Commercial Communications in the Internal Market - Green paper from the Commission
Date: 1996-05-08
Institutions: European Commission
Subjects: communications policy, freedom to provide services, marketing, single market, theory of marketing

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

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Brussels,  08.05.1996 
COM(96)  192  final 

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Commercial Communications  in the Internal  Market 

Green paper from the  Commission. 

Contents 

Executive  summary 

Introduction 

Part I. Commercial  communications  in the European  Community 

Summary 

Internal Market Objectives 

Meeting other Community Objectives 

Part II. Evaluation  of the need  for Community action 

Summary 

Reasons for existing or new Internal Market barriers 

Threats to the coherence of Community measures 

Part III. Evaluation of the specific  areas for Community action 

Summary 

A Preliminary Review 

The need for a  further  review of potential  regulatory  barriers 

The need for an early notification  mechanism 

Part IV. Proposals for consultation 

Summary 

A methodology to deliver a more uniform  assessment 

Improved  Co-ordination  and Information  at the European  level 

Footnotes 

Working Document of the Services. 

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A working  document  of the  Services  is provided  separately.  This  sets  out  in  detail  the  research 

findings  on which this Green  paper  is based. It  is in two parts. The first  assesses how  regulatory 

impacts  on  the  European  Market  for  Commercial  Communications  can  be  evaluated  and  the 

second  consists of a set of national  regulatory tables for each of the Member States. 

A<i 

EXECUTIVE  SUMMARY 

Objective. 

In November  1992 the  Commission  decided  to  review  its  future  policy  approach  in  the  field  of 

commercial  communications.  The  Commission  decided  that  this  review  should  be made  public 

in  the  form  of  a  Green  Paper.  Its  aim  is 

to  seek  the  views  of  the  European  Parliament,  the 

Member  States  and  interested  circles  on  proposals  which  have  the  objective  first,  of  ensuring 

that  any  future  initiative  undertaken  at the  Community  level  is  coherent  with  other  Community 

policies  or actions and  secondly,  of developing  an  approach  which  will  help the  Commission  to 

evaluate possible problems of compatibility  of certain  national  measures with Community Law. 

Scope. 

The  term  commercial  communications  covers  all  forms  of  advertising,  direct  marketing, 

sponsorship,  sales promotions  and  public  relations  promoting  products  and  services  (packaging 

is not  included  for  the reasons  outlined  in the  introductory  section).  As the  Information  Society 

evolves, new forms  of commercial  communications  will  undoubtedly  assume greater  importance 

in this  field. 

Preliminary  key  findings. 

As  preparation  for  this  Green  Paper,  a comprehensive  review  of the  relevant  legislation  in  each 

Member  State, a full  market  analysis  and  surveys  have  been  undertaken.  The detailed  results  of 

these  reviews  are  included  in an  associated  Working  document.^  Five  principal  conclusions  can 

be drawn  from  these analyses. 

(1)  Cross-border  commercial  communication  services 

in  the  Internal  Market  are  a  growing 

phenomenon. 

(2) At present,  differing  national  regulations  could  create  obstacles for  companies  wanting to 

offer  such  services  across  national  borders  and  also  create  problems  for  consumers  seeking 

redress  against unlawful cross-border  commercial  communication  services. 

(3)  For  the future  some  of  these  divergences  between  the  regulatory frameworks  of  Member 

States  could  give  rise  to  barriers  as  more  commercial  communication  services  will  circulate 

across  borders. 

(4)  The risk  of such regulatory  differences  giving  rise  to  barriers  may  be accentuated  with the 

advent  of the new services developed in the Information  Society. 

(5)  The  availability  of 

information  about  regulatory  measures  and  market  developments  is 

becoming  increasingly important  at national and Community  level. 

siL 

A new approach  towards Commercial  Communications  policy. 

Based  on these  preliminary  results the  Green  Paper  outlines  certain  basic  policy  orientations  on 

which reactions from  interested parties are sought. 

(1)  Existing  regulations  may  have  to  be  reviewed  where  they  are  shown  to  hamper  cross 

frontier  activity. 

Differences 

in  national  regulations  could  give  rise  to  problems  of  offering  commercial 

communication  services  across  national  borders.  Indeed,  a  number  of  potential  regulator)' 

barriers  to  trade  of  such  services  between  Member  States  were  identified  in  the  surveys.  The 

principle  of freedom  to provide  services  guarantees  that  a Member  State cannot  restrict  services 

emanating  from  another  Member  State  unless  such  restrictions  fulfil  certain  specific  conditions. 

A  restriction  may  arise  as  a  result  of  the  additional  application  of  national  rules  to  persons 

providing  services  established  in  the  territory  of  another  Member  State  who  already  have  to 

satisfy  the  requirements  of  that  State's  legislation.  Such  restrictions  could  be  justified  under 

Article  59  only  if  the  application  of  the  national  legislation  is justified  by  overriding  reasons 

relating to the public interest and  if it is proportionate to these or if the requirements  embodied in 

that  legislation  are  not  already  satisfied  by  the  rules  imposed  on  those  persons  in  the  Member 

State in which they are established  (mutual  recognition). Therefore,  in this legal context  it has to 

be  examined  to.which  extent  the  potential  barriers  to  trade  in  commercial  communication 

services  are admissible  under Community  law and  in particular  whether they fulfil  the  condition 

of  proportionality. 

Part  III  of  the  Green  Paper  defines  three  categories  of  potential  barriers  to  cross  frontier 

commercial  communication  services  identified  from  the  responses  to  the  preliminary  review 

resulting  from  the survey: 

Category (a) Restrictions that  involve an absolute ban on certain types of marketing  activity. 

Category  (b) Restrictions  that  limit  marketing  activities  but  without  going as  far  as to  ban  their 

use. 

Category (c) Restrictions that relate to certain  specific  product categories or types of service. 

The  detailed  review  launched  by  this  Green  Paper  may  eventually  lead  to  the  dismantling  of 

national  measures  for  which  it can  be demonstrated  that  they  are  incompatible  with  Community 

law. It may also allow for proposals for secondary Community  legislation where necessary. 

(2)  The  potential  development  of  new  barriers  within  the  Internal  Market  needs  to  be 

tackled. 

New  regulatory  problems  could  emerge  as 

the  market 

in  cross  frontier  commercial 

communication  grows. The  challenge  is therefore  to  ensure  that  a high  quality,  appropriate  and 

coherent  legal  framework  can  develop  in  a changing  environment.  Over-regulation  and  an  over-

reliance  on  infringement  procedures  (Article  169)  must  be  avoided.  This  could  be  achieved  by 

AO 

introducing  an  early  warning  system  to  identify  new  regulatory  developments.  In  addition 

increased  co-operation  between  the  regulatory  authorities  in  the  Member  States  and  with  the 

Commission  may prevent new barriers to occur. 

(3)  Future National  and  Community  measures  must  be developed  in conformity  with  both 

Internal  Market  and other Community  objectives. 

Any  policy  designed  to  meet  particular  public  interest  concerns  needs  to  be  defined  with  great 

precision  so  that  any  proposed  regulatory  measures  can  be  precisely  targeted  to  achieve  their 

underlying  policy  objectives.  Failure  to  do  so  could  result  in  potentially  counterproductive 

effects. 

Proposals  for consultation. 

Based  on  the  results  of  the  surveys  and  on  the  orientations  above  the  Commission  invites 

comments  from  all interested parties on the following  proposals. 

I.  To  improve  the proportionality  assessment  of  any future  regulatory  action  in  the field  of 

commercial  communications, the Commission proposes  a  methodology. 

With  such  an  assessment  methodology,  Community  initiatives  could  be  precisely  targeted  at 

specific  public  interest  objectives:  any  potential  spill-over  into  other  policy  fields  could  be 

identified  and minimised  at an early stage. At the national  level the methodology  could  be  useful 

to assess 

the legality of possible barriers to commercial  communications  activities.. 

II. Better  co-ordination and information at a European level is needed. 

The Commission  proposes to establish  a committee of representatives  from  the Member  States to 

consider the activities that  fall  within  the  scope of commercial  communications. The  committee 

will  examine  broad  issues  which  should  assist  the  transparency  of  the  Commission's  approach. 

The  Committee  could  help  safeguard  the  coherence  of  future  national  initiatives  in  the  field  of 

commercial  communications  allowing  for  solutions  to  be  found  which  would  help  ensure 

compatibility  with Community  law. In its early meetings  particular  attention  will  be paid to sales 

promotions  and sponsorship as commercial  communications'  activities that were identified  in the 

surveys as causing the most  difficulties. 

The  majority  of  respondents  to  the  survey  called  on  the  Commission  to  provide  better 

information  regarding  the  regulatory  picture  throughout  the  Community.  The  Commission 

proposes  that  a  central  contact  point  be  established  within  the  Commission  responsible  for 

particular  enquiries about its Commercial  Communications  policies. In addition  the contact  point 

will  collect  and  make  available  information  about  the  Commission's  overall  approach  through 

the  co-ordination  and development  of  improved  policy  information  communications  channels in 

this  domain. 

At 

NOTICE TO THE READER 

The  Commission  wishes to hold  an open consultation:  in addition  to  the European  Parliament 

and  the Member  States, any individual, firm,  body or authority  may comment on the analysis and 

proposals  presented  in this Green paper.  This is a twin-track  consultation process  whereby, not 

only  European  federations  and  associations  representing  consumers  and  industry,  but  also 

individual  interested parties  and national associations can make their views known. 

The  Commission  wishes  to  receive  comments  on  the  analysis  and  the proposals  made  in this 

Green paper  by the 30th October  1996? 

/<L 

INTRODUCTION. 

In November  1992 the Commission  decided  that  it should  prepare a Green  Paper  to consider  its 

overall appraisal of policy making in the field  of Commercial  Communications. 

The  Commission's  strategic  programme  "Making the  Most  of the  Internal  Market"  * recognised 

the  specific  role that commercial  communications  play  in the development  of the  European  area 

without  internal  frontiers.  The Commission's  policy on the Information  Society^ brought out the 

importance  of  developing  a  coherent  policy  for  the  European  Information  Society  service 

industries. 

Commercial  communications  can be defined  as: "All forms  of communication seeking  to promote 

either products,  services  or  the  image of a company  or  organisation  to final  consumers  and/or 

distributors."  The  term  includes  all  forms  of  advertising,  direct  marketing,  sponsorship,  sales 

promotions  and  public  relations.  It  also  covers  the  use  of  such  commercial  communication 

services  by  all  goods  and  service  industries  as  well  as  public  and  semi-public  bodies,  charities 

and  political  organisations-*.  Packaging  is  not  included.^ This  does  not  imply  that  problems  do 

not  arise  in  this  field  and  does  not  therefore  preclude  consideration  by the  Commission  of  the 

regulatory  framework  existing  in this domain. 

Within  this service sector, the following two general types of service may be  identified: 

(i) 

The  range  of  services  offered  by the  commercial  communications  industry  ("suppliers"^. 

Suppliers  include  advertising  agencies,  direct  marketing  companies  (all  forms),  sales 

promotion  designers, media buyers, sponsorship agents, public  relations companies.  Other 

services  are  supplied  by  "specialised  suppliers"  such  as  market  research  companies, 

advertising film  producers,  mailing list brokers. The services of both kinds of supplier  are 

provided  to clients ("users")  interested  in making such communications to the public or to 

a part thereof. 

(ii)  The range of  delivery  services offered  by "carriers" of commercial  communications. The 

providers  of these  services  cover  a wide  range  of  organisations  including  the  media (TV, 

radio  and  printed  word),  organisers  of  sports  and  cultural  events,  postal  and 

telecommunication  service providers,  billboard site  operators  etc., and may work  for both 

suppliers and users. 

