Tue, Feb. 13, 2007

Sponsorships Conform with UWG

MM - Washington.   Two competition watchdog groups slammed a brewery for its allegedly uncompetitive sponsorship of a rainforest program, in violation of the German unfair competition statute, UWG, of July 3, 2004, BGBl. I, 1414, as amended. Krombacher brewery had advertised its sponsorship of a campaign to protect the rainforest run by the World Wide Fund of Nature, WWF. Consumers were invited to support the campaign by buying Krombacher beer. The plaintiffs allege that such sponsorship influences consumers by unfair methods. Specifically, the advertisement fails to disclose how and to what extent the brewery would actually protect the environment.

In the matters of Schutzverband gegen Unwesen in der Wirtschaft e.V. and Verein gegen Unwesen in Handel und Gewerbe Köln e.V. v. Krombacher Brauerei, the German Supreme Court in Karlsruhe disagreed. On October 26, 2006, the court ruled that combining product marketing and the advancement of environmental objectives is proper, even when the two are not obviously related.

The court also clarified that the competition statute does not mandate transparency with respect to the specific implementation of the environmental objective. There is no general duty to inform consumers of the benefits of the program.

Ultimately, the court did not render final decisions in the matter I ZR 97/04 but remanded the case to the lower court with instructions. The UWG would require that advertising not unduly impede independent decisions by consumers. Especially, false promises violate the statute. That could be the case when the sponsor would contribute insignificantly to the campaign.

The court of appeals will need to determine whether Krombacher actually performed as promised and lived up to the expectations it raised in its costumers.

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