Not content with fining advertisers nearly 9m Euro in the last two years, Italy’s government has introduced still more measures as part of its implementation of the Unfair Commercial Practices Directive. Omar Bucchioni reports.
Topic: Consumer protection
Who: Italian Competition Authority
Law stated as at: 12 December 2007
On the 12th December 2007 two measures approved by the Italian Government have entered into force in order to bring Italian rules into the line with EU directives on misleading advertising addressed to consumers and businesses. The measures assign greater power to the Antitrust Authority (“Authority”), the public independent agency established in 1990, which has responsibility for ruling on misleading and comparative advertising and on conflicts of interests.
As a result of its jurisdiction and powers’ expansion, the Authority has launched a new Unfair Commercial Practices Directorate with the aim to allow the Authority’s departments to carry out faster and more effective interventions on behalf of consumers. In addition, the Authority will have the power to act ex officio, carrying out specific inspections when required, with the assistance of the Guardia di Finanza, the special police force whose primary task is to ensure the safeguard of the primary economic-financial interests.
Since Monday 12th November 2007, there is also a special free number (800 166 661) for consumers who want to report to the Directorate General for Consumer Protection cases of unfair business practices and misleading advertising. However, this call centre is only available from Monday to Friday from 10 am to 2 pm and it would certainly be a positive action to extend this time frame to normal working hours.
9 million Euros in fines
In addition, it has now been two years since the introduction of the Giulietti law, which came into force with rules enabling the imposition of fines on misleading advertisers. Between May 2005 and September 2007, more than 450 cases were found in breach of the code and the Authority imposed more than €9,000,000 in fines.
Advertising agencies and brand owners should be aware that the rules and controls have become stricter and legal advice should be sought in order to avoid the action of the Authority.
Following a recent analysis published by the Authority, the industries most at risk are
- Telecommunications (€3,318,000 in fines for 96 violations)
- Tourism, Industry and Services (€2,183,500 in fines for 149 violations)
- Diets and Pseudo-Pharmaceutical Products (€1,906,500 in fines for 84 violations)
- Credit and Finance (€787,400 in fines for 47 violations – 28 in 2007 alone)
Credit and Finance:
Violations in the Credit and Finance industry have risen significantly in the last few months. The Authority deemed misleading many advertisements promoting loans and financing to consumers because they lacked completeness and clarity of information on:
- “Quick loan” (advertisements of finance companies able to make a loan directly, whereas they were merely credit intermediary)
- Cost of the loan (the essential elements determining the exact cost of the loan were missing. Annual rate and effective overall annual rate indices were unclear so as to make it impossible for a customer to read them)
Fixed and mobile telephony have also been under attack for their commercial offers. The major breaches were found on:
- “camouflaged” costs (costs and conditions of the advertised offer that the advertisement fails to mention)
- technological skill level necessary to make use of some services (signal coverage for services offered)
- “Forever” offer (in reality there is a deadline by which the service, at that price, must be used)
- Hidden obligations (not clear when it is necessary to sign up for a particular tariff plan for a given period in order to take advantage of a particular offer under the advertised conditions)
The Authority has found a number of breaches mainly on:
- Misrepresentation on the Internet (hotel facilities, tourist villages, wellness centres, airfares, cruises and packaging holidays)
- Description on catalogues (tour operators’ catalogues where such descriptions were often different from the services provided in reality)
Several advertisements were found in breach of the code on the following issues:
- Proposed products intending to produce slimming or tonic effects without the need to follow a diet or to exercise
- Omission of information (no directions provided as to the need for a prior consultation with a doctor and other warnings)
In a specific case, the Authority established the principle that consumers with weight or cellulite problems find themselves in a situation of “particular psychological weakness”. As weak consumers, they must be protected by imposing higher fines.
Why this matters:
In the last couple of years, the Italian Competition Authority has shown its strict approach when it comes to tackling misleading advertising. The figures show an increase of breaches in the recent months along various sectors of the industry. Is the tough time arrived for advertising agencies and brand owners in Italy? The new powers conferred to the Authority by the introduction of a new legislation seem to indicate that this is going to be the case.