The Commercial  Communications  Sector 

It  is  not  possible  to  put  precise  figures  on  the  operations  of  the  whole  commercial 

communications  service  sector.  Its  importance,  on  the  other  hand,  is manifest.  Limited  data  are 

available for a number of activities: in  1993 advertising expenditure  reached  ECU 45,557  million 
in  the  European  Union;  the  market  for  direct  marketing  was  worth  ECU 26,760  million7;  and 
the  total  turnover  for  public  relations  companies  was  ECU  1,800  million5  . The  total  number  of 

/  I 

employees  in the  sector  is again difficult  to estimate, not only  because  it is a highly  fragmented 

sector,  but also  because  many  involved  in this field  work  on an  independent  or freelance  basis. 

Figures  advanced  range between  155,000 and 250,000 for the Union  as a whole.**  In addition to 

the employment  generated within the various parts of the sector itself, many more jobs within the 

marketing  departments  of users  should  be added  to this  total.  The economic  importance  of the 

sector in terms of both output and employment  is therefore  considerable. 

In the modern  industrial and service economies of the Union, commercial  communications  serve 

the  role  of  promoting  brand  identities  and  informing  potential  clients,  by  strengthening  the 

market  presence  and  the  desired  'positioning'  of  the  brand  or  company,  and  providing  in 

appropriate detail, information  on the product or service  offered. 

Commercial  communications  can  be  a  powerful  factor  in  the  integration  of  national  markets. 

Successful  trans-border  branding  strategies  within  the  Internal  Market  underpin  international 

trade by ensuring consumers  in export  markets are kept  informed  of products  and services  being 

offered  by  suppliers  in  the  exporting  Member  State.  At  present,  in  a  number  of  areas,  the 

marketing  of  goods  and  services  is handled  exclusively  by  local  agents  or  subsidiaries  of the 

brand  owner.  But,  in  future,  as  existing  trans-border  media  expand,  and  new,  more  effective 

trans-border  communication  channels  are opened,  it seems  highly  probable  that  more  and  more 

brand  owners will seek to communicate directly across borders with their consumers. 

It  should  be remembered  that  commercial  communications  are not, as is often  implied,  the only 

means  by which  goods and services are marketed. They are in fact  one of the  four  elements  in a 

company's  set of marketing  tools - its "marketing  mix". ( The others  are: the product  or service 

itself,  its distribution  and  its price).  The marketing  mix is determined  by the branding  strategy, 

which  in turn  reflects  the type of market in which  the manufacturer  or service  provider  operates. 

Six  types  of  branding  markets  have  been  identified^,  each  with  its typical  marketing  mix and 

combination  of  commercial  communication 

tools  adapted 

to  the  relevant  competitive 

environment. The relative need for targeting, the competitive power of distributors, and the types 

of  consumer  values  attached  to  the  brand  all  help  to  shape  the  mix  of  commercial 

communications  used. 

The Commission's  Study  programme. 

Given  the wide  scope  of  commercial  communications,  the Commission  decided  to  launch two 

analyses during  1993 and  1994. The first  was a comparative  study  of national  regulations  in  the 

field  of  commercial  communications^.  The  second  was  an 

economic/market  analysis  of 

commercial  communications  and  branding  strategies. ^ 

In  addition  to  these  two  studies,  in 

order to  check whether regulatory  divergences were creating barriers  in the Internal  Market, the 

Commission  undertook  two further  surveys  in  which  the  views  of  interested  parties  were 

canvassed^.  One of these^  was aimed  at the collection  of detailed  written  information  on the 

effects  of the  Internal  Market  on  companies'  commercial  communication  activities  and  on any 

obstacles  that  the  companies  could  identify.^This  also  canvassed  the  views  of  consumer 

associations on problems that consumers had or might be expected to experience with the growth 

of  cross-border  commercial  communication  services.  More  than  300  detailed  replies  were 

received,  and the evidence they  provide has been  extensively  drawn  on  in Parts  I and  III  of this 

Green  paper. 

The  second^survey  was  carried  out  by  MRB  International  Ltd  and  was  conducted  by 

fax/telephone.  This was done with  the express purpose  of avoiding  a situation  in which  the  only 

respondents  to  the  "call  for  written  comment"  were  companies  committed  to  achieving  an 

Internal  Market for commercial  communications  or consumer associations focusing  on  European 
rather than national or regional  issues^7. 

During this period  another  independent  study unrelated  to the current  Green  paper was  launched 

by  the  Commission  on  the  "Future  of  Media  and  Advertising".  This  concluded  that  the 

development  of  new  media  would  require  a  review  of  the  existing  European  regulatory 

framework  in the field  of advertising. 

Organisation  of the Green  paper. 

This Green  Paper  is organised  in four  parts. Part I sets out the role of the Community  in the  field 

of commercial  communications.  In  Part  II  the  Commission  argues  the  need  for  action.  Part  III 

provides  a preliminary  review  of  specific  areas where that  action  could  be taken. Part  IV  draws 

certain conclusions on which comment  is invited. 

The accompanying  'Working  Document  of the  Services'  supplies  the detailed  analysis  on  which 

the proposals made in the Green Paper are based. Part I of the Working Document  uses economic 

and  business principles to explain  the role of commercial  communications  in the Internal  Market 

in  the  framing  of  a  reliable  impact  analysis.  Part  II  of  the  Document  provides  a  detailed 

comparative  review, in tabular form, of national  laws and the objectives they seek to meet. 

PART I. COMMERCIAL  COMMUNICATIONS  IN THE  EUROPEAN  COMMUNITY. 

Summary 

Commercial  communication  services  fall  within  the  scope  of  Internal  Market  law,  notably  that 
concerning the free movement of services. An evaluation  of how they will develop in the Internal 
Market and a review of the survey results show that benefits  of the Internal  Market are not being 
fully  enjoyed  as  a  result  of  regulatory  differences  across  the  Member  States.  Moreover, 
the 
advent  of  the  Information  Society  will  result  in  an  increase  in  cross  border  commercial 
communications.  Since the Community's  role  is not  limited  to the  Internal  Market  but  has other 
policy  objectives,  there  is  a  brief  description  of  these  and  their  bearing  on  commercial 
communications. Respondents are asked to give their views on each of these points. 

INTERNAL MARKET OBJECTIVES 

Internal  Market  law. 

Commercial communications  and the free  movement  of goods 

In certain circumstances commercial communication  activities could  benefit  from  the application 

of Article 30 of the EC Treaty relating to the free  movement of goods. The Court's recognition  of 

the  indirect  economic  link between  commercial  communication  services and the sale of goods is 

clearly  explained  in the Oosthoek's  Uitgeversmaatschappij  judgement  concerning  the  restriction 

of a sales promotion by a Belgium  firm  into the Dutch market. The Court stated that this measure 

led to a measure equivalent to a quantitative restriction  as follows: 

" Legislation  which restricts or prohibits  certain forms  of advertising  and certain means of sales 

promotion  may, although  it does  not  directly  affect  imports,  be such  as  to restrict  their  volume 

because  it affects marketing  opportunities for  the  imported products.  The possibility  cannot  be 

ruled  out  that  to  compel  a producer  either  to  adopt  advertising  or  sales  promotion  schemes 

which differ from one Member State to another or to discontinue  a scheme which he considers to 

be particularly  effective may constitute  an obstacle  to imports  even if the legislation  in question 

applies to domestic products  and imported products  without distinction. "' °. 

In  GB-INNO^  where  the  restriction  bore  on  the  content  of  advertising  leaflets  distributed 

in 

Luxembourg by a Belgian  retailer, the Court made the  link  to Article 30 by way of the  reminder 

that  the  free  movement  of  goods  across  frontiers  also  depended  upon  the  free  movement  of 

people. Since the banning of advertising directed  at individuals from  a neighbouring  State would 

deprive them  of the incentive to cross the border  it would  therefore  limit the possibilities  for  the 

goods to cross the same border. This judgement  shows that the informational  role of  commercial 

communications  is  recognised  in  law.  It  also  shows  that  restrictions  in  advertising  related  to 

goods are to be assessed under Article 30. 

This  informational  benefit  was  stressed  in  the  "Yves  Rocher"  judgement^  .  In  deciding  that 

price comparisons were not misleading, the Court remarked  that  such  advertising practices could 

be considered as: 

" ...extremely useful to enable the consumer to make his choice  in full  knowledge of the facts." 

Restrictions on commercial  communications may therefore  be open to challenge under Article 30 
of the  Treaty.  In  Keck  and  Mithouard2^  the  Court  imposed  certain  limits on  the  application  of 

Article  30,  in  that  it  held  that  Article  30  would  not  apply  to  national  measures  prohibiting  or 
restricting  "certain  selling  arrangements"2-2 provided  such  measures  apply  to all  relevant  traders 

operating  within  the  national  area  and  so  long  as  they  affect  in  the  same  manner,  in  law  or  in 

fact,  the  marketing  of domestic  products  and  of  those  from  other  Member  States. This  case  has 
been  followed  by a number of other cases in which  the same  line has been taken  by the Court. 2-* 

In  order  to  decide  whether  Article  30  applies,  an  examination  of  restrictions  on  commercial 

communications  should therefore  be undertaken  on a case by case basis. 

Commercial communications  and free  movement  of  services 

The  freedom  to  provide  services  is  guaranteed  by  Articles  59 and  60  of  the  EC  Treaty.  Within 
the  meaning  of  these  articles  as  interpreted  by  the  Court  2^,  commercial  communication 

activities  involve  the  provision  of  different  "services"  which  can  be  classified  according  to 

whether they are provided  by the suppliers (e.g. advertising  agencies), the carriers (e.g. media) or 

the  specialist  suppliers  (e.g.  list  brokers). All these  services  could  be provided  on  a trans-border 

basis and against  remuneration. 

The  Court  has  already  held  that  advertising  is  a  service2-5.  For  example,  in  a  recent judgement, 
concerning  "cold-calling"  (unsolicited  telephone  advertising),2^  it  ruled  that  the  prohibition  of 

this  practise:  "deprives  the  operators  concerned  of  a  rapid  and  direct  technique for  marketing 

and  for  contacting  potential  clients  in  other  Member  States.  It  can  therefore  constitute  a 

restriction  on the freedom to provide  cross-border  services."^ 

The  principle  of  freedom  to  provide  services  guarantees  that  a  Member  State  cannot  restrict 

services  emanating  from  another  Member  State  unless  such  restrictions  fulfil  certain  specific 

conditions.  Therefore,  if  these  conditions  are  not  fulfilled,  such  services  only  fall  under  the 

legislation  of  the  Member  State  from  where  the  provider  of  services  is  established  (country  of 
origin  legislation).2^  However,  restrictions  on  the  freedom  to  provide  services  can,  subject  to 

certain  conditions,  be justified.  Here, the Court  draws  a clear  distinction  between  discriminatory 

and non-discriminatory  measures. 

Discriminatory  measures are compatible with Community  law only if they can  be brought within 

the scope  of the exemptions  contained  in Article  56 of the  Treaty, namely;  public  policy,  public 

security, or public health; and if they comply with the principle of proportionality. 

Non-discriminatory  measures may arise as a result  of the  additional  application  of national  rules 

to  persons  providing  services  established  in the  territory  of  another  Member  State  who  already 

have  to  satisfy  the  requirements  of  that  State's  legislation.  Such  restrictions  could  be  justified 

under Article  59 only if they are justified  by overriding  reasons relating to the public  interest and 

if  the  requirements  embodied  in  the  restrictive  measures  are  not  already  satisfied  by  the  rules 

imposed  on  those  persons  in  the  Member  State  in  which  they  are  established  (mutual 

recognition).  29  'Overriding  reasons  relating  to  the  public  interest'  (henceforth  referred  to  as 
"public  interest objectives")  include: the protection  of workers-**?; the protection  of consumers-*7; 
the  protection  of  intellectual  property^2;  the  protection  of  fair  trading;  the  conservation  of  the 

national  historic  and  artistic  heritage;  the  widest  possible  dissemination  of  knowledge  of  the 

artistic  and  cultural  heritage  of  a country-*-*; professional  rules  designed  to  protect  recipients  of 
services-**; the protection  of pluralism-*-5 and linguistic policy-***. 

