UK businesses wait with baited breath over new Bribery Act

Written by on 4th March 2011
Category: Business Travel

Last Sunday night saw the highlight of the awards season, the 83rd Academy Awards – or Oscars, as they are commonly known. This year there was one thing missing: no, I’m not referring to the originality of the acceptance speeches, but to the nominee goody bags. Normally worth a staggering $60,000 each, they used to be awarded to both nominees and award announcers as a thank you for attending the event, as if the worldwide career profile elevation wasn’t enough. The bags have been scrapped as they had become a grey area in United States tax law. Don’t feel too sorry for the A-listers though: they were still treated to a visit to a ‘gifting suite’, where luxury brands pay for the privilege of having their wares displayed for selection by Hollywood’s great and good. A gift worn or carried and therefore endorsed by an academy nominee is priceless for brands which are eager to cash in on the actor’s popularity, fleeting or otherwise.

Product placement is becoming a widespread phenomenon, and not one we can just attribute to our friends on the other side of the Atlantic. This Monday saw the airing of the UK’s first television programme with sponsored product placement, on the cookery segment of housewives’ favourite This Morning. Nescafé paid £100,000 to have their coffee machine placed behind the popular hosts Holly Willoughby and Philip Schofield. It was a ‘blink and you miss it’ moment that was only noticeable thanks to the small pink P (indicating product placement) in the top right corner of the screen.  Although this wasn’t a celebrity endorsement, This Morning does hold an aspirational quality in the eyes of viewers; judging by Nescafé’s reported success, this looks to be the first of many endorsements on UK television.

So how does product placement sit with our tax laws and broadcasting corporations, which are generally perceived as being stricter than those in the US? In contrast to this new development, concerns about the legality, and fairness, of similar practices within the business world have recently been the subject of debate. This April should see the implementation of the new Bribery Act, although the controversy it has caused has meant it is likely to be delayed. In a nutshell, the act will prevent companies from greasing the palms of business partners in order to gain business. This could have huge effects on the way companies work. At one end of spectrum it will prevent many UK companies working within countries such as India, Africa and the Middle East where, rightly or wrongly, ‘facilitation payments’ are ingrained in local culture. At the other end, picking up the bar bill when entertaining visiting clients could also be a grey area under the new act.

As a company we are often treated to hospitality by our property partners and clients and vice versa. We view it as a great way to catch up in a more relaxed environment than the boardroom, strengthening relationships with partners and enhancing our working experiences with them. Because we are part of the travel industry, this corporate hospitality often extends to familiarisation trips, which are essential for our Sales Team to distinguish between the serviced apartments they place clients in, ensuring they can facilitate a good fit between apartment and client. The trips are also a great opportunity for face-to-face rate negotiations with property partners; as SilverDoor have been saying for the past 10 years, we feel this is often the best way of doing business.

Let’s hope for the sake of UK industry big and small (and to avoid a complicated bar bill) that a greater understanding of business needs is achieved by the government before the details of the act are set.