Legal Briefing

Advertising and promotion law in the MENA region

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TMT | 04 May 2011

Consumers in the Middle East and North Africa (MENA) are much the same as consumers anywhere else in the world; they enjoy the chance of getting something for nothing. So, not surprisingly, brand owners are as keen here as they are elsewhere in the world to use promotional giveaways and prize draws to attract consumer attention and drive sales.

Given the nature of the global market, there are always benefits to be gained from conducting promotions in more than one jurisdiction, eg various markets can be accessed using common marketing materials and a single prize draw. This is particularly true in the MENA region, where brand owners are increasingly using multi-jurisdictional campaigns to boost sales across the region.

While there are significant upsides to a common campaign, there are also risks – particularly in regions, such as MENA, which include many countries with developing legal systems. Brand owners should, therefore, take time to prepare in advance; something that may not be easy when the marketing team is keen to proceed with its plan as quickly as possible. Knowing which issues to consider, and some of the initial questions to ask, will enable in-house counsel to respond quickly, add value, and manage their clients’ expectations of what is possible.

For many western organisations, MENA is just an amorphous area on the map somewhere south and east of Europe. Marketers and lawyers working on promotional campaigns in the region should, however, be aware of the region’s diversity and have at least some understanding of the nuances that exist between markets and even within markets. What is appropriate in the UAE, may not be at all appropriate in neighbouring Saudi Arabia, and it might possibly be simply incomprehensible in Algeria. There are also significant variations in law, lifestyle and language across the region. Arabic is the first language in most countries, but differences in the spoken language will quickly signpost a person’s origin. While a form of standard Arabic is used and understood across the region, it will often be too formal for marketers. In some countries, particularly North African countries like Algeria and Morocco, French is spoken.

Language issues will be relevant for both the marketing materials and official approvals. In almost all jurisdictions in MENA, applications for approval must be submitted in Arabic. The materials required for approval of a promotion will vary based on the type and location of the promotion, but may include detailed explanations, in Arabic, of the mechanics of the promotion. Add to this the need to have terms and conditions in Arabic (and occasionally French), and it is apparent that effective forward planning is critical and that budgets will need to take into account the cost of all necessary translation.

Planning ahead is also necessary in relation to obtaining approval. Approval times can vary from a few days to up to two months. There are few jurisdictions in which it is possible to walk in with an application and straight back out with the required promotional licence. The approval process is often exactly that; a process. It should be viewed as a dialogue between the brand owner and the approving authority, and it may be the case that additional information will be necessary or changes are required before final approval is granted. This dialogue is generally conducted face-to-face, which adds to both the time and cost involved. Being aware of this from the beginning, and ensuring that marketing teams keep it in mind, will enable in-house counsel to manage expectations and be seen as enablers, rather than people who always put obstacles in the way.

As the dialogue progresses, the way in which an authority, or rather, the responsible official, interprets a particular requirement may change. While every jurisdiction will have particular rules enshrined in the law (which may itself change on little or no notice), there is often broad scope for the exercise of discretion by decision makers. This can mean that something that was acceptable in the last promotion may need to be altered for the next one.

A further level of uncertainty has been added by the political turmoil that has arisen in several countries in the region (for example, Tunisia, Bahrain, Libya and Egypt). The authorities in these countries are likely to have more pressing issues and formal approval of a promotion may not be possible at all at some points in time.

It will also be necessary to give thought to the nature of prizes and location of the draw at the time the mechanics of the promotion are being developed. Some jurisdictions will require direct supervision of prize draws by an official from the relevant authority. This requirement may be waived where the draw is to take place in another market with which there is some level of comfort; but keep in mind that budgets may need to include flying an inspector from their country to the draw destination and putting them up in a hotel overnight.

On occasion a security deposit or bond will also need to be provided to the administrative authority to ensure that the prizes or their value are available to the winners. This can also have an effect on the budget, particularly if it is necessary to provide security in several jurisdictions across the region. In less strict markets it will usually be sufficient to provide copies of receipts for the prize or evidence of the availability of cash. Usually, it will not be necessary to obtain the prizes in advance.

