COVID-19 Update – What happens to Trade Promotions in market (or soon to be released) if they are impacted by shut downs?

Posted on: 24th March, 2020

By Matt Hansen, Senior Associate |

As Australia moves into a period of even tighter restrictions on movement and trade, in efforts to combat and contain the COVID-19 outbreak, many businesses have now been forced to close their doors, including pubs, clubs, gyms, indoor sport centres, places of worship and cinemas.

This is obviously a very stressful and sad situation for a lot of businesses and their employees.  Many of our clients are now facing questions as to how to proceed with campaigns, deals and production schedules that are heavily impacted by COVID-19. In particular, many trade promotions were scheduled to take place promoting these affected businesses during shutdowns, or have commenced and can no longer proceed.

So, what should I do if my promotion has NOT commenced and can no longer go ahead?

If advertising for the promotion has not commenced, you do not have to commence the promotion at all. There is no penalty for not commencing the promotion on the specified start date.  If you are not sure of the facts here, or what it means for you, reach out to us urgently and we can talk through the specifics of your situation with you.

What can I do for my promotion that is currently in market and can no longer be conducted, or the prize not awarded?

This is a more complicated question and will depend a lot on the exact situation. To be clear, we are talking about a situation where a promotion is in market, but participants can no longer physically enter (for instance, they cannot get in-store, or they cannot procure the relevant products), or the prize involved travel or some other item that can no longer be provided.

In terms of prize supply issues, we refer you to our previous article which is available here.

In terms of promotions that cannot continue due to entrants no longer physically being able to enter, if the promotion has been in market for some time and has already obtained a reasonable number of entries, it would be best to not seek to cancel the promotion but rather, see out the remainder of the promotional period (even though future entry activity is likely to be negligible), then wait until the specified draw date in the Terms and Conditions, then conduct a draw from the available entrants and determine as winner as per usual. This will ensure the promoter’s representations during the course of the promotion can still be fulfilled. Conversely, if the promotion has not been in market long and has had very little or no entries, it would likely be appropriate in such circumstances to cancel the promotion and contact any entrants advising them of the decision, as the impact on consumers overall is likely to be very low and manageable by the promoter and its representatives. The question of whether or not to offer refunds to any entrant that has made a purchase in order to enter the promotion is a tricky one and will depend on the nature of the products purchased. For a clear answer, you may require a regulatory authority to provide directions in writing. Accordingly, and particularly in the event of any consumer complaints, refunds or other make goods should be considered on a case by case basis.

How can I cancel a promotion that is in market?

Most terms and conditions include a termination clause or similar, which allows for a promotion to be suspended, modified or cancelled in circumstances where it cannot be run fairly or as anticipated. Promotions that require trade promotion lottery permits may also be subject to directions of a regulatory authority. In clear cases such as the current situation where mandated closures prevent the conduct of the promotion, seeking such directions to cancel the promotion would not be necessary in our view. However, if you would like some certainty in respect of the promotion’s cancellation, you are free to contact the relevant authority to obtain approval in writing.

What should I do moving forward?

Obviously this is still an evolving situation, and the current shutdown measures have no set end date. All businesses being promoters and suppliers alike, will need to work together to navigate the current crisis and be both patient and considerate of present circumstances.

In the meantime if you would like further information on the above and how it impacts on your current or upcoming promotion, please contact one of our experts below.