Institute of Sales Promotion

AN attempt by the European Union to introduce a law banning companies from offering free gifts and two-for-one offers has enraged more than 500 of Britain's biggest companies, including the main supermarkets.

 The law would also stop the practice of free gifts given away with magazines, newspaper competitions offering trips to France for £1, or company promotions giving away T-shirts to people who used their products. The European Commission's internal market division announced last week that a definitive stance on free gifts will be taken in April, and on promotional competitions in June.

 In Germany strict trading laws already ban promotions on most goods as it is believed they encourage people to buy products they do not want. American Express is presently taking the German government to the European Court of Justice on the grounds of restrictive trade after it was told the strict regulations meant it could not run its bonus points and air miles schemes. France, Belgium, Sweden and Austria also have more stringent rules than Britain.

 Sainsbury's, one of the companies campaigning to stop changes to the existing law, said: "We are concerned that the EU is now considering cutting back on these offers when we introduced them in the first place because they were what the customer wanted. Evidence in our stores show people do love them."

 Britain's Institute of Sales Promotion, which includes W H Smith, Boots, Heinz, Unilever, Visa and Britvic among its members, said that the offers were good for consumers as they made companies compete for their custom. Sue Short, the institute's secretary-general, said that shoppers were sophisticated enough to know whether a promotion really offered a good deal and ignored offers that did not.

 "It is important we protect their right to choose," she said. "If we do not conduct intensive lobbying now we could find out in a year that we have lost our freedoms." The institute hopes that lobbying from its members may persuade the EU to support Britain's stance on two-for-one offers but it is concerned that promotions will still be banned on the basis that they are an example of unfair competition.

 It is expected that any directive would be implemented in 2001. A spokesman for the Department of Trade and Industry said it was fighting to put forward Britain's position in the EU discussions. "We hope the final situation will be more like that in the UK where competition is allowed to flourish by competitors being able to promote their products imaginatively," he said.