"Foul!?"
Advertising law The proceedings against the soccer World Cup competition of electronics retailer Fust have been discontinued. However, uncertainty remains for marketers.
Advertising law The St. Gallen public prosecutor's office justifies its decision to drop the case by stating that the football World Cup competition run by electronics retailer Fust does not violate lottery law. However, uncertainty remains for marketers: in its advertisements and TV commercials, Fust promises to refund the purchase price of newly purchased televisions if the Swiss national football team reaches the World Cup quarter-finals. However, the buyer must also fill out a betting slip. At the end of April, the Department of Finance of the Canton of St. Gallen asked Fust AG to stop the competition because of the link between participation and the purchase of a TV set and the possible violation of the Lottery Act. Despite the threat of prison sentences of up to three months and fines of up to CHF 10,000, Fust allowed the game to continue; the company's legal department had thoroughly examined the action from a legal perspective. Last week, investigating judge Thomas Näf confirmed that no criminal proceedings would be opened. Competitions of this kind do not fall under the Lottery Act. For advertisers and marketing managers, however, the matter remains
This is tricky, because the consequences threatened by the law are serious.
The legal basis for organizing a competition is the Lotteries Act (LG) and the Unfair Competition Act (UWG).
Competition as a lottery? Even if it seems a little strange to the legal layman, a competition can be a lottery within the meaning of the Lotteries Act. However, lotteries are generally prohibited in Switzerland unless you have a license for them. However, it is very difficult to obtain a license for a lottery and the corresponding procedure is time-consuming. Consequently, care must be taken to ensure that a competition does not meet the requirements of a lottery and therefore does not fall under the Lotteries Act. A competition falls under the Lotteries Act if four requirements are met cumulatively, i.e. all together:
Performance of a commitment or compulsion to conclude a legal transaction,
The following criteria apply: pecuniary advantage as a prize, planned determination of the winners and random determination of the winners. An organizer proceeds according to plan, among other things, when it limits its risk. In the case of a competition, this is usually done by limiting the number of possible winners or prizes. As the requirements of chance and planning are met in most competitions, the only option is either not to require a stake or the conclusion of a legal transaction or not to offer a prize with a pecuniary advantage.
"I just want to take part in the competition..." In practice, with the exception of televoting, which is also legally problematic, you never actually have to pay to take part in a competition. However, competitions are often linked to a legal transaction, in particular the purchase of goods and the conclusion of subscriptions. If such a competition also offers a prize with a pecuniary advantage, it is essential to ensure that it is possible to take part in the competition without concluding a corresponding legal transaction. This must also be clearly and obviously communicated to the public.
The best way to do this is to give participants the option of ticking the sentence "I only want to take part in the competition". If entry forms for a competition are submitted with a product (e.g. as a label on a bottle), it must be possible to obtain an entry form without purchasing the product. Today, this can be done relatively easily via an entry form on the Internet.
However, if the concept nevertheless requires a transaction to be concluded, the participants must not make a profit with a pecuniary advantage. Any gain for which third parties would pay something constitutes a pecuniary advantage. This includes, for example, dinners with celebrities and VIP admission to sporting events. Prizes such as decals, pins and the like do not constitute a pecuniary gain.
Competition, like any other market activity, must also comply with the rules of the Fair Trading Act. The principle of fair play applies. For the organization of a competition, this means that it must be communicated and carried out transparently and clearly for everyone. On the one hand, it must be clear to the public what they have to do to take part in a prize draw. On the other hand, it must also be clear what there is to win and how the winners will be determined.
Fust World Cup campaignAfter initial suspicions, the public prosecutor's office of the Canton of St. Gallen has come to the conclusion that the Fust World Cup campaign does not violate the Lottery Act. The public prosecutor's office argues that Fust did not act according to plan because it did not limit the number of winners. Fust did not know how many televisions would be sold during the campaign period. Fust's campaign therefore fulfills one of the four cumulative requirements for a
Lottery, therefore does not fall under the Lottery Act and therefore cannot be prosecuted.
From the point of view of the specialist lawyers, however, the argumentation of the St. Gallen public prosecutor's office is debatable, as Fust could unilaterally cancel the campaign if the risk becomes too great, i.e. if too many televisions are sold. This means that the Fust World Cup campaign can also be planned and therefore all the elements of a lottery are present.
The public prosecutor's office of the Canton of St. Gallen has not investigated whether the Fust World Cup campaign may be in breach of the Fair Trading Act. The headline "All televisions free" at least suggests that this is generally the case. In fact, as explained in the small print, this is not the case. The televisions are only free under certain conditions, the fulfillment of which - as much as we would like them to be - is highly uncertain. In addition, the conditions of the competition are rather difficult to understand. Finally, the prices are not clearly stated. Depending on whether you get the entire purchase price refunded or just a few monthly installments of a rental, the prize varies.
The Fust World Cup campaign a "foul"? The referees in St. Gallen did not show the red card this time. Nevertheless, it's good to know the rules. Even if the opportunity promises huge revenues, at least you shouldn't be blindsided if you suddenly see red.