In  addition  restrictions  on  the  free  movement  of  services  cannot  be  imposed  merely  because  of 

the  existence  of  such  public  interest  objectives:  in  order  to  be justified  under  Community  law 

they must  furthermore  be proportionate  to these  pursued  objectives.  The Court  has specified  the 

meaning  of proportionality:  "it  is settled  case law that  requirements  imposed  on the providers of 

services must  be appropriate to ensure achievement  of the  intended  aim  and  must  not  go beyond 
that  which  is  necessary  in  order  to  achieve  that  objective"-*7.  In  other  words,  it  must  not  be 
possible to obtain the same result by less restrictive  rules.38 

It  cannot  be  excluded  that  the  ECJ  will  extend  its  reasoning  in  the  Keck  case  (see  above)  to 

Article  59. At this  stage,  it is not possible, however, to  state  in general  terms  what  would  be the 

precise  impact of such an extension, since much will depend  on the type of service  involved. 

Commercial  communications  and freedom  of  expression. 

Commercial  communications  could  benefit  from  the  principle  of  freedom  of  expression  as 

enshrined  in Article  10(1) of the European  Convention  of Human  Rights  (ECHR)  and  in Article 

19 of the International  Covenant  on Civil  and Political  Rights  (henceforth  referred  to as the UN 

Covenant).  Indeed,  commercial  communication  services  include  opinions,  information  or  ideas 

and  therefore  may  benefit  from  the  freedom  to  hold  opinions  and  to  receive  and  impart 

information  and  ideas  without  interference  by  public  authority  and  regardless  of  frontiers. 

Interference  by  public  authorities  can  be justified  if  it  complies  with  the  conditions  set  out  in 

paragraph  2 of  Article  10 of the  ECHR or Article  19 of  the  UN  "Covenant".  In this  context  the 

specific  nature  of  commercial  communications  is  accounted  for  through  the  application  of  the 

principle of proportionality. 

The  European  Commission  and  Court  of  Human  Rights  and  the  United  Nations  Human  Rights 

Committee-*^  have  recognised  that  commercial  communications  can  benefit  from  freedom  of 

expression  as thus defined*^ 

As  regards  the  links  between,  on  the  one  hand  Article  10  ECHR  and  Article  19  of  the  UN 

Covenant  and,  on  the  other  hand,  the  EC Treaty,  restrictions  on  the  free  movement  of  services 
should  be  interpreted  in  the  light  of  Article  10  of  the  ECHR*7  and  Article  19  of  the  UN 
Covenant*2. 

Internal  Market  secondary  legislation. 

Wherever  the  application  of  the  principles  of  free  movement  enshrined  in  the  Treaty  is  not 

sufficient  to  remove  restrictive  barriers  (e.g.  where  national  restrictive  measures  are  justified 

under  Community  law,)  secondary  legislation  is  necessary.  The  aim  of  this  legislation  is  to 

establish  an  equivalent  level  of  protection  of  the  relevant  public  interest  objectives  (e.g. 

consumer  protection,  protection  of  minors,  protection  of  public  health  )  in  order  to  remove  the 

legal  barriers  resulting  from  disparities  between  national  regulations.  A  certain  number  of 

existing  directives  are  relevant  to  commercial  communications.  They  concern  inter  alia 

misleading  advertising*-*,  foodstuffs**, 
protection*7  and television broadcasts*^. 

Potential  Internal  Market benefits. 

financial  services*-*,  medicinal  products***,  data 

The  Internal  Market  offers  a  significant  potential  for  individuals  and  organisations  involved  in 

commercial  communications.  However,  the  Commission's  surveys*^  indicated  that  these 

opportunities  could  not  always  be  fully  exploited  in  practice.  Five  categories  of  benefits  are 

identified  from  these  surveys  :  those  to  the  suppliers,  to  the  users,  to  the  carriers,  to  the 

consumers and to the self-regulatory  bodies. 

For  the  suppliers  of  commercial  communication  services,  the  very  nature  of  the  Internal 

Market  implies  that  any  service  lawfully  provided  in  the  country  of  establishment,  should  in 

principle  be freely  available to other users in other  Member  States, without the need to verify  in 

each  instance whether it is compatible with the regulatory provisions of these host countries. The 

likely  reduction  that  this  would  bring  about  in  the  costs  of  complying  should  assist  service 

providers  in  extending  their  activities  beyond  their  national  borders.  In  so  doing,  they  increase 

competition  within  the  Internal  Market,  stimulating  yet  more  efficient  provision  of  commercial 

communication  services.  The  increased  efficiencies  may  come  from  exploiting  new  economies 

of scale or scope, that become attainable because of the  increase  in market size, or, simply by re 

organising  and  reviewing  existing  methods  revealed  as  inefficient  in  the  light  of  the  new 

competition. 

Given  that  there  are  scarce  creative  services  at  the  core  of  advertising  and  direct  marketing 

services;  suppliers  trading  in  more  than  one  country  appear  to  have  an  interest  in  drawing  on 

centrally based creative teams. 

The survey-tO results. 

The  survey  results  show that  service  suppliers  are seeking  to operate  across the  Internal  Market 

but  are  confronted  by  a  significant  number  of  barriers  (other  than  those  of  a  cultural  nature). 

23%  of  respondents,  when  asked  to  respond  spontaneously  about  problems  in  providing  trans-

border  services,  placed  regulatory  problems  high  on  their  list  of  "very  serious"  barriers  (30  % 

cultural  and  13% economic). Moreover, when  prompted,  99% of respondents  identified  specific 

regulatory  difficulties.  40% of  respondents  noted  that  the  only  way to  tackle  the  problem  was 

either  to  adapt  at  the  local  level,  or  undertake  totally  different  campaigns  in  each  country. 

Respondents  were unanimous  in considering that  it is far  less costly to offer  effective  large scale 

commercial  communications services in the U.S.A. than  in Europe. 

The users of commercial communications (whether manufacturers  of major  branded goods or 

services or  small  or medium  sized  enterprises  trying to break  into new markets) could  benefit 

from  efficiencies  achieved  in  the  commercial  communications  business,  the  extent  varying 

according to the type of marketing mix which they use. 

Branding  strategies  will  inevitably  be sector  -but  not country-  specific.  This  explains  why, in 

principle,  users  seek  to  apply  the  same  branding  strategies  and  mixes  of  commercial 

communications  when  they trade  in a new national  market. Although  the way of applying the 

strategy  might  have  to  be adapted  to  local  culture,  its  underlying  core  values,  messages  and 

commercial  communication  tools should preferably  be similar  and  consistent,  and  its planning 

needs to remain centralised at the headquarters of the company. For this reason, users are likely 

to be keen to develop trans-border campaigns within the Internal Market and will benefit  from a 

greater  choice  of  service  providers. This  choice  can  help  them  to  achieve  a  better quality  of 

service at a more reasonable price ma, perhaps to grow sufficiently  to benefit  from  economies 

of scale or scope. In addition, three types of cost savings could result; 

(i) 

First,  legal  search  costs are reduced. The lesser the regulatory  divergence, the  less need 

there will  be for  the user to check each  set of national  regulations. Another reason why 

legal  costs can be significant  is that branding  investments  are vulnerable to any adverse 

publicity that might arise as a result of legal actions. 

(ii)  Secondly,  marketing  costs  are  reduced  as  firms  are  allowed  to  standardise  campaigns 

across markets. 

(iii)  Third,  distribution  costs will  fall.  Commercial  Communications  are used  as  competitive 

weapons  between  manufacturers  and  retailers.  If  regulatory  divergence  prevents 

manufacturers  from  effectively  using  this  competitive  tool  in  their  negotiations  with 

importing retailers then they will have to pay relatively more to access the relevant retail 

chain. The efficient  operation of the Internal Market would redress such an imbalance. 

Planning  and  overall  strategy  for  the  Internal  Market  are  increasingly  co-ordinated  centrally. 

This  is  for  two  reasons:  Efficiency:  planning,  designing  and  executing  different  national 

campaigns  push  up  costs  cutting  competitiveness  since  potential  synergies  of  a  co-ordinated 
trans-border campaign are lost.  The need to maintain  brand credibility throughout Europe:  the 
increasing ease with which information  flows freely across national borders means that  differing 
national campaigns conveying  potentially conflicting  messages could undermine the company's 
competitive position. 

The survey  results. 

There  are  a  multitude  of  trans-border  commercial  communication  services  across  a  number  of 

borders  rather  than  across  the  whole  Union.  Subject  to  cultural  and  regulatory  limitations, 

companies are increasingly attempting to use similar strategies for their non-domestic markets. 

When  users  were  asked  which  of the three types  of problems  (cultural,  regulatory  or  economic) 

were  the  most  serious  in  impeding  trade,  24%  named  cultural  and  19%  regulatory,  while  a 

further  11%  mentioned  structural  economic  problems. (Only  13% stated  they  had  no  problems, 

and  23% said  that  it  was  not  possible  to  identify  which  of  the  three  was  the  most  significant.) 

When  prompted  to  consider  a  whole  range  of  such  difficulties,  92%  felt  that  they  had 

encountered  cultural  difficulties  (a  heading  which,  for  them,  covered  issues  such  as  business 

. ethics or distribution  techniques  including regulatory  restrictions.) 

In  addition  to  tackling  these  cultural  differences,  when  prompted,  88%  of  the  users  (with  no 

differences  from  one  Member  State  to  another)  claimed  that  regulatory  differences  and 

restrictions  were  adding 

to 

their  difficulties 

in  conducting  cross-border  commercial 

communication  services. 

Regulatory  problems  were  associated  with  all  forms  of  commercial  communications,  the  most 

serious relating to sales promotions, direct marketing and sponsorship. 

The  media  and  other  carriers  (including  cultural  and  sports  events  organisers)  also  benefit 

from  the  Internal  Market.  Improved  efficiency  in  the  European  commercial  communications 

business should  allow for growth of this media sales business, particularly  across borders. 

The survey  results. 

When  carriers  were  asked  to respond  spontaneously,  culture was deemed  to be the  key  concern 

in terms of Internal  Market problems.  Nevertheless, 45% highlighted the existence  of regulatory 

barriers and  30%  believed  such barriers to be the most serious.  35% thought that the  differences 

directly  affected  the  level  of their  businesses but 60% recognised  that they affected  that  of their 

clients. 

Interestingly,  although 

the  users  and  suppliers 

indicated  reliance  on 

the  Press  when 

communicating  abroad,  it  was  the  TV  and  radio  operators  who  stated  they  received  the  most 

"imports"  of  trans-border  commercial  communications.  (This  probably  reflects  the  Press's 

tendency  to  rely  on  national  media  buyers; this  could  be  indicative  of their  underestimating  the 

amount  of advertising  revenues that originate from  non-domestic  markets).  80% of  respondents 

sold  advertising  space to users of commercial  communications  in other  Member  States and  60% 

carried  advertisements  that  had  been  launched  in  other  Member  States.  Most  of  the  operators 

expected  more  trans-border  commercial  communications  in  the  future  but  especially  in  "non-
classical  advertising" and particularly  in "below the line activities." -*7 

Consumers  stand  to  gain  as  intra-Community  trade  increases  and  fragmentation  effects  are 

reduced.  Lower  marketing  costs  and  a more  competitive  business  environment  are  likely  to  be 

passed  on to consumers  in greater choice and more competitive  pricing.  Individuals,  businesses 

or  other  professionals  should  be able  to make  better  informed  decisions  over  a wider  choice  of 

promoted  goods  and  services.  The  Internal  Market  regulatory  approach  should  lead  to  more 

effective  direct redress from  the country where the service originated  when such  communications 

infringe  laws and codes. 

The survey  results. 

