Political and legal forces

Marketing decisions can also be influenced by political and legal forces, which determine the rules by which business is conducted. Close relationships with politicians are often cultivated by organizations, both to monitor the political mood and also to influence it. The cigarette industry, for example, has a vested interest in maintaining close ties with government whereby it hopes to counter proposals from pressure groups such as ASH, which demand cigarette advertising be banned. Companies sometimes make sizeable contributions to the funds of political parties in an attempt to maintain favourable relationships.

Political action, then, through legislation and less formal directives can have a profound influence on business conduct. National laws governing advertising across Europe mean that what is acceptable in one country is banned in another. Toys, for example, cannot be advertised in Greece, tobacco advertising is illegal in Scandinavia and Italy, alcohol advertising is banned on television and at sports grounds in France, and in Germany any advertisement believed to be in bad taste can be prohibited. This patchwork of national advertising regulations means that those companies attempting to create a brand image across Europe often need to make substantial changes to their advertising strategy on a national basis. We shall now review some of the more important legal influences on marketing activities.

Monopolies and mergers

Formerly, the control of monopolies in Europe was enacted via Article 86 of the Treaty of Rome, which aimed to prevent the 'abuse' of a dominant market position. However, control was increased in 1990 when the EU introduced its first direct mechanism for dealing with mergers and take-overs: the Merger Regulation. This gave the Competition Directorate of the European Commission juris­diction over 'concentrations with a European dimension'. Over the years, the Commission has blocked several proposed mergers on the grounds that they would give certain companies a dominant share of their markets, including, for ex­ample, General Electric's proposed take-over of Honeywell. European regulations are often supplemented by national bodies (for example, the Monopolies and Mergers Commission in the UK). This body has the authority to investigate monopolies and mergers that are thought to be anti-competitive.

Restrictive practices

Article 85 of the Treaty of Rome was, in Europe, designed to ban those practices 'preventing, restricting or distorting competition', except where these contribute to efficiency without inhibiting consumers' 'fair share of the resulting benefit' and without eliminating competition. A notable success for the Commission was the breaking of the plastics cartel involving Britain (ICI), France (Atochem), West Germany (BASF) and Italy (Montedison) among others. In addition to the work of the Commission, organizations such as the Bundeskartellamt in Germany and the Competition Council in France provide national protection against anti-competitive practices. Many countries in Europe supplement cross-border regulations with their own national laws.