Anger grows over delay to Polygram case

Date: 04/05/2000

By Peter Chapman

THE European Commission is under fire for failing to live up to its year-old promise to take Germany to court over national rules governing firms' sales and marketing methods.

Members of the former Commission agreed last July to take action over Berlin's tough controls on sales techniques and its outright ban on offers such as 'two for the price of one', claiming they discriminated against foreign firms trying to get a foothold in the market. This followed a complaint lodged more than six years ago by then Dutch-owned music company PolyGram, which argued that the rules were effectively preventing it from developing its record club business in the country.

Since then, nothing has happened and senior music industry sources claim the blame for the delay lies with the Commission's legal service, which has questioned whether its political masters should have voted to take Berlin to court amid doubts over the extent to which EU single market rules on free movement of services should apply to marketing campaigns.

"If this is the case, it is outrageous given the fact that the College had actually approved it," said Mike Pullen, a Brussels-based lawyer with UK firm Dibb Lupton Allsop. This criticism was achoed by Alistair Tempest, director of EU direct marketing lobby group FEDMA. "I object to the legal service acting as judge and jury. This is atrocious. PolyGram went to the Commission. The late Commission agreed. What has happened since then? It is sitting on someone's desk," he said.

Ironically, as pressure mounts on the Commission to pursue its threat of legal action, there are signs that Berlin may change some of the offending rules itself after Economics Minister Werner Müller said that they would put German firms at a disadvantage vis-à-vis foreign rivals.