For  consumer  associations  (of  which  ten  responded),  although  cultural  problems  were  not 

deemed  to be  insignificant,  the key concerns related  to inaccurate translations  that  could  mislead 

consumers  in the non-domestic  market. Consumer  associations  recognise the opportunities  of an 

Internal  Market,  but  are  clearly  concerned  that  it  is  not  operating  effectively  as  a  result  of 

differences  in regulation  which  prevent  effective  redress  for  consumers  in host  countries  and, as 

a  consequence,  call  for  stricter  harrnonisation.  The  call  for  tighter  regulations  stemmed  from  a 

feeling  that  it  was  impossible  for  consumers  to  achieve  protection  from  harmful  commercial 

communication  services  originating  abroad.  This  again  confirmed  their  view  that  the  Internal 

Market  is not currently offering  the benefits  they would expect to see. 

Community  law. does  not  affect  the  distribution  of  competences  between  authorities  and  self-

regulatory  bodies.  It alldws  self-regulators  to continue  their  regulatory  function  at the  national 

level  but  it  also  implies  that  like  public  authorities  they  need  to  account  for  Internal  Market 

principles  when  seeking  to  control  commercial  communication  services  coming  from  other 

Member  States. 

The survey  results. 

The  views  expressed  by  self-regulatory  authorities  differed  from  all  other  respondents.  Ten 

responded  indicating  that  trans-border  problems  arose  particularly  in  the  area  of  direct  mail 

(where  it  was  not  always  clear  to  them  where  action  should  be  taken)  and  also  with  pan-

European  TV  and  Press  campaigns.  Here  it  was  felt  that  a  lack  of  understanding  of  "culture" 

tended  to  be  the  key  problem.  Unlike  the  other  respondents  (who  tended  to  highlight  the 

differences  in  regulations,  rather  than  their  restrictive  nature)  these  respondents  felt  that  laws 

were generally too restrictive, and that more should  be left  to self-regulation.  However,  most  felt 

that advertisers  should  be better  "educated" about cultural  divergence, and tended  to  believe that 

there was no need to standardise codes across the Community. 

The advent of the Information  Society. 

Broadly,  the  advent  of  the  Information  Society  has  four 

implications  for  commercial 

communication  services. 

First,  the  new  digital  communication  infrastructures  represent  a  new  carrier  for  such  services, 

which  allows  for  the  fusion  of  direct  marketing  techniques  with  creative  advertising  skills. 

10 

Forecasts  of  current  marketing  activity  over  the  Internet  vary  widely  but  they  all  predict 
significant  growth.-*-2 Users will certainly use these new carriers and commercial  communication 

tools to complement their existing methods. 

Secondly,  speed  of  transmission  and  targeting  possibilities  will  greatly facilitate  trans-border 

commercial  communications.  All  these  services will  be  offered  point  to  point,  in  principle  on  a 

transfrontier  basis. Unlike postal direct marketing, such  interactivity  is practically  instantaneous. 

In  comparison  with  existing  video  text  or  teleshopping  services,  the  creative  potential  of 

multimedia  tools  is highly promising,  if still  expensive to run. Cultural  resistance  is likely to  be 

relatively low because the communication  will be of a totally new international  form. 

Thirdly,  they  will  lead  to  an  integration  of  commercial  communication  services  with  distance 

retailing,  allowing  for  interactive  distance  shopping,  which  is  likely  to  revolutionise  the  whole 

concept of teleshopping •*•*;  indeed  suppliers are already  investing  in such concepts as  interactive 

on-line sales catalogues and shopping malls. 

Finally,  the  operators  of  other  new  Information  Society  services  will  seek  out  certain  new 

commercial  communication  (e.g. interactive  advertising)  services to offer  in  order to make  their 

services  affordable  (in  practice,  commercial  communications  will  underwrite  the  other  new 

services). 

These  new  developments  in  commercial  communications  will  sharpen  the  need  to  resolve 

existing  trans-border  regulatory  problems. The  nature  of these  new  networks  increases  the  need 

for  a  regulatory  framework  based  on  Internal  Market  principles  and,  more  specifically,  where 

possible and appropriate, based  on country of origin  control. This can best be demonstrated  with 

the  example  of  the  Internet.  Once  a  message  has  been  sent  on  the  Internet  it  can  be  received 

instantaneously  anywhere  in  the  world.  A  regulation  based  on  country  of  origin  control  will 

enhance the possibility of tracking down  offenders. 

The  existing  regulatory  approach  could  prove  to  be  increasingly  ineffective  for  consumers  as 

well  as  providing  insufficient  security  for  users,  who  realise  that  branding  investments  are  the 

most vulnerable to adverse publicity. Both factors would  reduce the potential  demand  and  supply 

of new on-line  interactive commercial  communication  services. Not  only would  this weaken  the 

competitiveness  of  European  business, 

it  could  undermine  the  development  of  the  European 

Information  Society  infrastructures. 

Although  they  are clearly  of  importance  to this activity  both  now  and  in the  future,  the  Internal 

Market  principles  are  not  the  only  Community  objectives  that  could  be  applied  in  the  field  of 

commercial  communications. 

MEETING  OTHER  COMMUNITY  OBJECTIVES. 

Other objectives  established  by the EC Treaty, notably  public  health  (Article  129) and  consumer 

protection  (Article  129a)  can  influence  commercial  communications.  In  the  remainder  of  this 

Part of the Green Paper these and other relevant Community objectives are briefly  reviewed. 

Consumer protection  policy 

Article  129A  of  the  Treaty  clearly  requires  the  Community  to  deal  with  the  whole  range  of 

consumer  issues, not just those related  to the Internal  Market.  Such  an obligation  implies  careful 

consideration  of  subsidiarity  at  all  stages  so  that  appropriate  solutions  are  adopted.  With  the 

advent  of  the  Information  Society,  it  is possible  that  effective  consumer  protection  may  require 

increased  trans-national  regulatory  co-operation.  For those  regulatory  areas  that  fall  beyond  the 

remit  of  the  Internal  Market  the  globalisation  of  supply  which  the  information  society  heralds 

calls  for  a  comparable  adjustment  of  the  regulatory  system.  This  adaptation  will  be  of  crucial 

importance  to  consumers*  willingness  to  participate:  the  Commission  and  the  Member  States 

must address these  issues.  In this context, attention  should  be drawn  to the fact  that  all  measures 

based  on Article  129A can take a minimal  nature, i.e. such that Member  States may adopt  stricter 

provisions to ensure a higher level of consumer  protection. 

Industrial  Policy 

The  EC  Treaty  incorporates  legal  bases  for  implementing  industrial  policy  to  "ensure  that  the 

conditions necessary for the competitiveness of the Community's  industry" exist (Article  130(1)). 

Article  130(2) adds that  in order to attain  these objectives  the Member  States  "shall  consult  each 

other  in  liaison  with  the  Commission  and,  where  necessary,  shall  co-ordinate  their  action".  The 

Commission  is ^assigned  the  specific  duty  to  "take  any  useful  initiative  to  promote  such  co 

ordination". 

To  support  their  national  action, the  Community  will  generally  help  to  achieve  this  objective  of 

improving  competitiveness by taking horizontal  measures  under a series of common  policies (on 

research,  cohesion,  vocational  training,  networks  and  foreign  trade).  The  Council  may  also, 

ruling  unanimously  on  a proposal  from  the  Commission,  "decide  specific  measures  destined  to 

support  actions taken  by Member  States  in order to attain  stated  objectives"  according  to  Article 
130, paragraph  1  of the Treaty.-5^ 

Since  efficient  commercial  communication  services  would  generally,  by  improving  marketing 

efficiency,  assist industry  in meeting these competitive goals, they could  be covered  by  initiatives 

in this field. 

Competition Policy, 

In  general  commercial  communication 

"suppliers",  "users"  and  "carriers"  activities  are  all 

covered  by  the  competition  rules  of  the  EC  Treaty.  Given  the  competitive  role  of  commercial 

communications  in  the  Internal  Market,  anticompetitive  agreements  in  the  meaning  of  Article 

85(1) of the Treaty, which  restrict the freedom  of the parties to supply, to carry, to use or to buy 

such communications are prohibited. 

Nevertheless,  anticompetitive  agreements  on  commercial  communications  can  be  granted  an 

exemption  if they satisfy  the conditions set out in Article  85(3) of the Treaty. An example, which 

also  illustrates  the  direct  relevance  of  commercial  communications  in  the  market  relationship 

12 

between  manufacturers  and distributors, is clause  8(b) of Article 3 of the Commission  regulation 

on  the  application  of  Article  85(3)  of the  Treaty  to  certain  categories  of  motor  distribution  and 

servicing  agreements.  This  clause  allows  manufacturers  to  prohibit  dealers  from  soliciting 

customers  for  contract  goods  or  corresponding  goods,  outside  their  territory,  by  personalised 

advertising. 

Protection  of Public  Health. 

Article  129  of  the  Treaty  calls  upon  the  Community  to  contribute  to  a  high  level  of  health 

protection,  particularly  by  preventive  action.  It  is  to  address  the  major  health  scourges  and 

particularly  mentions the fight against drugs. 

The  Treaty  stipulates  that  health  protection  requirements  shall  be  an  integral  part  of  other 

Community  policies.  This  obligation  is  also  valid  for  Community  action  in  the  field  of 

commercial  communications. 

Central  to the  Commission's  role  in the  implementation  of Article  129 is the  obligation  to  liaise 

with  the  Member  States  in  the  co-ordination  of  their  policies  and  programmes  concerning 

prevention,  including  drug  prevention,  investigation  and  analysis  of  causes  and  modes  of 

transmission  of  health  scourges,  health  information  and  health  education.  In  its  Framework  of 

Action  in public health, the Commission  has foreseen  eight programme proposals, of which  three 

on 

- Cancer 

- AIDS and other Communicable Diseases, and 

- Health  promotion 

have  already  been  adopted.  Two  proposals  currently  under  discussion  in  the  Council  and  the 

European  Parliament, on 

- drugs, and 

- health  monitoring. 

The Commission  intends to put forward  three further  proposals  shortly on: 

- pollution-related  diseases, 

- rare diseases, 

- accidents and  injuries. 

In addition, the Commission  publishes annual reports on the integration  of health requirements in 

other  Community  policies  on  the  Health  status  in  the  Community.  It  has  also  put  forward  a 

Communication  on Surveillance Network  for Communicable  Diseases. 

General  public  health  policy,  particularly  concerning  health 

information  and  promotion, 

generates  a  number  of  commercial  communication-related  measures,  particularly  in  Member 

13 

States.  The  Commission  has  put  forward  a  draft  Directive  on  tobacco  which  proposed  to  ban 

advertising  for  tobacco  and  tobacco  products  under  certain  circumstances.  In  the  framework  of 

the  public  health  programmes,  major  Community-wide  campaigns  such  as  European  Cancer 

Week  are  organised. On Member  State  level, there are numerous  other  public  health  campaigns. 

Although  funded  by the  State these  are commissioned  from  commercial  communication  service 

providers.  Likewise,  public  health  considerations  have  lead  Member  States  to  require  health 

warnings  to be placed  on commercial  communications  that  promote  certain  products. The  use or 

commercial  communication  related  measures  in this  area  can  be  expected  given  the  key  role  of 

health  information  and education. 

Audiovisual  Policy. 

The Community's Audiovisual  Policy has two main goals: 

- to put in place and ensure the working of a true "European  Audiovisual  Area", in 

particular by ensuring the free movement of broadcast  services; and 

- to strengthen the competitiveness of the European film and television  production 

industries. 

Both  objectives  are pursued  taking full  account of the specific  cultural  aspects of the  audiovisual 

sector. 

Audiovisual  Policy  is  implemented  through  two  types  of  Community  instrument.  These  are, on 

the  one  hand,  legal  measures  such  as  the  "Television  without  frontiers"  Directive  and  on  the 

other, financial  support initiatives such as the MEDIA II programme. 

