Commercial Law within Countries

When doing business in more than one country, marketer must remain alert to the different legal systems. This problem especially is troublesome for the company who formulates a common marketing plan to be implemented in several countries. Although, differences in languages and customs may be accommodated, legal differences between countries may still present problems or a marketing program.

Marketing Laws:

All countries have laws regulating marketing activities in promotion, product development, pricing, and channels of distribution. Usually the discrepancies across markets cause problems for trade negotiators but particularly for managers and their firms. For example, the United States does not allow the buying or selling of human organs and it restricts the use of human stem cells in medical research to develop treatments for a variety of diseases. Other nations have different laws. The ethics of both issues are quite controversial and adding in an international dimension just complicates things even more. In the case of the current international trade in human organs, Europeans can legally travel to foreign countries for transplants. However, the European Union Parliament is considering making it a criminal offense to do so. Mean while the US government is considering relaxing laws regulating stem cell research as scientists in other nations, unfettered by similar restrictions are making important advances in the field.

One country may have only a few marketing laws with lax enforcement; others may have detailed complicated rules in 1991. Greece, Norway, Denmark, Austria and the Netherlands all restrict advertising directed at children. Recently, the European Commission threatened to restrict all advertising of soft drinks and snack foods to children, and PepsiCo volunteered to curb its advertising to kids in response. At the same time, the American food industry is arguing against such actions in the United States. It is interesting to note that the US Federal Trade Commission and the sugared food and toy manufactures went down a similar path on restricting advertising to children in the late 1970s. The industry made a few concessions at the time but began ignoring previous commitments during the 1980s. All this will be interesting to follow as childhood obesity continues to be a major public health issue in all affluent countries.

There often are vast differences in enforcement and interpretation among countries having laws covering the same activities. Laws governing sales promotions in the European Union offer good example of such diversity. In Austria, premium offers, free gifts, or coupon are considered cash discounts and are prohibited. Premium offers in Finland are allowed with considerable scope as long as the word free is not used and consumers are not coerced into buying products. France also regulates premium offers, which are, for all practical purposes illegal there because selling for less than cost price or offering customers a gift or premium condition on the purchase of another product is illegal. French law does permit sales twice a year, in January and August which can legally last four to six weeks. This event is so popular that it is advertised on radio and TV and special police are even required to control the crowds. One poll indicated that over 40 per cent of the French set aside money during the year for sale time and 56 percent will spend less money on essential things to buy things on sale.

The various product comparison laws, natural and effective means of expression, are another major stumbling block. In Germany, comparisons in advertisements are always subject to the competitor’s right to go to the courts and ask for proof of any implied or stated superiority. In Canada the rulings are even more stringent: All claims and statements must be examined to ensure that any representation to the public is not false or misleading. Such representation cannot be made verbally in selling or be contained in or on anything that comes to the attention of the public (such as product labels, inserts in products, or any other form of advertising, including what may be expressed in a sales letter). Courts have been directed by Canadian law to take into account in determining whether a representation is false or misleading the general impression conveyed by the representation as well as its literal meaning. The courts are expected to apply the credulous person standard, which means that if any reasonable person could possibly misunderstand the representation, the representation is misleading. In essence puffery, an acceptable practice in the United States, could be interpreted in Canada as false and misleading advertising. Thus a statement such as the strongest drive shaft in Canada would be judged misleading unless the advertiser had absolute evidence that the drive shaft was stronger than any other drive shaft for sale in Canada.