The rules for organizing a competition Checklist
for holding a competition:no commitment or business transaction (reference to free participation) or no pecuniary advantage
Simple competition task that can be solved by anyoneClear description of the prize or prizesClosing date for entriesExclusion of legal recourse More information on this topic at
www.kommunikationsrecht.chUeli Grüter, LL. M., attorney-at-law, is a partner at Grüter Schneider & Partner, Zurich/Lucerne (gsplaw.ch), and a lecturer in communications law at the University of Applied Sciences Central Switzerland (fhz.ch). He is the editor of the practical guide "Advertising and Communications Law", published by WEKA-Verlag, Zurich.
This is tricky, because the consequences threatened by the law are serious.
The legal basis for organizing a competition is the Lotteries Act (LG) and the Unfair Competition Act (UWG).
Competition as a lottery? Even if it seems a little strange to the legal layman, a competition can be a lottery within the meaning of the Lotteries Act. However, lotteries are generally prohibited in Switzerland unless you have a license for them. However, it is very difficult to obtain a license for a lottery and the corresponding procedure is time-consuming. Consequently, care must be taken to ensure that a competition does not meet the requirements of a lottery and therefore does not fall under the Lotteries Act. A competition falls under the Lotteries Act if four requirements are met cumulatively, i.e. all together:
Performance of a commitment or compulsion to conclude a legal transaction,
The following criteria apply: pecuniary advantage as a prize, planned determination of the winners and random determination of the winners. An organizer proceeds according to plan, among other things, when it limits its risk. In the case of a competition, this is usually done by limiting the number of possible winners or prizes. As the requirements of chance and planning are met in most competitions, the only option is either not to require a stake or the conclusion of a legal transaction or not to offer a prize with a pecuniary advantage.
"I just want to take part in the competition..." In practice, with the exception of televoting, which is also legally problematic, you never actually have to pay to take part in a competition. However, competitions are often linked to a legal transaction, in particular the purchase of goods and the conclusion of subscriptions. If such a competition also offers a prize with a pecuniary advantage, it is essential to ensure that it is possible to take part in the competition without concluding a corresponding legal transaction. This must also be clearly and obviously communicated to the public.
The best way to do this is to give participants the option of ticking the sentence "I only want to take part in the competition". If entry forms for a competition are submitted with a product (e.g. as a label on a bottle), it must be possible to obtain an entry form without purchasing the product. Today, this can be done relatively easily via an entry form on the Internet.
However, if the concept nevertheless requires a transaction to be concluded, the participants must not make a profit with a pecuniary advantage. Any gain for which third parties would pay something constitutes a pecuniary advantage. This includes, for example, dinners with celebrities and VIP admission to sporting events. Prizes such as decals, pins and the like do not constitute a pecuniary gain.
Competition, like any other market activity, must also comply with the rules of the Fair Trading Act. The principle of fair play applies. For the organization of a competition, this means that it must be communicated and carried out transparently and clearly for everyone. On the one hand, it must be clear to the public what they have to do to take part in a prize draw. On the other hand, it must also be clear what there is to win and how the winners will be determined.
Fust World Cup campaignAfter initial suspicions, the public prosecutor's office of the Canton of St. Gallen has come to the conclusion that the Fust World Cup campaign does not violate the Lottery Act. The public prosecutor's office argues that Fust did not act according to plan because it did not limit the number of winners. Fust did not know how many televisions would be sold during the campaign period. Fust's campaign therefore fulfills one of the four cumulative requirements for a
Lottery, therefore does not fall under the Lottery Act and therefore cannot be prosecuted.
From the point of view of the specialist lawyers, however, the argumentation of the St. Gallen public prosecutor's office is debatable, as Fust could unilaterally cancel the campaign if the risk becomes too great, i.e. if too many televisions are sold. This means that the Fust World Cup campaign can also be planned and therefore all the elements of a lottery are present.
The public prosecutor's office of the Canton of St. Gallen has not investigated whether the Fust World Cup campaign may be in breach of the Fair Trading Act. The headline "All televisions free" at least suggests that this is generally the case. In fact, as explained in the small print, this is not the case. The televisions are only free under certain conditions, the fulfillment of which - as much as we would like them to be - is highly uncertain. In addition, the conditions of the competition are rather difficult to understand. Finally, the prices are not clearly stated. Depending on whether you get the entire purchase price refunded or just a few monthly installments of a rental, the prize varies.
The Fust World Cup campaign a "foul"? The referees in St. Gallen did not show the red card this time. Nevertheless, it's good to know the rules. Even if the opportunity promises huge revenues, at least you shouldn't be blindsided if you suddenly see red.
The rules for organizing a competition Checklist
for holding a competition:no commitment or business transaction (reference to free participation) or no pecuniary advantage
Simple competition task that can be solved by anyoneClear description of the prize or prizesClosing date for entriesExclusion of legal recourse More information on this topic at
www.kommunikationsrecht.chUeli Grüter, LL. M., attorney-at-law, is a partner at Grüter Schneider & Partner, Zurich/Lucerne (gsplaw.ch), and a lecturer in communications law at the University of Applied Sciences Central Switzerland (fhz.ch). He is the editor of the practical guide "Advertising and Communications Law", published by WEKA-Verlag, Zurich.