The  "Television  without  frontiers"  Directive  (Council  Directive  89/552/EEC  "on  the  co 

ordination  of certain  provisions  laid  down by  law, regulation  or administrative  action  in Member 

States concerning the pursuit of television  broadcasting activities")  is the cornerstone  of the legal 

arrangements  for  the  "European  Audiovisual  Area".  Its  primary  objective  is  to  create  the  legal 

framework  conditions needed  to ensure the  free  movement  of  broadcast  services  and  thereby  to 

encourage their development throughout the Community-^. 

Free movement  is ensured through the following  mechanisms: 

-  Each  broadcaster  can  only  be  subject  to  the  law  of  the  Member  State  under  whose 

jurisdiction  it comes (that of the place where  it is established) and  must comply with  a minimum 

set of common  rules (the "co-ordinated  fields"), 

-  Member  States  must  ensure  freedom  of  reception  and  may  not  hinder  the  re 

transmission  of broadcasts from  other Member States for reasons that fall  within the co-ordinated 

fields. 

As  one  of  the  co-ordinated  fields  is television  advertising  and  sponsorship,  this  Directive  is  of 

particular  relevance to the area of commercial  communications.  Advertising  and  sponsorship  are 

integral  parts  of,  and  constitute  the  main  source  of  funding  for,  many  television  broadcasts 

14 

whether  they  emanate  from  public  or  private  broadcasters.  The  full  implementation  of  this 

Directive,  based  as  it  is on the  "country  of  origin"  principle  which  is the  only  workable  way  in 

which  transnational  broadcasting  can  be  developed,  is  therefore  of  fundamental  importance  for 

the  development  of  commercial  communications.  In  turn,  the  maximisation  of  the  resources 

broadcasters  earn  through  advertising  and  sponsorship  revenues  will  contribute  significantly  to 

the  attaining  of  Audiovisual  Policy's  other  main  goal  i.e.  the  development  of  the  film  and  TV 

programme  production  industries.  The  economic  inter-linking  of  these  sectors-  broadcasting, 

commercial  communications  and  programme  production  -  means  that  the  development  of 

effective  Audiovisual  and Commercial  Communication  policy  instruments  is in the interest of all 

three of them. 

The  Directive  is  currently  being  up-dated  and  clarified.  In  the  Commercial  Communications 

services  sector,  one  of the  main  objectives  of  this  review  is to  liberalise  the  rules  that  apply  to 

teleshopping.  Otherwise  the  1989 rules  on  advertising  and  sponsorship  have  proved  robust  and 

have  provided  a  suitable  framework  for  the  development  of  television  advertising  and 

sponsorship  while  providing  a  satisfactory  level  of  consumer  protection.  The  Commission  has 

therefore  proposed  to  leave  them  largely  unchanged.  It  has  also  proposed  to  strengthen  the 

"country  of  origin"  principle  established  by  the  Directive  by  clarifying  the  rules  on  how 

jurisdiction  is determined. 

Cultural  Policy. 

In  the  area  of cultural  policy, the Commission  has  recognised  how  commercial  communications 

can  act  as  an  important  additional  source of revenue to  State  funds  and  therefore  again,  cultural 
policy  could  have  an  impact  on  such  services.  In  its  1992  Communication-5** the  Commission 

made  clear  that  although  the  basic  responsibility  for  culture  and  its  main  source  of  financing 

remain  with  the  authorities  in  the  Member  States,  the  complementary  role  of  sponsorship  must 

not  be  neglected.  The  Community  has  looked  with  interest  at  the  question  of  sponsorship  and 
initial  attempts  have been  made to try out the network  approach-57.  More  generally,  and  with an 

eye  to  the  frontier-free  area,  the  Community  might:  improve  information  on  incentives  to 

finance  the  arts  in  the  Member  States,  given  their  diversity  and  complexity;  promote  the 

exchange  of  information  and  the highlighting  of  original  initiatives  for  making  optimum  use of 

cultural  resources  (structural,  economic  or  human)  in  the  Member  States  and  encourage 

sponsorship  and  promote  meetings  between  creative  artists,  project  promoters  and  sponsors 

without  in any way interfering with respective individual  freedoms. 

15 

Internal  Market  objectives: 

Invitation to comment. 

The  Commission  would  welcome  views  on 

the  role,  both  now  and  in  the future,  of  Internal 

Market  principles  in the field  of commercial communications.  In particular,  further  information 

is  sought  on  the  nature  of  any  Internal  Market  barriers,  actual  or potential,  that  respondents 

have  encountered  or  identified.  Given  the  expected  increase  in  cross-  frontier  commercial 

communications,  the  Commission  is  interested  in  hearing  of  new  commercial  communication 

services  (in pilot  or commercialised form)  and any new kinds  of Internal  Market  barrier that may 

be  appearing. 

Other Policy  Objectives. 

The  Community's  role  could  clearly  develop  over 

time  as 

trans-border  commercial 

communications  assume  greater  prominence, following  the  advent  of  the  Information  Society. 

Given  the need  to apply  the principle  of subsidiarity^^,  the  Commission  welcomes  views  on the 

implications  of  this  expected  growth  in  cross  border  communications  which  could  give  rise  to 

increased  Community  involvement  in  relation  to  the  other  policy  objectives  enshrined  in  the 

Treaty  of the Union. 

16 

P A RT  II.  EVALUATION  OF  T HE  NEED  FOR  COMMUNITY  ACTION 

Summary 

The  survey  results  suggest  that  the  Internal  Market  objective  for  commercial  communications 
may  not  be  met  at  the  current  time.  Various  reasons  explain  why  national  measures  diverge 
substantially  from  each  other  and  are potential  barriers  to cross  frontier  activity.  These  sources 
of divergence  can  be expected  to persist  as commercial  communications  across  borders  expand 
with  the  advent  of the  Information  Society. There  is a risk  of  inconsistent  regulatory  responses 
explaining  why  Community  action  may  be  needed.  Respondents  are  requested  to  provide  their 
views on the need for Community  action. 

REASONS FOR EXISTING OR NEW INTERNAL  MARKET BARRIERS. 

The existing  regulatory  environment  is based  on differing  national  legal  traditions: 

National  measures  in  the  area  covered  by  this  Green  Paper  derive  from  three  main  families  of 

law; unfair  competition  law, consumer protection  law: and  specific  legislation  for  the  protection 

of  the  wider  public  interest.  The  disparity  of  aims  pursued  by  the  Member  States,  reflects,  in 

part, their differing  emphasis on these sources of national  law. -^ 

(i)  Unfair competition  Law^ 

The  objective  of these  laws**'  is to prevent  abuses  of the commercial  and  industrial  freedom  to 

compete.  Thus,  for  example,  all  Member  States  tend  strictly  to  control,  and  often  prohibit, 

commercial  communications  that  cause  confusion  or  disparagement  (libel  and  slander),  or  that 

exploit or dilute the reputation  of competitors (for example, unauthorised  use of trademarks). By 

contrast,  the treatment  of comparative  advertising ( which  entails  the comparison  of products or 

services  with  the  same  products  or  services  offered  by  another  competitor)  differs  between  the 

Member  States.  It  tends  to  be  most  tightly  controlled  (often  entailing  bans)  in  those  countries 

where the definition  of "truthful"  or "misleading" is most  limited  in scope. 

Unfair  competition  legislation  has  developed  in  different  ways  across  the  Community,  into 

either  a broader  law of market  behaviour  (Denmark.  Finland.  Sweden) or commercial  practices 

(Belgium)  or  alternatively,  sections  of  the  original  unfair  competition  law  have  been  separated 

and  developed  independently  (e.g.  Portuguese  and  Spanish  advertising  laws  or  the  consumer 

protection  laws  of  Greece).  Certain  Member  States'  legislation  is  based  mainly  on  unfair 

competition  law.  Some  indeed  are tightening their  laws.  Sweden,  for  example,  is attempting  to 

reinstate the concept of the protection  of competitors. 

(ii) Consumer Protection Law 

This  relatively  recent  branch  of  law^  is becoming  the  source  of  new  regulations  in relation  to 

commercial  communications  in  some  Member  States  (Sweden  and  Greece).  The  link  between 

these  laws and those of unfair  competition  needs to be kept  in mind, since  in many  instances the 

laws seek to protect consumers by regulating competition  between  manufacturers  and  retailers. 

Consumer  protection  law  applies  to:  misleading  advertising;  improper  influencing  of  the 

consumer;  undercutting; discounts; "free  gifts";  and promotional  offers.  A number of these areas 

17 

are also covered  by  Unfair  Competition  law, which  may  lead  to  a conflict  of  interests  between 

the  two  objectives;  for  example  comparative  advertising  may  be  seen  as  providing  useful 

information  for  consumers,  but  will  be  seen  as  undesirable  from  the  point  of  view  of  those 

competitors who are shown to be promoting less advantageous products or services. 

(Hi) Specific  legislation  for the protection  of the wider public  interest. 

Certain  laws have come  into being which  seek to protect  interests of society rather than  those  of 

the  hypothetical  final  consumer.  These  laws  have  a  wide  scope,  although  they  may  also  be 

product-specific.  They  include  the protection  of fundamental  human  rights, as  laid  down  in  the 
European  Convention  of  Human  Rights*5-5 (such  as the  right  to  freedom  of thought,  conscience 

and  religion, the  right  to  respect  for  private  life, etc.) and  extend  in  addition  into  the  following 

categories: protection  of public  health  and safety;  protection  of  minors; protection  of  pluralism 

in  the  media;  protection  from  anti-social  behaviour  (this  would  cover  issues  such  as  taste  and 

decency,  and  those  general  laws  and  self-regulatory  codes  which  seek  to  safeguard  human 

dignity and prohibit discrimination  on grounds of race, sex or nationality);  protection  of  culture 

and  of  national  spiritual  heritage,  notably  in  Greece  (within  the  context  of the  broadly  defined 

Consumer  Protection  Law),  and  in  France  and  Belgium,  where  specific  measures  concerning 

language  exist.  Specific  product  laws  have  been  developed  with  these  categories  in  mind.  For 

example, the various restrictions  on the advertising of food  , dangerous  products  (e.g.  firearms) 

and those on commercial  communications  relating to pharmaceuticals  and on medical  and  para 

medical  services fall  under public health and safety  as would  restrictions on tobacco  and  alcohol 

advertising. 

A variety of differing  types and levels of national  measures  result. 

The choice of instrument  by a Member  State will depend  on  both  its regulatory tradition  and  its 

current  political  priorities.  The  measures  taken  by  the  Member  States  clearly  follow  a  wide 

range  of  national  policy  objectives.  These  already  coincide  with  some  of  the  public  interest 

objectives  recognised  under Community  law. A scrutiny  of current  national  measures^  leads to 

three conclusions: 

(i) Member States justify  their legislative initiatives in different  ways 

Similar  types  of  measures  in  different  Member  States  which  deal  with  the  same  activity  are 

justified  under  different  public 

interest  objectives.  For  example,  measures  concerning 

misleading advertising relate to several different  public  interest  objectives:  consumer  protection 

(the United Kingdom  and Ireland); consumer protection and the protection  of Industrial  Property 

rights  (IPR)  (Denmark,  France,  Austria,  Belgium,  Luxembourg,  Germany,  the  Netherlands, 

Greece);  consumer  protection,  the  protection  of  IPR  and  the  protection  of  professional  ethics 

(Finland);  consumer  protection,  the  protection  of  IPR  and  the  protection  of  minors  (Spain, 

Sweden  and  Italy);  consumer  protection,  the  protection  of  IPR  and  the  protection  of  public 

health  (Italy). Within  the Member  States, different  emphasis  is given  to the two main  objectives 

A) 

18 

of consumer  and  IPR protection;  those with  a strong tradition  of unfair  competition  law  tend  to 

frame  laws on misleading advertising  from  within a perspective of IPR protection. 

(ii)  The level of restriction  tends to reflect the objective pursued. 

