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Sales Promotions and Regulatory Bottlenecks(AllAfrica Via Acquire Media NewsEdge) Raheem Akingbolu writes on the raging issue on the involvement of the National Lottery Regulatory Commission in the regulation of promotional activities in Nigeria and the recent attempt by the commission to amend the Act that established it In the recent time, the National Lottery Regulatory Commission (NLRC) has been in the news for its decision to regulate promotional activities in the country. Many stakeholders are saying the function is outside the jurisdiction of the government agency. But NLRC has insisted that those who are opposed to its activities in the area of regulating promotions are either ignorant of the law or being mischievous. A section of the public, especially people who are versed in the area of business law, players in the Fast-Moving Consumer Goods (FMCG), telecommunications, banking and manufacturing sectors, have consistently argued that the NLRC's involvement in promotion regulation is an abuse of purpose. Specifically, they are of the opinion that NLRC was primarily established in Nigeria, like in other countries of the world, to regulate the operation and business of the national lottery in Nigeria, in collaboration with the licensee, set standards, guidelines and rules for the operation of national lottery. To this end, concerned members of the public have called on government and the commission to look at the issue very well, especially when government also has the Consumer Protection Council (CPC), to ensure that consumers are not shortchanged. Confirming the mandate of CPC to regulate promotional activities, the Deputy Director, Public Relations, CPC, Abiodun Obimuyiwa, said the council is empowered to validate promotions to make sure they mare not organised to swindle consumers. Meanwhile, a former Director General of the NLRC, Mr. Peter Igho, while rationalsing the establishment of the commission five years ago during a working visit to Lagos, had stated that it was established by the Federal Government as a bridge between lottery operators and the public, particularly as it affected the integrity and transparency of the business. Igho, who led other members of his management team to some lottery agencies, said it was imperative that both the lottery operators and the public were educated on the rudiments, which guide the lottery business in the country. He recalled that in the past before the commission was created in 2005, there was a complete disconnect in terms of functions, responsibilities and dividends accruable to both parties. According to him, "The lottery population needs to grow to compete with foreign counterparts. This commission is ready to support the various agencies, who recognise the commission as the sole regulatory body of the lottery business," It was during the visit that the former NLRC boss disclosed that zonal offices would soon be opened across the country and that Lagos would be one of the first to be created. But in a telephone conversation during the week, the Coordinator of the Lagos Area for NLRC, Mr. Fidelis Ajibogun shed more light on how the commission is mandated to regulate promotional activities. According to him, "It is part of the functions of The National Lottery Regulatory Commission to regulate promotions to enhance credibility and transparency. It is important that the commission oversees any promotion that has element of lottery. Like lottery, promotions, in most cases are game of chance. When a company invites customers to buy and win, we have the mandate to see that it is a transparent and credible exercise. But if a promotion is organised to reward all consumers that buy a particular product, then the issue of game of chance doesn't arise and this will not attract NLRC. Our function is to make sure that the process is transparent and that consumers are not short changed," National Lottery Act In the act that established the NLRC, it is spelt out that the commission shall promote transparency, propriety and integrity in the operation of national lottery in Nigeria, thereby ensuring that the protection of the interests of players, stakeholders and the public in the national lottery are protected. The act also stated that the commission shall carry out periodic assessment of the operation of national lottery in Nigeria and submit report to the President and the National Assembly. In what looked like a peak of the discussion, a lawyer, one Gbolahan Gbadamosi, had recently published an article in many national newspapers, where he attempted to interprete the law that established the commision. Gbadamosi, who works with Rickey Tarfa and Co. Lagos, had stated that lottery, like other ideas as borrowed from other jurisdictions is a creation of statute. According to him, "From the UK and the US, it is clear that lotteries are established by government to either raise funds for a specific project or to augment state revenues or to support educational system. In whichever way, tickets are offered as part of lotteries to enable interested parties participate in it," In respect to the National Lotteries Act (NLA) 2005, which brought into life The National Lottery Regulatory Commission (NLRC), the legal practitioner referred readers to Section 1 - as signed into law by the former president, Olusegun Obasanjo, on March 30 2005. He interpreted lottery in ordinary meaning to mean a means of raising money by selling numbered tickets and giving prizes to the holders drawn at random. To understand this, he also directed readers to take a look at the introductory part when Britain raised money to fund 2012 Olympic Games. In another word, he also explained that lottery is a gambling game or method of raising money, as for a public charitable purpose in which a large number of tickets are sold and a drawing is held for certain prizes. While emphasising that the operators of the National Lottery Act in Nigeria are not implementing the provisions of the statute, he illustrated his point with the creative stretch of the NLRC towards 'regulating' Consumer Sales Promotions (CSPs) of private sector businesses especially in telecommunications, banking, manufacturing, broadcasting and other players in the corporate Nigeria. He explained that to