Positive information obligations on advertisers

1
Positive information obligations on advertisers

• Antonina Bakardjieva Engelbrekt, LL.D., Associate
  Professor
• Stockholm University
• antonina.bakardjieva_at_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
Information

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  km CO2-Emission 249 g/km)

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
Infromation and advice, or

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  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.

13
advertising ban?

• Obésité  Bachelot envisage de supprimer
  certaines publicités pour enfants 

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 200333KO v. Ryanair
25
MD 200424 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

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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.

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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

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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 UCPDs
  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.