According  to  the  objective  pursued,  the  level  of  restriction-can  vary  significantly  between 

Member  States.  For  example,  sponsorship  restrictions  are  justified  under  several 

different 

public  interest  objectives  across  the  Member  States.  Although  many  seek  the  protection  of 

pluralism  (all  except  Finland,  Luxembourg,  Belgium  and  Austria),  others  pursue;  consumer 

protection  (in  Sweden,  Finland,  the  United  Kingdom,  the  Netherlands,  Belgium  and  Austria); 

the protection  of minors (Sweden,  the United Kingdom,  Ireland,  Italy and  Spain); the  protection 

of  public  health  (Italy,  the  United  Kingdom,  Sweden,  Denmark,  Germany,  France,  and  the 

Netherlands);  IPR  protection  (Austria,  Belgium,  and  Sweden)  and  the  protection  of  public 

morality  (the  United  Kingdom).  The  restriction  itself  varies  both  in  scope  of  application  and 

degree  of  restriction.  For  example, the  protection  of  pluralism  leads  to a wide  application  (e.g. 

all  TV/radio  programmes)  but  a  limited  degree  of  restriction  (i.e.  clear  identification).  By 

contrast  the  protection  of  public  health  leads  to  narrowly  defined  ranges  of  application  (e.g. 

tobacco or alcohol sponsors) and very high degrees of restriction  (including total bans). 

(iii) Account  has to be taken on how a  measure may have spillover effects into other  objectives. 

A  measure  directed  at  one  objective  may  encroach  on  and  even  contradict  other  objectives. 

Thus,  at a general  level, a Member  State which  feels  strongly  that  commercial  communications 

are unduly  influencing  consumer's  behaviour may regulate the activity restrictively, even  though 

it recognises that this might have adverse effects  on competition. The reverse  situation  may  also 

occur.  National  regulators  are  continually  having  to  balance  the  achievement  of  one  objective 

with  the  effects,  both  direct  and  indirect,  that  the  relevant  measure  may  have  on  other  policy 

areas. 

In view  of the variety  of  legal  traditions, and the divergences  in priorities  and  political  choices, 

it  is  hardly  surprising  that  when  commercial  communications  cross  a  border  they  can  be 

confronted  with  a  regulatory  framework  utterly  unlike  that  of  the  country  from  which  they 

originate.  This  may  hinder  or  make  less  attractive  the  exercise  of  fundamental  Internal  Market 

freedom s .^ 

A risk  of future  Internal  Market  barriers. 

The  Information  Society  will  bring  new  forms  of commercial  communications  into  the  market. 

In response changes  in national  legislation  could  lead to re-fragmentation  of the Internal  Market. 

Furthermore,  given  that these  communications  will  tend  to be of a cross-border  nature,  existing 

regulatory  differences  which  have  not  posed  problems  to  date  could  become  new  Internal 

Market  barriers.  Again  therefore  preventive  Community  action  at  a  Community  level  may  be 

required. 

19 

THREATS  TO THE  COHERENCE  OF COMMUNITY  MEASURES. 

As  shown  immediately  above,  commercial  communications  are  covered  by  various  legal 

viewpoints  and  a  wide  range  of  public  interest  objectives  depending  on  the  relevant  Member 

State.  Given  the  increasingly  transborder  nature  of  commercial  communication  services,  these 

differing  regulatory  approaches  will  increasingly  confront  each  other.  In  the  future,  at  the 

Community  level, this confrontation  could  lead  to pressure  to propose  Community  actions each 

seeking  to  pursue  one  of  these  public  interest  objectives  in  isolation  without  giving  due 

consideration  to the  other  policies.  Such  actions,  whatever  their  legality,  could  be  questionable 

in terms of coherence and efficiency,  in particular when they  may disproportionately  prevent the 

development of the commercial  communications  services. 

For example,  in the interests of preventing consumers  from  being unduly  influenced  (consumer 

protection) there might be a call for a ban on all sales promotions and advertising on new on-line 

services.  Since  the  development  of  on-line  services  will  largely  depend  on  sales  promotions 

(discounts,  concessionary  offers,  etc.)  and  advertising,  unconditional  assent  to  this  call  for 

consumer  protection  would  have  harmful  effects  on  the  industrial  policy  of seeking  to  develop 

new Information  Society services. 

If there  is to be coherence, all relevant objectives  must be taken  into account. 

Internal  Market Objectives. 

Invitation  to  comment. 

Analysis  of the sources  and nature of national laws, together  with awareness of the  increasingly 

cross-border  nature  of  commercial  communications  reveals  the  reasons  why  the  efficient 

operation  the Internal Market  in this field  could be impaired.  Without a common  understanding 

of  the  role  of  commercial  communications  this problem  could  worsen  with  the  advent  of  the 

Information  Society.  The  Commission  therefore  concludes  that  it  needs  to  take  action  in  this 

respect.  Views on this conclusion are requested in the light of the preceding  analysis. 

Other Policy Objectives. 

The Commission believes that the development of cross-border  commercial communications and 

differing  national priorities  in their regulation will lead to pressure for  it to take action, subject 

to  the  application  of  subsidiarity,  to  meet  the  other  policy  objectives  for  which  it  has 

competence. In order to ensure coherence  in its overall approach  to this field,  it therefore again 

considers  that it must take steps  to ensure that its overall policy  remains coherent.  Respondents 

views  are  requested  on  the  need for  Community  action  in  the  other policy  areas  listed  in this 

section. 

20 

PART  III.  EVALUATION  OF  SPECIFIC  AREAS  FOR  COMMUNITY  ACTION 

Summary 

A  preliminary  comparative  review  of  the  disparities  between  regulations  identified  as  posing 
possible Internal Market problems suggests that any Community  action  must be undertaken  on a 
case-by-case  basis  following  a thorough  examination  of the  proportionality  of  measures.  A  list 
of priority areas requiring attention  needs to be drawn  up and  steps must be taken to prevent new 
barriers from  arising, in particular as a result of the Information  Society. 

A  PRELIMINARY  REVIEW. 

The  legal  reviews  and  survey  results  indicate  that  a  number  of  measures  dealing  with  specific 

types  of  commercial  communications  vary  considerably  across  Member  States  particularly  in 

respect  of  type  and  degree  of  restriction.  Measures  run  from  total  bans  through  restricted  or 

limited  bans  to  no  bans  whatever.  This  unevenness,  and  the  Internal  Market  problems  that  it 

could  give  rise to are best  illustrated  by  the  following  preliminary  review  of key types  of  bans 

and/or restrictions on  commercial  communication  services. 

The  Commission  wishes  to  stress  that  the  purpose  of  this  preliminary  review  is  to  provide  a 

general  description  of  the  existing  regulatory  framework  in  the  Union  and  the  problems  that 

interested  parties  perceive  within  it.  In  this  manner  the  Commission  wishes  to  stimulate  debate 

and  encourage  respondents  to  provide  further  views  and  information  to  help  it  focus  on  key 

problem  areas. The survey  results  do not  prejudge  the  Commission's  position  as to the  question 

of whether  these identified  barriers  are restrictions  within  the  meaning  of Article  59 or  whether 

they  infringe  the  latter.  It  will  be  subsequent  to  the  responses  to  the  Green  Paper  that  the 

Commission  will  be able to consider,  on a case  by case  basis, whether there are obstacles  to the 

functioning  of the free  frontier  area; whether these obstacles  are compatible with the Treaty and 

whether  secondary  legislation  could  be needed  to address  such  restrictions  under either  Articles 

30 or  59 of the EC Treaty. 

Likewise  in the preliminary review that follows, due reference  is given to Community  secondary 

legislation  in the form  of existing  and/or  proposed  Directives.  Again,  it should  be noted  that the 

views  of  respondents  are  not  to  be taken  to  be those  of  the  Commission  at  the  current  stage  of 

the  launching of this consultative process. 

Ci)  Misleading Advertising: 

The  wide  differences  in  national  measures  in  this  area  are  reflected  in  the  Directive  on 

misleading  advertising^.  Certain  differences  remain  between  Member  States,  which  to  some 

extent  may  be  explained  by  the  directive's  minimal  harmonisation  or  by  its  definition  of 

"misleading",  which  some  survey  respondents  claim  is  lacking  in  precision.  But  the  different 

degrees  of  restriction  arise  too  from  different  national  definitions  of  "misleading".  In  Member 

States  where  the  definition  is  narrow,  advertising  may  be  banned  which,  in  another  Member 

State,  would  precisely  be  seen  as  informative  advertising.  Survey  results  suggest  that  these 

21 

differences  in  interpretation  across  a number  of  Member  States  are creating  real  barriers  to the 

flow  of advertising services. 

Measures which regulate the advertising of the professions  (such as lawyers and doctors) seek to 

protect  the  consumer  from  being  misled.  They  vary  from  a  total  ban  on  advertising,  often-
imposed  by self regulation, as for  example  in the United  Kingdom  in respect of barristers^7 and 

Belgium,  to  limited  restrictions  in  other  countries  such  as  in  France,  where  Bar  Associations 

forbid  advertising  by  individuals,  but  not  by  the  profession  as  a  whole.  Survey  respondents 

claim that such differences  prevent trans-border commercial  communications. This problem  will 

become  more  widespread  as  the  possibilities  for  offering  such  services  at  a  distance  increase 

with the advent of the Information  Society. 

Numerous  users of commercial  communications  also complain  that they cannot use comparative 

advertising  in  certain  Member  States,  and  are  therefore  forced  to  redesign  entirely  their 

commercial  communication  campaigns  in those  territories.  The  complaints  focus  on  Germany, 

Belgium,  France  and  the Netherlands.  On  this, the  Commission  has  proposed  that  comparative 

advertising  should  be permitted  as long as it is based  on  objective  comparisons that are not used 

to denigrate the trademark  or reputation  of a competitor^.  At the  level  of the Council,  political 

agreement on this proposed directive was reached  in November  1995 and the formal  adoption of 

a Common  Position  by the Council  is expected  imminently. 

Cii) Price advertising: discounts, undercutting etc. 

A  wide  divergence  in  degrees  of  restriction  characterises  this  area.  For  examlpe,  Germany, 

under  its  rebate  law  (Gesetz  Ober  Preisnachlasse  (RabattG)),  limits  cash  discounts  to  "end" 

consumers  to 3%, and  the advertising  of  special  offers  is also  restricted.  Austria,  Belgium,  and 

Italy  also  have  relatively  strict  regimes  (often 

limited  bans),  whilst  France  has  limited 

restrictions.  Other  Member  States  generally  permit  price  advertising,  subject  to  restrictions 

linked  to  the  general  Misleading  Advertising  provisions  and  those  against  anti-competitive 

practices  such  as  dumping.  The  Scandinavian  countries,  whose  legal  tradition  is  far  more 

closely  linked  to  consumer  protection  than  to  legislation  on  unfair  competition,  tend  to^ 

encourage  such  advertising.  For example,  Swedish  law  promotes  comparative  price  advertising 

between  traders. 

A  large  proportion  of  respondents  felt  that  the  measures  were  so disparate  that  they  effectively 

prevented  any  form  of  trans-border  campaign  using  this  technique.  A  number  of  specific 

examples  were given, such as the extremely  detailed  and  different  regulations on trading stamps" 

and  discounts  in Greece, Portugal,  Spain  and  Italy, and  the  effective  ban on  "three for  the price 

of  two"  campaigns  in  those  countries  with  very  low  value  thresholds,  such  as  Germany  and 

Denmark . 

