Who: Parquet national financier, Sherpa and Actionaid Peuples solidaires and Samsung Electronics (Samsung)
Where: France
When: April 2019
Date law stated: 24 July 2019
What happened:
A judicial inquiry was filed in France against Samsung by Sherpa and Actionaid Peuples solidaires, two French NGOs, on the grounds of misleading consumer practices.
Samsung claimed that it met high ethical standards and respected the rights of its workers all around the world. Such claims are increasing becoming part of the marketing communication of global companies and can offer a marketing advantage, with ethical practices a growing concern for consumers.
In relation to Samsung, investigations from the NGO China Labor Watch had allegedly revealed several infringements to worker rights in South Korea, such as the employment of minors under the age of 16, abusive working hours and exposure to toxic substances such as benzene and methanol. The Korean courts had, in 2017, reported that there was a link between Samsung’s employee working conditions and incurable diseases that were suffered certain of the employees.
Based on these alleged actions occurring outside French courts’ jurisdictions, the NGOs filed a complaint before the French criminal courts, arguing that Samsung Electronics’ declarations in relation to ethics were misleading to French consumers, since these declarations were accessible to them and were therefore producing effects in France. A similar claim had been filed by that same association in 2015 against Auchan, but had not resulted in any criminal prosecution by French criminal courts.
In the Samsung case, the examining judge found the claim admissible and valid to enable a prosecution to be brought, and thus deemed that there were sufficient and serious indications that misleading practices could have been committed by Samsung Electronics in France. Although the court was not at this stage making a ruling on whether or not such practices had been committed, such a finding is still innovative, since it finds that claims regarding ethical values and behaviours of a company can be examined under B2C misleading practice rules, even if are neither directly connected with a product advertising, nor strictly fall into one of the listed practices deemed misleading by the French consumer code.
Why this matters:
As consumer demands make ethical considerations increasingly important for marketing teams, the French regulator has also increased ethical standards and compliance obligations for large companies. This includes the 2016 Sapin II Act of the fight against bribery, the 27 March 2017 Act on companies duty of vigilance and the 19 July 2017 Ordinance of non-financial performance declarations. These changes intend to impose transparency and risk management obligations regarding the fight against corruption, environment protection, human rights and worker protection. The French Parliament also just voted on new piece of legislation (the PACTE Law), which requires companies to take into account social and environmental considerations in their business activities.
The case at hand also shows that marketing claims can present the risk of court action.
