Positive information obligations on advertisers

1. Positive information obligations on advertisers Antonina Bakardjieva Engelbrekt, LL.D., Associate Professor Stockholm University antonina.bakardjieva@juridicum.su.se

2. Introduction to Question B LIDC Congress Hamburg 2008

3. Question B • Under which circumstances and to what extent should the positive obligation of providing information be imposed by regulation on advertisers?

4. Background • Growing number of rules and regulations imposing positive information obligations on advertisers on national and European level, e.g. • On health and safety aspects of products (e.g. dangers of alcohol and tobacco, obesity, etc.) • On environmental characteristics of products (e.g. CO2 emissions) • On withdrawal rights of consumers • Directive 2005/29/EC (UCPD) • General ban on misleading omissions, Article 7 UCPD • Specific information obligations for the case of ’invitation to purchase’

5. Concerns • Too costly for industry? • Excessive constraint on freedom of commercial communications? • Effectiveness? • Information overload for consumers? • Shifting undue burden and risk assessment to consumers?

6. Delimiting the question • Subjective scope: advertisers, not traders in general • Objective scope: • Obligations in advertising, i.e. in pre-contractual relations • Positive obligations • Geographical scope: • In principle global, but confined to states whose national groups submit reports

7. Difficulties of delimitation • Defining advertising – upon broad definition encompasses nearly all commercial communication • Pre-contractual relations – but often with contractual consequences • Positive obligations in what sense: • Positive (affirmative), contrary to negative? • Positive (specific), contrary to general? • European bias due to UCPD

8. Short answer to Question B • It depends.

9. Structure of the study • Mapping the existing types of information obligations • Positive or negative? • General or specific? • Horizontal or vertical? • Identifying the typical circumstances under which positive obligations are imposed and the policy justifications for that • Analyzing the scope of the obligations • Who is the addressee of the obligation? • What information is required? • How is the information to be provided? • Is the communication medium taken into account? • Providing a glimpse in enforcement • Review of the legal policy discussion: pros and cons

10. Individuell und sportlich - der neue Passat R36 Liebhaber maximaler Dynamik und exklusiven Designs können den neuen Passat R36 ab jetzt bestellen. Der stärkste Passat aller Zeiten steht mit seinen sportlichen 220 kW (300 PS) als Limousine und Variant zur Auswahl. Optisch reizvoll sind unter anderem die Lackierung „Biscay Blue Perleffekt“, der für die R-Reihe typische Stoßfänger und die entsprechenden in Aluoptik gestalteten Doppellamellen des oberen Kühlergrills. (Kraftstoffverbrauch: 10,5 l/100 km; CO2-Emission: 249 g/km)***** Information…

11. … or product standard? • BBC news, 26 September 2008: MEPs stand by car emission curbs • European car makers face tough new targets for cutting carbon emissions after MEPs rejected industry pleas for more time to produce greener cars.

12. « Pour votre santé, mangez au moins cinq fruits et légumes par jour» « Pour votre santé, pratiquez une activité physique régulière », «Pour votre santé, évitez de manger trop gras, trop sucré, trop salé » « Pour votre santé, évitez de grignoter entre les repas». Infromation and advice, or …

13. Obésité : « Bachelot envisage de supprimer certaines publicités pour enfants » …advertising ban?

14. …or product ban?

15. Smoking kills

16. Summary of the international report

17. International report • Based on: • National reports • Austria • Belgium • Czech Republic • France • Germany • Hungary • Italy • Spain • Switzerland • UK • Additional comparative information • Scandinavian countries, but no national reports! • Analysis of European law, Unfair Commercial Practices Directive

18. Regulative approaches • Unfair competition law • Germany, Austria, Switzerland • Marketing practices law • Sweden, Denmark, Finland • Consumer law • France, Belgium, Italy, Spain, Czech Republic • Self-regulation • UK • Mixed approaches • Hungary: competition law and consumer law

19. Types of information obligations • Positive or ‘negative’ obligation: • Positive: requires in an affirmative manner disclosure of material information in the marketing to consumers • Negative: upon failure to provide material information the advertisement may be considered misleading or unfair • General or specific (certain aspects only) • Horizontal or vertical (certain products or industries only)

