Sales promotion have become an important part of how businesses attract customers, increase sales, and create awareness around their products and services. Competitions, prize draws, giveaways, discounts and other promotional incentives are commonly used to encourage consumers to purchase or engage with a product. Despite its many advantages, sales promotion can also be used as a tool of oppression and unhealthy business practices. Hence the reason for the regulation of this very unique marketing strategy.
WHAT CONSTITUTES A SALES PROMOTION?
A sales promotion generally involves an incentive offered by a business to encourage consumers to purchase or engage with its products or services. Depending on the structure of the campaign, this may include competitions, lucky draws, prize-based promotions, giveaways, discounts and any other promotional activity.
WHICH REGULATORY BODIES REGULATE SALES PROMOTION IN NIGERIA?
The Federal Competition and Consumer Protection Commission (“FCCPC”)
The FCCPC is the primary regulator of sales promotion in Nigeria. They oversee consumer protection and to ensure compliance throughout the duration of the sales promotion, the FCCPC also plays a supervisory role by monitoring the sales promotion activities and ensuring that it is carried out within the provisions of applicable laws. The FCCPC administers the sales promotion framework which includes the following:
- Registration of sales promotion;
- Review and approval of terms and conditions of the sales promotion;
- Monitoring of the promotion
- Verification of the winners and prizes
- Review and approval of promotional advertisements and materials;
- Enforcement of terms and conditions of promotional activity.
Advertising Regulatory Council of Nigeria (“ARCON”)
ARCON becomes relevant when the promotional activity involves advertising or marketing communications. While FCCPC regulates the sales promotion itself, ARCON regulates the advertising and marketing communications aspect of the promotion. This requires that the advertising and marketing materials are registered with ARCON so as to ensure that the content of the advertising and marketing materials are in compliance with the requirements of applicable laws. Businesses should therefore assess the advertising contents of a sales promotion before publishing advertisements or inviting consumers to participate.
National Lottery Regulatory Commission (“NLRC”)
The NLRC becomes relevant when the promotion involves a lottery, raffle draw or other game of chance. Not every sales promotion necessarily requires a lottery permit. A promotion involving a guaranteed discount, gift with purchase or cashback may not fall under the regulatory purview of the NLRC.
Relevant Sector Regulator
An additional approval may be required from the sector regulator where the business in question operates in a regulated sector. Even the FCCPC sales promotion application form requires that the applicant confirms that the sales promotion does not require additional permit from any other sector regulator. This is usually a precondition for obtaining the FCCPC approval as the FCCPC may then refer the business to the relevant regulator if the business is one that requires the sector regulator’s approval.
From the above, it is clear that sales promotion in Nigeria is principally regulated by the FCCPC. Depending on the structure of the sales promotion, the nature of the promotional communications, the sector in which the promoter operates and whether the promotion involves an element of chance, the promotion may require additional regulatory approvals.
This article will concentrate on how to obtain the approval of the FCCPC for sales promotional activities in Nigeria.
WHAT ARE THE REQUIREMENTS FOR OBTAINING THE FCCPC APPROVAL FOR SALES PROMOTION?
A promoter seeking FCCPC approval for a sales promotion is required to submit a filled sales promotion application form along with the following:
- The company’s incorporation documents;
- Samples of the proposed promotional materials, including advertisements intended for print, electronic or digital media;
- Terms and conditions governing the promotion;
- Total value of the prize or reward;
- Details of the rewards or promotional items, including their unit cost and total value;
- A signed undertaking confirming that the promotion will be conducted fairly and transparently;
- The promoter’s telephone number, email address and other relevant contact details; and
- Any additional approval or licence that may be required, depending on the nature of the promotion. This may involve an additional approval from ARCON, NLRC or the relevant sector regulator.
What is the Registration Process for Obtaining Sales Promotion Approval?
Upon submission of the filled sales promotion application form, the FCCPC will review the application and if satisfied that the application does not require additional information or regulatory approvals, will proceed to issue a letter of assessment. The letter of assessment will contain the applicable application and approval fee depending on the total value of the prize or reward.
Upon payment of the assessed fee, the FCCPC will proceed to issue a letter approving the promotional activity.
WHAT IS THE ASSOCIATED COST FOR OBTAINING SALES PROMOTION APPROVAL FROM THE FCCPC?
The associated cost for obtaining FCCPC approval for sales promotion is dependent on the total value of the prize or reward of the promotion.
The FCCPC provides for the application and approval fees based on the following threshold:
| S/N | VALUE OF THE PROMOTION (N) | APPLICATION FEE (N) | APPROVAL FEE (N) |
| 1. | Below 2,000,000 | 25,000 | 240,000 |
| 2. | 2,000,000 – 9,999,999 | 50,000 | 999,999.90 |
| 3. | 10,000,000 – 29,000,000 | 75,000 | 2,549,999.92 |
| 4. | 30,000,000 – 49,999,999 | 100,000 | 2,999,999.94 |
| 5. | 50,000,000 – 99,999,999 | 150,000 | 5,199,999,95 |
| 6. | 100,000,000 – 499,999,999 | 200,000 | 22,499,999.96 |
| 7. | Above 500,000,000 | 250,000 | 15,000,000 |
ARE THERE ANY OTHER APPLICABLE COSTS THAT MAY BE INCURRED IN THE COURSE OF RUNNING THE SALES PROMOTION OR PROCESSING THE APPROVAL?
