Lloyd's Maritime and Commercial Law Quarterly
PRIZE COMPETITIONS—THE LOTTERY OF LEGALITY
R. M. Merkin
Department of Law, University of Lancaster.
For almost 100 years the British public has been presented with a vast array of competitions devised by manufacturers and sellers of products to promote their sales. Competitions began in newspapers, to increase circulation, but rapidly spread to goods—so much so that at the time of writing there are no less than 136 competitions running,1 a figure which appears to be fairly constant. The range is incredible. At one end of the scale quite deep research or original thought is required;2 at the other end of the scale there may be little more than simple observation or pure luck involved. Most competitions indeed combine many of the infinite variety of possibilities. The practical importance of this form of sales promotion cannot be overstated. The prosecution of Imperial Tobacco, which will form a major part of this article, revealed a total sum of £20 million being set aside for advertising, with a yield of “tens of millions of pounds”3 and a sales increase of 40% during the period of the promotion in question. Yet despite the apparent vitality of such competitions they have lived under a cloud of illegality since their inception. This springs from two independent but related sources—the law relating to lotteries and the special statutory provisions relating to competitions. Since the second world war prosecutions have been few, a fact due largely to the complexity of the law, but it may well be that Imperial Tobacco will herald a spate of prosecutions4 and the principles laid down in the case by the House of Lords thus assume a double significance. Unfortunately, as will be seen, the decision does little to free advertisers from the rigours and uncertainties of the law. In order to assess the impact of the prosecution it is necessary to examine the historical development of both branches of the law. Finally, some ideas for reform will be proposed.
I. LOTTERIES
1. Historical Development of the Lottery Laws
The first recorded lottery in England5 was held between 1566 and 1569, and was sponsored by the Crown to provide funds “towards the reparation of the havens and
1 Source: “Competitor’s Journal”, Mar. 4, 1980. The figure does not include localised competitions.
2 Ranging from true creativity to the limerick or slogan, which features in almost every competition.
3 Imperial Tobacco v. Attorney-General [1980] 1 All E.R. 867, 869.
4 The action in fact began life as an attempt by trade rivals to obtain the consent of the Attorney-General for a relator action. Consent was refused but the Crown took up the prosecution itself. At this point Imperial Tobacco claimed declarations that its activities were lawful, and much of the judgment of the House of Lords is devoted to the question of whether civil proceedings were appropriate in the face of threatened prosecution.
5 For a brief history of lotteries outside England see Rubner, “The Economics of Gambling” (1966), chapter 2, which shows that lotteries by merchants existed on the Continent as early as 1530.
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