The Lotteries In View Of The Protection Of Competition Act

Under the contemporary conditions for the commercial turnover the supply of goods and/or services on the free market is lastingly related to the advertisement and marketing methods for making popular these goods and services. A fixed part of the marketing strategy, and most of all of the big commercial chains, is the planning and carrying out of the marketing campaigns for the promotion of the products supplied by them. Among the instruments used by the different tradesmen for attracting clients is the supply of their goods и services by organizing games, lotteries, the offering of gifts, a system of discounts, initiatives of charity, etc. The described marketing methods are used more and more often under the conditions of the economic crisis for the purpose of a bigger stimulation of the consumers’ demand.

However the carrying out of similar marketing campaigns by the tradesmen is very often directed not so much to the popularization of the products offered by the respective merchant than to the pushing out a given competitor from the market by means of non-market methods, representing disloyal competition. In view of the above, a great number of these campaigns has acquired a legislative regulation and is admissible only as far as it meets the rules specified in the Act and approved in the practice.

One of the marketing practices often applied by the commercial chains is the organization of lotteries. In its essence the lottery is a lottery game, where one or several prizes are announced that might be won by the participants at the lottery, whose numbers or tickets have been drawn. In relation to trade, usually the lottery is organized so that the participants at it might be the persons, who have bought a certain product from the respective merchant-organizer of the lottery – the conditions are that purchasing the product the buyer automatically participates at winning the prize or some of the prizes.

However, very often on a certain market, not only small-size or average-size companies are operating but also big international commercial chains disposing of big budgets intended only for the marketing and publicity initiatives. In such case similar big „players” on the market organize purposefully lotteries with prizes having a high value, whereby it is for certain that the winning of the prize is preconditioned by a purchase of the product of the lottery organizer. The probability of winning the expensive prize is the factor attracting the clients to the product of the tradesman – organizer of the lottery instead of to the product of the competitor, who does not have the opportunity to organize such an expensive lottery.

On a further scale a similar situation would bring about redirection of the demand of the consumers to the product of the one offering the prize, instead of to the product of the competitor – a redirection that has been predefined not by the choice on the basis of the characteristics of the two replaceable products, but by the prize offered with the purchase from one of them. Such a situation would surely result in pushing out the „smaller” competitors from the market.
In the sense of the Constitution and the Protection of Competition Act accepted on the grounds of the Constitution, the right of free competition is protected, whereby the legislator has estimated also that the right should include in any case the protection of the tradesman against disloyal actions on the part of its competitor. Such action might be the organization of lotteries as described here above, namely for the purpose of redirecting the demand.

Taking into account the above, under the currently valid Act for protection of the competition, the carrying out of lotteries is permitted only under observation of certain terms and condition as representing the basis of the Act and in the practices of the regulator in the field, the Commission for Protection of the Competition.
As we already mentioned, the said regulation is of special importance in view of and as far as its sense is to protect the weaker competitor, i. е. to prevent the possibility for a tradesman with a bigger economic power by means of promising a prize to a considerable value in a lottery to direct the demand to its own goods/services, for the account of its „smaller” competitor, who cannot afford to give a prize of such a value.
In view of all that, the Act introduces a prohibition for the organization of lotteries when carrying out economic activity, where the value of the prize in the lottery surpasses considerably the value of the sold goods or services.

The regulatory body, the Commission for Protection of the Competition, accept that, when the prize from a similar lottery does not surpass considerably the value of the goods/services, that would have a favorable impact on the market as far as such similar lotteries might be organized also by weaker competitors, and respectively the demand of the consumer would not be dependent on non-market methods as for instance the promising of a prize. In view of the above it has to be noted that for establishing whether a certain lottery violates the legislation on competition or not, the most important parameter that has to be assessed, is the value of the prize in relation to the value of the goods/ services.

According to the latest practices of the Commission for Protection of the Competition the prize surpasses considerably the value of the offered goods or services, when the value is by 100 times higher than the value of the goods/services, but not by more than 15 minimal working salaries.
It has to be noted that, in order to define a behavior as violation of the prohibition for carrying out of lotteries with prizes to a value higher than the one accepted by the practices of the Commission for Protection of the Competition, it is not necessary to prove the availability of a real damage of the interests of the competitor/s by the lottery carried out.

It has to be taken into account that in case the fact of an illegal lottery organization has been established, the sanctions, which the regulator shall impose, may reach great amounts, the maximum size foreseen for such cases of material sanction to be imposed is up to 10 percent of the total turnover for the preceding financial year of the enterprise – violator.
As far as the above stated represents only a brief analysis of the legislative framework, we would advise that, before carrying out the lottery, one should always request and obtain a qualified judicial consultation taking into account all parameters of the game to be organized and carried out.