22 

(iii) Intrusive advertising: telephone/mail advertising 

Measures  in  respect  of  "cold-calling"  (unsolicited  telephone  advertising)  vary  in  degree  of 

restriction  from  no  specific  measures  (Spain)  to  limited  bans  (e.g.  in  Denmark,  where  cold-

calling  is only  permitted  for  books, subscriptions  to  newspapers  and  periodicals,  and  insurance 

contracts,  although  resulting  orders  are  not  legally  binding),  through  to  total  bans  (e.g.  in 

Germany,  where  telephone  solicitation  is  not  allowed  even  if  individuals  are  first  informed  in 

writing).  In  respect  of  direct  mail,  the  Netherlands  (through  a  self  regulatory  code)  and  Italy 

have  the  most  restrictive  measures  (often  bans).  The  Council  has  recently  reached  a  common 

position  on  a proposed  Directive  in respect of distance  contracts^  which  harmonises  consumer 

protection  provisions,  to  allow  for  the  development  of  trans-frontier  distance  sales  techniques. 

However,  Member  States  may  apply  stricter  provisions  in  the  interest  of  consumer  protection. 
Another  relevant  Directive  has  recently  been  adopted  by  the  Council70,  on  data  protection.  It 

will  allow  the  free  circulation  of  personal  data,  essential  for  the  efficient  operation  of  the 

European  direct  marketing  business, on the basis of a common  set of rules protecting  individual 

privacy. In particular  individuals are guaranteed  the right to  "opt out" of the use of their data  for 

marketing purposes. 

Respondents  to  the  survey  specifically  identified  the  problem  of  differing  regulations,  which 

they  claimed  put  obstacles  in  the  way  of  effective  trans-border  direct  marketing.  Consumer 

interests highlighted the problems arising from  non-domestic direct mail  offers. 

Civ) Intrusive  advertising: promotional  gifts/offers and prize  competitions 

The measures  relating to promotional  gifts  and offers  again  differ  greatly  in form  and  restrictive 

effect.  In Germany the practice  is heavily restricted.  In France  "free  of charge" gifts  are  banned; 

couponing  (for  example  "money  off  next  purchase"  offers)  are  regulated  in  a  less  restrictive 

manner.  Belgium  bans all tie-in  offers  (for  example, the  possibility  of buying  a product/service 

at  a reduced  price  after  making  a commitment  to  future  purchases), whereas  in the  Netherlands 
(through  self  regulatory  codes)  such  offers  are  permitted,  although  subject  to  restrictions7^. 

Denmark  has  similar  provisions  requiring  that  promotions  be  of  low  value,  and  that 
the  gift 
must  be  closely  associated  with  the  product  purchased  (as  in  the  Dutch  system7-2),  although 

couponing  is  permitted.  Sweden  and  Finland  have  a  less  restrictive  approach  to  this  activity, 

although  there are restrictions in relation to alcohol. 

The remaining Member  States have more  liberal  approaches towards sales promotions, but even 

here certain  peculiarities exist, such as (a) the manner  in which  all such promotions  in Italy have 

to  be  agreed  to  by  the  Ministry  of  Finance  and  (b)  the  specific  regulation  on  trading 

stamps/coupons  found  in the United Kingdom. 

As  with  promotional  offers,  there  tend  to  be  significant  differences 

in  relation  to  prize 

competitions.  These  range  from  broad  bans,  for  example,  in  Denmark,  Belgium  and  Finland 

where  games  of  pure  chance  (lotteries)  are  generally  prohibited,  and  bans  on  lotteries  without 

State permits (e.g. in the Netherlands  or in Italy, where the Ministry  of Finance must be  notified 
23 

before  any  lottery  is  launched),  to  restricted  bans  such  as  bans  on  games  involving  stakes  or 

requiring purchase for participation  (e.g. France and Germany). Other detailed  restrictions  relate 
to the types and values of prizes7-*. The survey  results for  both  sets of activities made  reference 

to  the  very  marked  differences  in  regulations  across  the  Community,  and  the  barriers  created. 

The  common  complaint  from  the  detailed  commentaries  was  that  it was  impossible  to  run  any 

form  of trans-border  competition  because  of the  very  detailed  and  different  nature  of  prize  and 

lottery rules, 

(v) General media and  "carrier" restrictions 

The  levels  of  restriction  vary  significantly  in  relation  to  television  advertising  from  no 

advertising  (for  example,  the  BBC  in  the  United  Kingdom)  or  an  advertising  monopoly  (in 

Belgium-Flanders  and Denmark) through  to those Member  States (such  as Greece and  Portugal) 
who have copied the provisions of the  "Television  Without  Frontiers  directive" (TVWF)7^ ; i.e. 

a  maximum  of  15% daily  and  20% of  advertising  spots  per  hour.  This  directive  provides  for a 

minimal  harmonisation  clause  which  allows  Member  States  to  apply  stricter  or  more  detailed 

rules  to  the  broadcasters  under  their  jurisdiction.  For  broadcasters,  the  Directive  has  the 

advantage of ensuring that they only have to comply with the advertising measures applicable in 

the  Member  State  of their  establishment.  It  is clear,  however,  from  the  survey  results  that  the 

adoption  of  stricter  measures  by  the  Member  States  is  seen  as  creating  barriers  to  the  free 

movement of audiovisual advertising as such. 

Respondents  to  the  survey,  representing  a  wide  variety  of  interests,  raised  both  specific  and 

general  points. In general, divergence of national  practices  was  seen  as problematic, and  certain 

States  were  criticised  for  being  over  restrictive.  Supply  restrictions,  such  as  certain  monopoly 

situations  were  criticised  (e.g.  Denmark  and  Belgium-Flanders).  Extreme  variations  in  the 

permitted  advertising time were felt  to lead to problems  in  planning  and  executing  trans-border 

media  buying  campaigns.  Apparent  restrictions  on  the  sales  of  airtime  into  neighbouring 

"overspill" markets (into which the signal either naturally falls  or is retransmitted  by cable) were 

felt  to  be  a  regulatory  problem.  Teleshopping  operators  criticised  the  classification  of  their 

programmes  as advertisements. Likewise the producers of "infomercials"  (i.e. short promotional 

product  presentations)  objected  to  the  fact  that  broadcasters  cannot  sell  them  "downtime"  (i.e. 

programming  periods  which  are  either  replaced  by  the  test  card  or  have  very  low  audience 

ratings)  because  of  their  categorisation  as  advertisements.  Specific  points  were  made  about 

restrictions, particularly in France, preventing certain sectors from using TV advertising. 

(vi) General sponsorship restrictions 

Such  restrictions  apply  to  both  TV  and  event  sponsorship.  Restrictions  in  this  area  are  often 

detailed  and  disparity  between  the  Member  States  is  large.  Aspects  of  sponsorship  tightly 

controlled  (or  indeed  banned)  in some countries are treated  not  as requiring  regulation  at  all  in 

others.  The  difference  extends  as  far  as  the  applicable  tax  regime.  The  TVWF  directive  lays 

down  certain  conditions  on  sponsoring  TV  programmes  (Article  17),  which  have  been 

24 

supplemented  in  many  cases  by  the  Member  States  either  by  legislation  or  through  self 

regulatory codes. 

Respondents  to  the  survey  were concerned  about  the  lack  of  information  on  the  relevant  codes 

or  laws,  in  view  of  the  significant  divergence  of  measures.  The  general  opinion  was  that, 

although  certain  measures  were  necessary,  the  differing,  and  sometimes  diametrically  opposed 

measures,  created  problems. In  events  sponsorship,  the  Netherlands  was  singled  out  as  having 

restrictive  measures  (often  such  activities  were  effectively  banned),  whilst  for  broadcasting  the 

United  Kingdom  and Denmark were felt to be restrictive. 

(vii) Product  restrictions: commercial communications for tobacco 

Particularly restrictive regimes were felt to exist  in: France which  only permits advertising at the 

point  of  sale,  and  bans  all  reference  to  trademarks/brands  in  other  product/service  categories; 

Finland,  which  permits  advertising  only  in  foreign  publications  not  specifically  linked  to 

tobacco  issues; Italy, which  only allows for  references  to brands/trademarks  when they  are used 

to  promote  other  product/service  lines;  Sweden  and  Ireland,  which  only  permit  advertising  in 

certain  publications. 

All  Member  States  have  a  ban  on  TV7-5  , and  radio  advertising  (except  Spain  and  the  United 

Kingdom  where  radio  advertising  is  permitted).  TV  sponsorship  is  also  banned  in  all  the 

Member States. A ban  is also apllied to radio sponsorship  in most Member States. 

Measures  on  the  Press  differ  across Member  States. In  Belgium  there  is a targeted  ban  on  such 

advertising  in  publications  aimed  at  children.  In  Germany  a  more  general  provision  prohibits 

any  advertising  of  tobacco  that  would  incite  children  to  smoke.  Likewise,  in  the  United 

Kingdom,  publications  aimed  at children  cannot  carry  such  advertising,  and  there  are  voluntary 

agreements  on  limitations on outdoor advertising  in the neighbourhood,  for example, of schools. 

Most countries also have strict restrictions on the content of permissible  advertising. 

A Commission  proposal76,  which  would  harmonise  national  approaches  by  imposing  a ban  for 

all  direct  and  indirect  advertising  of  tobacco  products,  is  currently  under  discussion  in  the 

Council. 

, 

Respondents  to  the  survey  did  not  dispute  the  need  for  control,  but  questioned  the  spread  of 

restrictions  into  media  and  forms  of  direct  marketing  not  aimed  at  young  people.  Certain 

respondents  criticised  in  particular  the  broad  definition  of  "indirect  advertising"  which  by 

including brand  diversification  prevents the use of internationally  licensed  brands to launch new 

non-tobacco products and services. 

(viii) Product  restrictions:  commercial communications for alcoholic  beverages 

Three groups of countries can be distinguished. 

The first  group  consists  of  those  countries  with  stringent  rules.  In  Sweden  and  Finland,  spirits 

and  non-light  beers  cannot  be  advertised  in  periodicals  or  on  radio  and  television.  Class  II 

25 

beer77  can  be advertised  in print  but not on  audio-visual  media.  Direct  advertising  and  outdoor 

advertising  are  banned.  Denmark  allows  such  advertising  only  in  the  press.  In  addition, 

restrictive measures are found  in France  and Austria. 

A second  group  of  Member  States  (the United  Kingdom,  the Netherlands,  Spain  and  Portugal) 

place restrictions  (often  bans, imposed  or voluntary,) on the  content  and  style of TV  advertising 

of  spirits  (in  the Netherlands  this covers all  alcoholic  beverages).  Such  measures  are,  however, 

less  restrictive  than  those  in  operation  in  the  first  group  of  Member  States.  (The  United 

Kingdom  has recently  lifted  its voluntary ban on advertising spirits on TV.) 

Finally, Member  States of the third group generally permit  the advertising  of alcohol, subject  to 

conditions (on content of such advertising or the audience for whom  it is intended). 

Article  15  of  Directive  89/552  harmonised  rules  on  television  advertising  for  alcoholic 
beverages. A Council  Resolution75  requested  interested  parties to submit views on how to  limit 
and reduce disparities  in the other media.  The Amsterdam  Group7^  responded  to this by calling 

for greater co-operation through  self-regulation. 

Many  detailed  responses  to  the  survey  expressed  concern  at  the  extent  to  which  these 

differences  are  creating  new  barriers.  It  was  felt  that  trans-border  campaigns  would  be  legally 

hazardous,  under  present  conditions.  Specific  complaints  were  aimed  at  measures  affecting  the 

advertising  of  spirits  in  the  audiovisual  media,  which  were  said  to  cause  a  shift  on  to  price 

competition,  which  favoured  cheaper  "own-label"  domestic  brands.  The  spread  of  restrictive 

measures  was  also  of  concern;  radio  stations  said  that  restrictions  on  beer  advertising  in 

Germany  could  reduce their total  advertising revenue by  10%. The  effect  on  sports  sponsorship 

was also raised,  in the context of bans in France and the Netherlands. 

