When misleading marketing material arrived on UK doorsteps from a Belgian marketer, it thought the UK authorities would be powerless to act. But it reckoned without the Enterprise Act 2000, the OFT and the Consumer Injunctions Directive. What is this all about?
Topic: Direct marketing
Who: The Office of Fair Trading of the UK and D Duchesne SA of Belgium
Where: The Commercial Court in Brussels
When: May 2004
It was announced that for the very first time the UK's Office of Fair Trading was launching proceedings outside the UK.
These were in Brussels against a Belgian direct mailing company trading under the names TV Direct Distribution and Just4You. It was sending mailings to UK recipients offering household goods by mail order. It also informed recipients that they had won a large prize, usually one of £10,000. Recipients were then requested to make a mail order purchase before claiming their prizes but those placing orders were then only entered into a prize draw and not entitled to a prize automatically.
Either as a result of complaints being made to the Advertising Standards Authority, or following a complaint direct to the OFT, it had contacted Duchesne and asked them to undertake to discontinue the mailings. However, for reasons best known to itself, Duchesne continued the practice.
How the OFT had the power
What gave the OFT power to take action through the Belgian Courts was the Enterprise Act 2002. This gave legal force in the UK to another EU Directive, the Consumer Injunctions Directive.
This directive empowered authorised consumer protection bodies to take action against marketers distributing marketing material that offended against a range of identified EU Directives. One of these Directives was the Misleading Advertising Directive, which the Duchesne mailings allegedly breached. The action these bodies were empowered to take included proceedings in Courts of other EU states from which the marketing material was being sent.
In this case, the Duchesne materials had been received by UK recipients and sent from Belgium, hence the OFT's action through the Brussels Court, before which a hearing is scheduled for September 2004.
Why this matters:
When we first reported the introduction of these new laws in the UK, we warned that this could potentially see consumer protection bodies from Portugal, Germany, Italy or now the Czech Republic or Hungary, applying to the British Courts for injunctions and possibly damages and costs against UK marketers. This could occur if a UK marketer's material were misleading and was being received, by whatever channel, by individuals in any of those states.
With the growth of digital communications, there is clearly an increasing risk of this occurring and a need for care and advice on cross-border communications to ensure that they are not in any way misleading or contrary to the laws of the countries where they may be received.
A related point concerns current self regulatory mechanisms for dealing with cross-border advertising and marketing complaints. In the UK, the relevant laws oblige the OFT to ensure, that before it takes actions before the Courts, the existing means of regulating the advertising in question have been unsuccessful in stopping the offending advertising.
In this sort of context, with direct mail the communication channel in question, the OFT would look to the ASA to indicate whether it had taken action. What action might is have taken in this case?
The ASA might, without the "EASA" system, have said that since the marketing material was coming from outside the UK it had no remit. However, since 1992, the ASA has been involved in the operation of the "European Advertising Standards Alliance" system for the handling of cross-border complaints. The system was set up by a consortium of the ASA and equivalent bodies across the European Union.
The effect of the EASA system is that if the ASA receives a complaint from a UK recipient over a Belgian direct mail piece, the ASA passes the complaint to the Belgian equivalent of the Advertising Standards Authority. This body will then consider the complaint under the relevant Belgian advertising codes and, if it upholds the complaint, take suitable steps under its own established procedures and powers, to curtail the activities of the Belgian marketer.
We are not aware of whether this mechanism was deployed in this particular case. The latest reports of cross border advertising complaint handling, which appear on the "EASA – Alliance" website on www.easa-alliance.org , only go up to August 2003 and do not mention this particular dispute.
EASA Alliance: is it working?
This begs the question as to the effectiveness of the EASA-Alliance mechanism, which is hardly over used.
As the ASA itself reports in its Annual Report for 2003, that year saw just 18 cross-border complaints referred to the ASA from other countries under the Alliance system. The ASA itself referred 88 complaints out to other Alliance member countries for processing, but as Chris Graham of the ASA himself admits in the Report, these numbers are quite modest. With the enlargement of the EU, the ASA hopes for more extensive and effective self regulation across the European Union, which may result in greater use of this system.