20. Information obligations prior to UCPD • Positive information obligation • Unfair competition model: no • Marketing practices model: yes • Sweden – most far reaching, applies to all marketing, information important from consumers’ point of view • Other Scandinavian countries – with qualifications • Consumer law model: yes, but restricted to offers, linked to contract law • Self-regulation model: no • Mixed model: yes, in consumer law • Negative information obligation: yes in all countries

21. Directive 2005/29/EC (1) • Misleading omission • Elements: • Material information • Needed by average consumer (general public or average for the group) • To make informed decision • Capacity to influence transactional decision • Flexibilities • Context (twice) • Account of practice features and circumstances • Limitations of the communication medium

22. Directive 2005/29/EC (2) • Invitation to purchase: • commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase • List of material information • Flexibilities • If not apparent from the context • to an extent appropriate to the medium and the product

23. Directive 2005/29/EC (3) • Way in which information is provided can equal omission • a trader hides or provides in an unclear, unintelligible, ambiguous or untimely manner such material information; • fails to identify the commercial intent of the commercial practice

24. Swedish Market Court, MD 2003:33KO v. Ryanair

25. MD 2004:24 Vodafone

26. Directive 2005/29/EC (4) • To be taken into account • Limitations of space and time imposed by the communication medium • Any measures taken by the trader to make the information available to consumers by other means

27. Post-implementation stage • Problems with transposition into national law • Missing flexibilities • No definition of average consumer • Communication medium • Problems with interpretation of provisions • Invitation to purchase? • Limitations of communication medium?

28. Specific and vertical information obligations • Information asymmetries • Complex products (foodstuffs, medicines, cosmetics, complex services) • Price (artificially complicated price-setting) • General public interest • Health and safety • Environmental protection • Paternalistic motives: protecting consumers from themselves • Altering consumption patterns toward healthy food, no smoking, no drinking etc.

29. Regulative transparency? Annex II UCPD • Articles 4 and 5 of Directive 97/7/EC • Article 3 of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours • Article 3(3) of Directive 94/47/EC of the European Parliament and of the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of a right to use immovable properties on a timeshare basis • Article 3(4) of Directive 98/6/EC of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers • Articles 86 to 100 of Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use • Articles 5 and 6 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) • Article 1(d) of Directive 98/7/EC of the European Parliament and of the Council of 16 February 1998 amending Council Directive 87/102/EEC for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit • Articles 3 and 4 of Directive 2002/65/EC • Article 1(9) of Directive 2001/107/EC of the European Parliament and of the Council of 21 January 2002 amending Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) with a view to regulating management companies and simplified prospectuses • Articles 12 and 13 of Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation • Article 36 of Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance

30. Arguments for and against information obligations • The pros • Enhancing market transparency • Relatively cost-efficient (cheapest information provider) • Relatively simple and clear-cut enforcement • More conducive to economic integration than product bans and uniform standards • Protection of non-economic interests (health and safety, environment) • Protecting consumers against themselves (sometimes)

31. Arguments for and against information obligations • The cons • Costs of information obligations (often passed on to consumers) • Questionable effectiveness • Commercial communication and free speech • Regulative thickets

32. Suggested conclusions 1) Support for measures enhancing market transparency and truthful commercial communication, but • balance against the principle of free market communication: the choice of form, content and medium of commercial communication should essentially rest with advertisers. 2) Positive information obligations on advertisers should be imposed in • carefully selected instances of well-evidenced information asymmetries, • where additional information can be effectively apprehended and used by consumers.

33. Suggested conclusions (UCPD in particular) 3) Argue for loyal implementation of the UCPD’s provision on misleading omissions in the national laws of the EU Member States, transposing the flexibilities envisaged. 4) Which information should be qualified as material? Use economic theory, market analysis, assessment of the circumstances of the individual case rather than universally applicable specifications. 5) ‘Invitation to purchase’: shall the concept apply to any commercial communication which contains price and product characteristic or should the communication also enable the consumer to make a purchase in other way? 6) The League could take a stand on the issue of whether information obligations should be confined to B2C relations or whether they should be extended to traders as well.

34. Suggested conclusions 7) The League should insist on a better regulative environment where redundancy and overlap of information duties and confusion over applicable rules and regulatory competence are avoided. The implementation of the UCPD in national law should be used as an occasion for streamlining and consolidating information duties to match market transparency with regulatory transparency.