Trade Promotions – What you need to know
Trade promotions can be a great way to promote your products and services.
However, before you run a trade promotion, there are several things you should consider. These include:
1. Is the prize you want to award permissible?
For example, tobacco products and certain alcoholic beverages may not be a permissible prize under State and Territory trade promotion regulations.
2. Do I need a permit?
Whether you need a trade promotion permit or not depends on the State or Territory in which the trade promotion is being conducted and the mode by which the winner is determined.
Game of Skill
You do not require a permit to conduct a trade promotion that consists of a game of skill.
For example, Instagram and Facebook trade promotions in which the most creative picture or answer wins do not require a permit in any State or Territory.
However, you must ensure that:
- All entries are judged individually on their merit; and
- The winner is chosen by a judge’s decision based on skill or originality.A promotion where entrants can potentially submit the same answer or result, e.g. ‘Who is the prime minister?’, is not a game of skill.
Game of Chance
You will require permits in some States and Territories to conduct a trade promotion that consists of a game of chance, for example where the winner is drawn from a barrel or the draw is conducted via a computer using random intervals. The NSW regulator has provided some helpful guidance with respect to what constitutes a game of chance. According to Liquor & Gaming NSW, unless qualified or expert judges are used and the winner is decided against set criteria, a competition is not based on skill – it is based on chance. The requirements of the different States and Territories are as follows:
Victoria, Tasmania, Queensland and Western Australia
Permits are not required for trade promotions whether games of skill or games of chance in these States.
New South Wales
Permits are required for any trade promotion conducted as a game of chance in New South Wales.
Australian Capital Territory
The general rule of thumb is that any trade promotion lottery conducted in the ACT involving an element of chance will require a permit if the total prize pool of the promotion is $3,000.00 or more. However, there are some exceptions. For example, if a promotion involving a game of chance is conducted via a website, a trade promotion lottery permit is not required unless:
- The website is hosted in the ACT, or
- The website is not hosted in the ACT but the promotion is being advertised in the ACT in addition to the advertising on the website
Permits are required in South Australia for any trade promotions involving an element of chance where the total prize pool is $5,000.00 or more. Notably, South Australia now has the longest permit processing time frames (currently a minimum of 14 business days unless urgent processing fees are paid). It is therefore important to ‘get in early’ and have your trade promotion organised well in advance. Furthermore, South Australia has several specific requirements on how trade promotions are to be conducted. For example, you must also publish the names of competition winners on your website and, in certain circumstances, also in the relevant localised or State-based newspaper.
Permits are required in the Northern Territory for any trade promotions involving an element of chance where the total prize pool is $5,000.00 or more. However, if you run your promotion in South Australia, New South Wales or the ACT also, the Northern Territory will accept any permit issued by any of these State or Territory Regulators, without the necessity for a separate permit in the Northern Territory.
3. Do I need Terms and Conditions?
You most certainly will need terms and conditions in order to run your trade promotion. Not only are terms and conditions essential for the protection of your business’s interests in the event of a dispute between your business and an entrant, but also are they necessary to comply with any regulations governing the conduct of trade promotions in the different States and Territories. It is noteworthy also that the regulatory bodies requiring permits will review the terms and conditions for compliance with their local State or Territory regulations. It is therefore important that you seek legal advice before setting up trade promotions.
What we can do for you
Our Business Law experts can assist you in drafting the relevant terms and conditions, review your trade promotion advertisements for compliance with the trade promotion specific regulations in each State and Territory as well as the Australian Consumer Law and assist you in applying for the relevant trade promotion permits.