In some jurisdictions there are restrictions, based on Sharia principles, on the awarding of cash prizes.

Public morality often informs laws governing public order and local sensibilities should be taken into account when developing supporting materials. The type of imagery that is appropriate in some parts of the world may not be appropriate in MENA, eg images of scantily clad women (and men), displays of affection, religious references and iconography, and mention of political tensions. Similarly, the use of national flags and emblems may be formally restricted, but it may also be informally restricted; for example both the Saudi Arabian and Iranian flags refer to Allah, and custom dictates that certain uses, such as on footwear, will be inappropriate.

In addition to the matters raised above, a prudent brand owner will also run searches on any new logos or taglines it proposes to use during a promotion. The length of time required to undertake these searches will vary from jurisdiction to jurisdiction, ranging from a day or two in some cases, to several weeks in the slowest markets.

Finally, common sense will go a long way to minimising the risk inherent in conducting a promotion in the region. As a starting point following the general principles that apply in the developed markets of Europe or North America is recommended.

COUNTRY BY COUNTRY

Below is a list of some of the more active markets in the region and an indication of the rules that govern the conduct of promotions in each of them.

UAE

The UAE is a federation of seven emirates (states). It is not, however, possible to obtain a licence for a raffle at the federal level: it is necessary to obtain a licence in each separate emirate. Each emirate has its own Department for Economic Development, or equivalent, which has the power to license any commercial promotion that involves a raffle.

The procedure is, generally, to file the relevant application forms with a detailed letter describing how the promotion will operate.

The letter will need to be in both English and Arabic, as will all terms and conditions, and any coupons, tickets or other supporting material. Entry to the prize draw (or coupons/tickets for entry) must not be directly purchasable for money.

A separate licence for the prize draw itself must also be obtained in the emirate in which the physical draw is going to occur. Representatives of the relevant economic departments must attend from other emirates and supervise the prize draw.

From a practical perspective, it may make the application process faster to obtain a licence in the emirate where the draw will take place and attach that to applications in the other emirates.

Saudi Arabia

Approval of the promotion must be obtained from the Ministry of Commerce and Industry. The application for approval must provide detail of how the promotion will operate and must include proof of ownership of the prize. From time-to-time, the Ministry officials may require that a further approval is obtained from the Ministry of Communications and Information. These requests are rare but generally occur when a promotion has an online element.

Purchase of a product should not be a precondition for participation in competition. Also, the means of participation in a competition should not be affixed to a product or placed inside a product package (ie the entry form cannot be part of the product packaging).

The competition should not be based on any matter that violates Islamic principles or the traditions of Saudi Arabia. It is also prohibited for a prize to include travel to a destination outside Saudi Arabia.

The period of competition should not exceed 60 days. The competition result should be declared within a period not exceeding 30 days from the date on which the competition ends and the prize must be awarded within seven days.

It is a formal requirement of the law that the competition is under the supervision of the Ministry of Commerce and Industry. This requirement includes draws being held in and outside Saudi Arabia. Nevertheless, if it can be shown that the promotion will be properly regulated in a neighbouring jurisdiction, the Ministry may waive its right to supervise the draw in the context of a multi-jurisdictional promotion.

Egypt

Approval of the promotion must be obtained from the Ministry of Social Affairs (lottery department). The application for approval must provide details of how the promotion will operate. The application must also include an undertaking that the promoter holds the prizes and has the right to pass them to the winner, together with evidence that the prize is available.

A donation of 15% of the total value of the prizes must be paid to a charity fund designated by the Ministry.

If all is in order, the application is expected to be approved in a few days. The promotion, or advertising for the promotion, cannot begin until approval is obtained.

Under the law, the promoter must also pay 60% of the value of the prizes as a tax, though it is understood this is often not required in practice. If the promotion is changed to include a question that the participant must answer, this tax can be reduced to 20% payable by the promoter and another 20% payable by the prize winner.

