While the welcomed Sales Promotion Regulation is beached, the less welcome Unfair Commercial Practices Directive and the high-flown ‘Cross-Border Rogue Traders Initiative’ get a boost. We report the EU ‘Competitiveness Council”s recent labours at
Topic: Misleading advertising
Who: The EU Competitiveness Council
When: May 2004
The EU Competitiveness Council ("EUCC") has recently had a very busy time giving red and green lights to no less than three different initiatives aimed at harmonising controls over misleading advertising and promotions across the now 25 countries of the European Union.
Sales Promotion Regulation
On the red-light side, the proposed Sales Promotion Regulation has been rejected in its most recent form.
Only last month marketinglaw.co.uk reported the breathing of new life into this years-long initiative to harmonise rules for promotion marketing across Europe, with standardised prize promotion rules and other measures to make the whole task of running promotions across European borders much easier. However there was controversy surrounding some of the new provisions such as a requirement that some types of prize promotion offering cash prizes should offer an equal amount to charity and that there should be a cap on prize money of €100,000 (£67,000).
The UK's Direct Marketing Association branded these proposals as unworkable and lo and behold, although the EUCC sought to get agreement by suggesting dropping those particular proposals, the legislation was thrown out and returned to the European Council for further discussion.
Unfair commercial practices?
On a more positive note, the "Unfair Commercial Practices" Directive, which began life at about the same time as the proposed sales promotion regulation, got a boost from the EUCC. Political agreement was reached on its terms so that it is now clear to return to the European Parliament for a second reading it the Autumn 2004.
We have no reports of significant changes to the earlier version. This means that it very likely retains its shape and its main thrust. This is to introduce rules for determining whether a commercial practice is unfair, defining examples of certain unfair practices and imposing a duty on member states to ensure that the new rules are enforced and that traders who break them are punished.
The plan is that these practices would include misleading advertising. There will also be a requirement that all advertising should contain a limited amount of core information such as a product's main characteristics, its pricing inclusive of taxes and where appropriate delivery charges and the existence of a right of withdrawal.
Thirdly, another proposed measure against rogue traders and advertisers has been endorsed. The EUCC agreed a proposed regulation targeting unscrupulous traders and advertisers who try to escape consumer protection authorities in one EU member state by targeting consumers living in other EU states.
The idea is to create an EU-wide network of national enforcement authorities who are able to take co-ordinated action against rogue traders conducting cross-border scams.
Under the draft regulation, member states will be required to designate a public enforcement authority to be part of a mutual assistance network. There will be measures to encourage co-operation between competent authorities across the EU and a particular focus will be those who target consumers across internal EU borders using the internet, telephone and other such measures.
The plan is to proceed to final adoption of the regulation later in 2004, with the new EU wide enforcement network starting work in 2006.
Why this matters:
It is disappointing that the Sales Promotion Regulation, perhaps the clearest and most helpful to cross border marketers of these measures, has encountered heavy weather again.
So far as the other two measures are concerned, the unfair commercial practices directive has been the subject of some criticism because of its potentially wide and over-restrictive ambit.
As regards the regulation targeted at cross border traders, the intentions seem laudable, but marketinglaw's own feeling is that our own enforcement authorities in these areas would do best to focus on taking effective action against unscrupulous traders targeting UK consumers, and then develop that facility in co-operation with other equivalent authorities in the EU.