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Prize Promotion and Competitions In Germany

Prize promotions (also known as free prize drawings and sweepstakes) and competitions can be invaluable for your business, particularly a new or startup business. There are many reasons your should consider a prize promotion or competition. Prize promotions and competitions can:

• create ‘buzz’ around your product or service;

• encourage people to visit your website;

• help to expand your email list;

• provide your with valuable market research;

• strengthen the relationship between you and your customers.

What laws or regulations apply?

German laws and regulations that affect prize promotions and competitions include: the Criminal Code (Strafgesetzbuch—StGB), the Interstate Treaty on Gambling, and the German Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb). In Germany you can legally conduct both prize promotions (also known as sweepstakes) competitions (also called contests).

Promotions

In this context, a promotion will mostly likely be a free prize drawing. A promotion in which the winner is chosen by chance and a prize is awarded is legal if:

1. participants do not pay to enter. Payment is interpreted to mean that a participant renders a financial sacrifice in order to obtain a chance to win, except when the amount is irrelevant (most courts determine this to be between €0.05 and €2.50, which would include standard telephone and postal services; and

2. the conditions for participation are clearly and unambiguously stated; and

3. the promotion or prize does not provoke in participants a psychological pressure to buy the promoted product(s) or service(s).

Competitions

A competition (contest) where a prize is awarded is legal, even if payment is involved, if the winner is chosen based on skill rather than chance, or not primarily based on chance. A competition will be considered primarily based on chance if the determination of the winner and losers is not substantially determined by skill, knowledge, and attentiveness of the participants, but solely or mainly by coincidence.

The conditions for awarding prizes through a promotion or competition must be transparent, meaning, among other things, the information about how winners will be notified must be provided to the participants. Prizes must not be so valuable that participants feel a psychological pressure to buy the product or service. The terms and conditions of the promotion or competition must be displayed in German.

What are the risks of noncompliance?

Violations of the German Act against Unfair Competition could result in injunctive relief and damages. Violations could also rise to the level of criminal conduct, which is punishable by up to five years imprisonment and/ or monetary fines.

Criminal Code

German Act against Unfair Competition