all intents and purposes, CSPs by definition are a variety of short term promotional techniques to encourage customers and consumers to respond in some way. "A sales promotion is a typical marketing technique that adds values to a product in order to achieve specific marketing goals. In these categories of CSP are some of the companies that engage in short term promotions which operations are not within the contemplation of the drafters of the National Lottery Act. It is argued that the Act of the NLRC in issuing letters alleging 'breaches' of the provisions of the Act to some companies that engage in short-term promotion is illegal as can be gleaned from Section 29 of the Act (Sales of Tickets)," he stated. Speaking further, he concluded by saying that "It is my humble submission that companies conducting CSPs do not sell tickets, it is only additional value or incentive for patronising a particular product. The consumer is definitely not engaging in a lottery game as defined by statute because he or she already gets value for his money in terms of the product he or she has paid for," Another point he said should be considered is located in Section 24 of the Act (Application of proceeds of a National Lottery). The subsection (1), according to him, reads "A licensee shall establish an operational fund to be known as the "prize funds" into which be paid a minimum return of 50 percent of the proceeds of a National Lottery", while subsection (3) states that " A licensee shall pay to the Trust Fund established under Section 35 of this Act within a period not more than 90 days after the determination of the result of each lottery, an amount of 20 percent of the proceed of the lottery for the first 5 years of the licence, 25 percent in the subsequent 5 years and thereafter 27.5 percent". To drive home his point, the lawyer said it should be noted that companies or corporate bodies conducting CSPs do not sell tickets. Thus, there are no "proceeds" out of which they should pay a required percentage to the National Lottery Trust Fund. He added that the Act (NLA) according to the drafters was only to regulate lottery business and not marketing promotions of private business concerns. He pointed out two acts of illegality that readily come into fore. Firstly, he stated that it altered the provision of the Act by creating another class of lottery not known to the law and secondly, that it is against the provision of the Act to confer on the NLRC the power to grant lottery permits. "The attempt to expand the scope of coverage of the commission by the instrumentality of the regulation to include granting short term permits in place of a licence is not within the contemplation of the Act and therefore it is illegal and invalid. By extension, there is no power granted to the NLRC to seal up any business premises in the Act" he stated. Reactions As the body mandated under the law to regulate marketing activities in the country, the National Institute of Marketing of Nigeria is said to have begun move to address the issue. Its president, Mr. Ganiyu Koledoye, in an interview with THISDAY, cautioned stakeholders not to blow the matter out of proportion. He said his council has embarked on the process to work with relevant stakeholders to resolve the controversy. "NINM is aware of the issue and we are going to address it at our inaugural meeting next month. Already, we have started consultation and in good time, we will sit with all the parties concerned, including NLRC to resolve it. But for now, I don't want it to be blown out of proportion. At the end, we will come out with what we benefit both our members and the good people of Nigeria," he said. The President of the Public Relations Consultants' Association of Nigeria (PRCAN), Mr. Chido Nwakanma, who said he was not fully abreast with the situation however called on government agencies to avoid looking for spaces outside their area of jurisdiction. "It is good for government agencies to generate revenue but it must be within the armpit of the law. A situation where an agency tries to look for space, just to be relevant or to be seeing to be working is unacceptable. It should be avoided. I think government should take a deeper look at the issue to avoid making life difficult for the citizens" he said. Matters Arising Rather than feeding on promotions, a doctoral student in the Department of Sociology of the University of Lagos, Mr. Adams Atata has called on government to revive the National Sports Lottery to create platform of operation for NLRC. He also told THISDAY that the recent desperate attempt by the commission to amend the law of its establishment showed that those behind it knew that its involvement in promotion was illegal. "It is my considered view that all acts of the National Regulatory Lottery Commission which are not consistent with the law that established it should be reversed. For example, it is unlawful for the commission to compel companies engaging in CSP to pay levies to it as well as closing their business premises. It has no such powers. Short promotional sales is not a lottery, it is a way of rewarding loyal customers. The Commission should be told in clear language that it needs to restrict itself to the mandate of the Act. It will do well for all to call on the supervising Ministry to compel the Commission to refund all fines it had coerced from some of the corporate bodies involved in CSPs. This is the minimum to accept while it desists henceforth from illegalities. The Commission should restrict its powers to casino operators and others who are selling tickets for lottery purpose. "If Lagos State can create an enabling environment for lottery to operate, federal government has no excuse. I think the problem is that NLRC is idle and those working there want to be seeing to be working. It is high time the National Sports Lottery is revived. If this is done, there will be work for the federal government agency to do. The recent attempt to send bill to National Assembly to ammeter the NLRC's 2005 Act is in bad fate. Now, they want it to include regulation of promotions. This is unacceptable. All over the world, lottery commission regulates lotteries and not promotions as we are witnessing in Nigeria." Atata said. Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com). |