaty, which stipulates that there must be freedom to provide services within the single market. In particular, a Community firm should be able to make promotional offers to attract potential customers and thus build up a clientele on the basis of initial responses. The German legislation does not impose the same obstacles on German firms which are already established in Germany and thus have a distribution network and an existing customer base. As far as CD clubs are concerned, the Commission takes the view that the restrictions are disproportionate since there are less restrictive methods of protecting consumers.