New Euro-test for advertising laws

Date: 02/05/1996

By Fiona McHugh

THE European Commission will this month propose that national advertising and sponsorship laws introduced ostensibly to protect the public's interest, but suspected of acting as protectionist barriers to trade, be put to a rigorous Euro-test.

Under current EU rules, member states may adopt legislation which restricts the free movement of goods and services within the bloc in order to protect the “general good”, but only if the law in question is not excessive.

The 'proportionality' challenge, proposed in a discussion paper due to be adopted by the Commission next week, would scrutinise national rules, such as the Greek toy advertisement ban, to see if they were in proportion to their aims - in this case the protection of children.

It would also assess the impact of the rules on the market as a whole, and not just on the targeted sector. In the case of the Greek ban, this would mean examining, for example, the knock-on effect it has on television stations' revenue as well as on that of the toy industry.

Conspicuously absent from the text of the Green Paper on Commercial Communications is any explicit mention of the infringement proceedings which would inevitably follow the test, should a national law be deemed illegal. That is being seen as a nod in the direction of the legal services, which, already swamped with complaints, delayed the adoption of the text for weeks amid fears that it could open the door to a flood of new cases.

The Commission's move, which comes in response to demands to bind together the patchwork of national laws on advertising which currently exist in the EU's 15 member states, has been warmly welcomed by industry representatives.

“This is an excellent approach,” said Lionel Stanbrook of the Advertising Association. “We need to have a functioning single market as much as any other sector does.”

Rules governing tobacco and alcohol advertisements, for example, vary enormously across the EU, with some countries imposing outright bans and others publishing lengthy lists of do's and don'ts. These differences force EU companies to tailor their campaigns to national markets, a costly task which gives US rivals selling to a single, relatively homogeneous home market a competitive edge.

Only 9&percent; of businessmen who participated in a recent Commission survey said it was easy to launch a pan-European marketing strategy, while 25&percent; said they found it positively difficult to do so.

Recent amendments demanded by the European Parliament to the revised Television Without Frontiers Directive have prompted fears of a swing towards the re-nationalisation of broadcasting which could make the situation worse.

At the moment, EU television stations are governed by the laws of the country from which they broadcast. As a result, most set up shop in liberal countries such as the UK. But concessions being sought by Sweden would, if adopted by ministers, allow countries to block transmissions from abroad which did not respect national rules. This, the advertising industry says, would lead to a further fragmentation of the 70-million-ecu advertising and public relations market.

A tug of war between liberal and protectionist departments within the Commission has been raging for years. The Green Paper represents an attempt by the staunch liberaliser, Internal Market Commissioner Mario Monti, to recapture ground recently lost to the protectionists.

With the Intergovernmental Conference in full swing, and worries about an erosion of national sovereignty to the fore, the Commission has recently erred on the side of caution, avoiding confrontation with national governments whenever possible.

The proposed new approach to advertising would go against that trend, by exposing national laws to closer EU scrutiny. But Monti hopes to persuade fellow Commissioners to support his plan by suggesting the setting up of a committee comprised of a chairman from the Commission and member state representatives to help coordinate legislation in this area. One of the committee's tasks would be to try to solve problems diplomatically before resorting to court action.