The end of promotion games in Bulgaria?

In its decision 25/2006, The Bulgarian Commission for the Protection of Competition (CPC) announced imposing a fine of 50,000 Leva on "Kendi" OOD for a breach of s. 34(6) in connection with s.30 of the Competition Act (CA) and has issued an order to the investigated company to cease and desist from further breaches. Process on the case was initiated on the request of Eurostok EOOD, a producer of soluble drinks, effervescent tablets and vitamins.

Kendi OOD, the producer of the Bulgarian market-leading drink powder "Step", ran a promotion game from 1st July 2005 to 1st September 2005 which involved collecting 5 packs of Step, sending them to an address and the chance of collecting one of several prizes - 3 scooters, a sea holiday, bikes, portable fans and footballs.

s 34(6) of the Bulgarian CA bans offering 'non-market stimuli directed towards buyers as a method of raising sales' (in the reading given to it by the Commission). The ban was held by the commission to be intended to prevent such types of sales in which consumers prefer a good or service because of the offered (in the event of a sale) inducements, instead of because of its quality and price.

The Commission proceeded to point out that in the instance before it, the reviewed promotional game involved the purchase of a product. The value of two of the offered prizes - a holiday and a scooter - considerably surpassed the price (if not the value) of the offered product. The possibility for consumers to receive the prize goods not for their market value but against paying for the promotional product, with a far lower price impacted the market behaviour of the consumers, 'forcing them psychologically' to re-orient towards a good accompanied by the offer of a prize. This skews (held the Commission) ordinary competition between producers of substitutable goods, which then turns from a contest of combinations of goods and additional prizes. This eliminates the fair competition (loyal competition) which relies on the product qualities, their gustatory properties (!) and other factors which would otherwise naturally determine the market behaviour of its participants.