The law requires the relevant terms and conditions to be translated into Arabic and lodged with the application.

Jordan

Approval of the promotion must be obtained from the Department for Promotion and Prizes of the Ministry of Industry and Trade. A letter (on company letterhead) must be submitted detailing how the promotion will operate, the relevant dates and prizes.

A letter of guarantee from a bank must also be included, together with a copy of the applicant’s certificate of registration. Approvals are normally granted the same day.

Lebanon

Approval of the promotion must be obtained from the Ministry of Finance. The application for approval must provide details of how the promotion will operate. It must also include evidence that the prize is available (eg receipts or a copy of the tickets, or confirmation from the tour operator), and an undertaking that the promoter has the right to pass it to the winner.

The application must be approved before the promotion begins or before it is advertised. It usually takes a week for the application to be approved.

The prize pool is required to be at least 3% of the value of the entries to the promoter.

While a bond or bank guarantee is not required, the applicant will be required to pay stamp duty, calculated on the basis of L£30 (approximately $2) per Lebanese participant, as soon as the application is approved.

The application should be made by someone who is registered with the Lebanese Register of Commerce (and they will need to include a certified copy of this registration with the application). If the promoter does not have a locally registered business in Lebanon, a local agent should apply on its behalf (preferably one of its local distributors).

Kuwait

Approval of the promotion must be obtained from the Ministry of Commerce and Industry. The application for approval, containing details of how the promotion will operate, must be filed no less than 15 days before the beginning of the promotion.

If the prize draw is to take place in Kuwait, a bond will be required. If it is to take place in another country, evidence of the approval or licence from the authorities in that country must be provided. It will, therefore, be necessary to obtain approval in the draw country first and then apply in Kuwait 15 days before the promotion begins.

The decree regulating advertising in public places requires that all public advertisements are in English and Arabic. Therefore, an Arabic version of the execution must also be created.

Tunisia

There is no formal application process for the approval, but promotions must comply with certain criteria. There must be no charge, direct or indirect, for participation in the promotion; participants should be able to enter the prize draw by post or online; the promotion must not run for more than 90 days; and the maximum value of each prize should not exceed more than TND25,000 (approximately $20,000). If the prize is greater, special permission must be obtained from the Tunisian Trade Ministry.

The law requires the relevant terms and conditions to be in Arabic or French. The terms and conditions must then be deposited with a Tunisian notary, who should be based in the same place as the brand owner’s local business in Tunisia (or its local agent).

Morocco

There is no specific regulation of the types of promotion and prize draws usually conducted by brand owners, and no official consent or licence is required.

It is common practice for organisers to deposit the terms and conditions before a notary public in Morocco, and to mention this in all promotional material.

Qatar

Approval of the promotion must be obtained from the Ministry of Business and Trade. The application for approval must provide detail of how the promotion will operate. It must include details of the goods and services to be promoted, and the prices before and during the promotion.

The application for approval must be lodged one month before the beginning of the promotion. A bond is not required. However, it is necessary to provide an undertaking to the Ministry regarding compliance with their requirements, notification of the winner and delivery of the prize within 30 days.

Bahrain

A licence must be obtained from the Ministry of Industry and Commerce (the Ministry). The application must be submitted to the Ministry at least two weeks before the start of the promotion.

The competition period cannot exceed six months and the organiser is limited to two promotions per year.

A Ministry representative must be present for the prize draw and the organiser is required to pay any related fees and costs. Where the draw is to take place outside Bahrain, a specific request can be made to the Ministry, during the approval process, to waive this requirement.

The relevant law requires that prizes must be kept in good condition throughout the campaign.

Oman

Approval of the promotion must be obtained from the Ministry of Commerce and Industry. A letter (on company letterhead) must be submitted requesting a licence and providing details of the operation of the proposed promotion. The letter must be submitted 15 days before the beginning of the promotion.

Conducting promotional campaigns in the MENA region can be complex: certainly it will rarely be possible to transfer an existing programme from another market, without amendment. With careful planning, however, successful and worthwhile campaigns are achievable.