Where the sales promotion will involve periodic draws, the promoter is required to inform the FCCPC and request for their presence at each draw. The FCCPC charges a draw attendance fee of N25,000 (Twenty-Five Thousand Naira) per draw.
Also, the FCCPC also offers a premium service where the approval can be issued within 48 hours from the date of application. Where an applicant requires the premium service, it will require an additional payment in the sum of N500,000 (Five Hundred Thousand Naira). Please note that the premium service is optional.
WHAT IS THE TIMELINE FOR REGISTRATION?
The estimated timeline for completing the FCCPC sales promotion registration is 21 working days. This is subject to the submission of complete documentation and the FCCPC’s satisfaction after the review process. The actual timeframe may vary depending on the Commission’s checks, internal schedules and whether queries or additional requirements arise during the review.
However, as has been earlier stated, the FCCPC offers a premium service that allows for the process to be completed within a period of 48 hours at an additional fee of N500,000 (Five Hundred Thousand Naira).
WHAT IS THE TIMELINE WITHIN WHICH AN APPLICATION MUST BE SUBMITTED TO THE FCCPC?
The FCCPC requires that an application for approval to conduct a sales promotion must be submitted 21 days before the date of commencement of the sales promotion. Where the application is submitted at a later time, it may require the promoters to adjust the commencement date so as to ensure compliance.
ARE THERE ANY FACTORS TO CONSIDER WHEN CONDUCTING A SALES PROMOTION?
Obtaining regulatory approval is only the first step in the compliance process. Businesses must also ensure that the promotion is conducted in accordance with the approved terms and applicable consumer protection requirements. To ensure full compliance, we advise as follows:
- Promoters must ensure that they comply with the conditions listed on the notice of approval as failure to comply with the conditions may lead to revocation of the approval.
- Consumers should be given sufficient information to understand the promotion and the conditions attached to participation. Material terms should not be hidden in a manner that makes them difficult for consumers to understand.
- The terms and conditions of the sales promotion should be same as what is stated in the advertisements and what was approved by the FCCPC.
- Promotions should be administered fairly and transparently. Where winners are selected through a draw or competition, the process should follow the rules communicated to participants.
- Businesses should ensure that advertised prizes or rewards are available, and that winners receive them in accordance with the approved terms of the promotion. In some cases, the FCCPC may request to inspect the reward or prizes before issuing an approval.
- Proper records should be maintained throughout the promotion. These may include applications, promotional materials, terms and conditions, records of participants and winners, prize information and relevant correspondences. Good record keeping can assist the business in responding to consumer complaints or regulatory enquiries and will also support the required post-promotion reporting.
- Businesses should not assume that their regulatory obligations end once the promotion has been concluded. The FCCPC requires promoters to submit an end-of-sales promotion report which must be submitted within 21 days from the date of conclusion of the sales promotion. The end-of-sales promotion report is filed using the form CPC (B).
WHAT IS THE EFFECT OF NON-COMPLIANCE WITH THE GUIDELINES OF THE FCCPC ON SALES PROMOTION?
The FCCPC guidelines makes it mandatory for an approval to be obtained before the commencement of sales promotional activity. Failure to obtain the FCCPC approval will lead to sanctions against the business. Also, non-compliance with the guidelines and the conditions of the approval could lead to fines and penalties and in some cases, revocation of the approval.
Some of the offences and their applicable penalties are as follows:
| S/N | OFFENCE | PENALTY (N) |
| 1. | Non-registration of promotion | 10,000,000 |
| 2. | Commencement without approval | 5,000,000 |
| 3. | Failure to insert in adverts that the promotion has been approved by the FCCPC | 2,000,000 |
| 4. | Non-adherence to conditions in the guidelines | 5,000,000 |
| 5. | Non-adherence to conditions in the approval letter | 5,000,000 |
| 6. | Making changes in the terms of the approved promotion without the requisite approval | 5,000,000 |
| 7. | Any act or omission in the conduct of the promotion which is considered by the FCCPC to be exploitative of Consumers | 5,000,000 |
WHAT IS THE DURATION OF THE SALES PROMOTION APPROVAL?
The FCCPC guidelines requires that a sell-in-time period of sales promotion must not exceed one year. However, where a promoter wishes to extend the sell-in-time period, they must apply to the FCCPC for an extension for another period of one year. The application for extension must be submitted before the expiration of the existing approval.
CONCLUSION
A successful sales promotion is not just about attracting customers; it is also about getting the compliance aspect of the activity right. Businesses should obtain the necessary approvals and ensure that the promotion is conducted in line with the applicable requirements. Taking care of these obligations early can help prevent delays, penalties, and avoidable losses.