(ix) Product  restrictions:  commercial communications to children 

The  strictest  rules  are  found  in  Sweden  (where  advertising,  and  sponsorship  of  programmes 

aimed  at  children  below  the  age  of  12, is  prohibited)  and  in  Greece  (where  TV  advertising  of 

toys  to  children  is  banned  between  7.00  a.m.  and  10.00  p.m.  is  banned).  Generally  there  are 

specific  (often  differing)  measures  aimed  at  ensuring  that  children  are  not  excessively 

influenced  by  advertising  (mainly  related  to  the  content  or  standard  of  such  advertising). 

Provisions  also  apply to sponsorship of sports events. At the Community  level, the  rules  on TV 

advertising  are  co-ordinated  to  the  extent  needed  to  ensure  the  free  circulation  of  television 

broadcasts by Article  16 of the TVWF directive. 

Generally,  the  survey  results  highlighted  the  variations  between  Member  States,  and  the 

problems  resulting  from  the  method  of  applying  local  copy  clearance  to  such  advertising. 

Specific  problems  were  raised  in relation  to bans on toy  advertising  in  general, and  for  specific 

types  of toys  (in  Germany  and  Denmark). Concerns were  expressed  about  the  manner  in  which 

such  restrictions  reduce  sponsorship  and  advertising  revenues  for  children's  programmes,  and 

also about the restrictions on the use of sales promotions  (merchandising). 

26 

(x) Product  restrictions:  commercial communications for food products 

None  of  the  Member  States  prohibits  such  commercial  communications,  but  there  are  wide 

differences  in  the  complexity  of  codes  or  laws  that  regulate  the  contents  of  such  advertising, 

particularly with respect to claims. Certain differences  in approach are interesting, the first being 

Member  States  extending  labelling  measures  into  advertising  (  notably  Germany,  Austria,  the 

United  Kingdom,  Ireland  and  the Netherlands)  and  those  that  limit  them  to  "pack"  display  (i.e. 

restrictions  that  relate  only  to  the  packaging  of  products).  These  countries  sometimes  have 

restrictive content provisions; for example, in Belgium, references  to health/illness are banned in 

such  advertising. 

Community  legislation  in  this  area  includes  the  directive  on  the  labelling,  presentation  and 
advertising  of  foodstuffs50.  However,  the  scope  of  the  harmonisation  is  limited  given  that 

Article  15 of this Directive  makes it clear that the text applies only to national  rules on  labelling 

and  presentation  and, 
to  commercial 
communications.  The  Council  Directive  on  infant  formulae5^  contains  a  minimal  clause  in 

in  spite  of  its  title,  not  to  provisions  relating 

relation  to  provisions  taken  by the  Member  States  in  relation  to  advertising  for  such  products. 

The  survey  results  have  highlighted  the  barriers  resulting  from  diverse  restrictions  on  baby 

foods  in general. 

Specific  problems  highlighted  in  the  replies  include;  measures  requiring  the  same  information 

content  that  is  imposed  "on-pack"  to  be  used  for  commercial  communications  (respondents 

suggest  that  this  prevents  the  use  of  common  visuals  in  cross  border  campaigns);  problems 

relating  to  very  diverse  self-regulatory  codes  and  laws  for  baby  foods;  very  significant 

differences 

that  cause  problems  for  advertising  of  confectionery  products  (for  example, 

requiring  additional  images  of  toothbrushes  which  means  that  a  separate  TV  advertisement 

needs to be produced  in the relevant country). 

(xi) Product restrictions:  commercial communications for  pharmaceuticals: 

National  restrictive  measures  in this  area  are complex,  but  certain  general  points  arise; a  group 

of  Member  States  ban  non-prescribed  (over the counter  : OTC)  pharmaceuticals  advertising  on 

audiovisual  media  (including  Belgium  and  Denmark);  another  group  requires  pre-notification 

for  OTC  advertising  (Sweden,  Italy  and  France); and  a third  group  prohibits  sales  promotions, 

for  these  products  (including  Belgium  and  France).  Respondents  complained  that,  because  the 

lists  of  prescription  drugs  and  those  on  the  national  insurance  lists  are  not  the  same  from  one 

Member  State  to  another,  it  was  only  possible  to  advertise  those  OTC  drugs  that  were  not  on 

either  list  on  a pan-European  basis. In  addition,  specific  problems  related  to  information  "tag" 

messages  (warning  messages  about  the  product),  that  varied  across  the  Member  States.  Spain 

and  Germany  were  stated  to  have  strict  requirements,  that  extended  the  required  length  of  TV 

advertisements  by  up  to  25%. Media  respondents  also  stated  that  these  restrictions  dissuaded 

potential  advertisers.  The  length  of  time  required  for  copy  clearance  was  also  raised  as  a 

problem.  The  prohibition  of  the  use  of  umbrella  brands  (these  are  corporate  or  product  type 

27 

brands  which  are  applied  to  both  non-prescribed  and  prescribed  pharmaceuticals)  by  some 

Member  States  was  criticised  as  it  results  in  the  obligation  to  launch  a  completely  new  brand 

(involving considerable expense). 

The  directive  on the advertising  of medicinal  products  for  human  u s e^  harmonises  this  matter 

by banning the  advertising  of prescribed  pharmaceuticals,  and  of those containing  psychotropic 

or  narcotic  substances.  Member  States  are  permitted  to  ban  the  advertising  of  pharmaceuticals 

that  could  be  reimbursed  under  State  insurance  schemes.  Advertising  for  non-prescribed 

pharmaceuticals  is  subject  to  the  need  for  market  authorisation  of  the  relevant  product. 

Prescribed  pharmaceuticals  may  only  be  advertised  in  media  aimed  at  medical  professionals, 

whereas  OTC  pharmaceuticals  may  be  advertised  but  are  subject  to  stringent  conditions.  As 

regards,  the  rules  on  TV  advertising,  these  are  co-ordinated  to  the  extent  needed  to  ensure  the 

free  circulation  of television  broadcasts by Article  14 of the TVWF directive. 

(xii) Product  restrictions: commercial  communications  for financial  services 

Although  measures  in  this  sector  are  generally  restrictive,  there  are  significant  differences 

between  each  of  the  Member  States.  For  example,  the  details  required  in  relation  to  financial 

service  "products" differ  greatly.  These provisions  are extremely  detailed,  being contained  both 

in  laws  and  in  self-regulation.  Community  legislation  tends  to  concern  the  right  to  establish 

branches  and  offer  services  in  the  other  Member  States.  However  the  directives  in  this  area 

allow  Member  States to  impose their  differing  national  rules justified  by the  "general  good" on 

the  commercial  communications  of  such  companies. (For  example; Article  41  of  both  the  third 
life  insurance5-* and third  non-life  insurance directives5^, Article 44(2) of the Council  Directive 

on  the  co-ordination  of  laws,  regulations  and  administrative  provisions  relating  to  the 
undertakings  for  collective  investment  in transferable  securities  (UCITS)5-5 and  Article 21(1) of 
the Second  Banking  Directive56). 

From  the  survey  responses,  it  was  clear  that  the  disparity  between  the  measures  prevented  the 

development  of trans-border  commercial  communications  services. Copy  clearance  (pre-vetting 

of Press and TV advertisements)  is required  in some Member  States (e.g.  in Italy  prior  approval 

by  the  national  supervisory  commission  for  businesses  and  the  stock  exchange  (CONSOB)  is 

required  for  investment  advertising, including advertising of  financial  products and  in the UK  it 

is an  offence  in the Financial  Services Act of  1986 to  issue  an  investment  advertisement  which 

has  not  been  approved  by  an  authorised  person)  and  not  in  others.  It  was  suggested  that  the 

intricacy  of  detail  of  the  relevant  laws and  codes  was  making  their  interpretation  difficult  and 

thus resulting  in inconsistencies  between  positions taken  in specific  cases. This was  said to  lead 

to significant  legal uncertainty as to what could or could not be undertaken  in this  market. 

(xiii) Restrictions  on commercial  communications  for reasons related to societal  values 

This area covers such diverse subjects  as political  advertising  and  issues of  "taste  and  decency". 

In  relation  to  all  these  areas,  both  the  levels  of  restriction  and  the  measures  themselves  vary 

enormously  across the Member  States. For example, political  advertising  in the United  Kingdom 
28 

is banned  for  audiovisual  media  (this applies to  both  advertisers,  and  advertising  content).  This 

ban  stems  from  a  self  regulatory  code.  However,  it  does  not  apply  to  the  press  or  to  outdoor 

advertising. In Finland, by contrast, political  advertising  is permitted  on television. Article  12 of 

the Television  Directive (89/552/EC) was considered  to  incorporate the essential  features  of the 

rules  generally  accepted  in  the  Member  States  by  the  circles  concerned.  It  was  not,  therefore, 

considered  necessary  to  ban  advertising  for  any  sector  or  issue  (other  than  for  tobacco  and 

prescription  drugs) but rather to apply controls on  its content and  standard. 

Respondents to the survey covered  many different  issues. With  respect to Sex discrimination  the 

use of the female  body  in advertising  is strictly controlled  in certain  Member  States (such  as the 

United  Kingdom,  the  Netherlands,  Spain  and  Denmark).  In  respect  of  sanitary  products  and 

contraceptives,  restrictions  differ  in  relation  to  showing  the  product,  and  the  timing  of  such 

advertising.  Political  advertising  is  strictly  controlled  on  audiovisual  media  in  relation  to 

political  parties.  However,  respondents  raised  the  issue  of  wide  interpretations  of  "political" 

advertising  in  certain  Member  States  which  prevented  charities  and  pressure  groups  from 

advertising  (such  as 

the  United  Kingdom  and  Germany).  As  for  the  protection  of  the 

professional  ethics  of  commercial  communications  respondents  were  concerned  that  certain 

regulations  (notably  self-regulatory  codes)  in  the  area  of  taste  and  decency  were,  in  their 

application, seeking to achieve another objective, viz. the  "good  repute" or "professional  image" 

of  the  commercial  communications  (notably  advertising)  industry.  This  was  felt  to  make 

regulation  diverge  from  country  to country  such  that  it became  difficult 

to create  trans-border 

campaigns.  The  difference  in  measures  affecting  public  relations  was  highlighted,  despite  the 

existence  of  an  agreement  between  national  PR  trade  associations  to  a  common  international 

code.  For  reasons  of  language/cultural  protection  certain  Member  States  were  identified  as 

imposing  language  restrictionsthat  created  Internal  Market  barriers  (notably  Belgium  and 

France). 

The  key  finding  arising  from  this  preliminary  review  is  that  there  is  a  growing  divergence 

between  certain  Member  States  in  the  way  in  which  they  develop  their  national  regulatory 

frameworks.  It  has  shown  how  Member  States,  when  regulating  commercial  communications, 

pursue a wide range of policy objectives  which, at times, rely on approaches that are not entirely 

coherent  or  indeed  contradictory  with  those  adopted  by  other  countries. This  leads  to  different 

types  of  regulatory  measures  as  well  as  differing  levels  of  restriction  and  the  laws  and  codes 

may  be  applied 

in  such  a  way  as  to  impede  the  flow  of  cross  border  commercial 

communications. 

T HE  NEED  FOR  A  FURTHER  REVIEW  OF POTENTIAL  REGULATORY  BARRIERS. 

What  is  the  impact  of  the  significant  variations  between  national  commercial  communication 

regulations  on  the  functioning  of  the  Internal  Market?  Specific  national  restrictions,  in 

themselves,  are  not  at  issue.  Instead  the  concern  is  the  application  of  these  restrictions  to 

services  originated  in other  Member  States. Intervention  at  Community  level  could  rely  on  the 

i 

. 29 

efficient  application  of  the  existing  Community  law  which  safeguards  the  free  movement  of 

goods  and  services  within  the  Internal  Market.  Alternatively  action  at  Community  level  could 

involve  harmonisation  where  the  restrictions  are justified  and  therefore  create  legal  barriers 

within the area without  frontiers. 

The  preliminary  regulatory  review  indicates  that  potential  Internal  Market  barriers  arise  from 

the existence of non-discriminatory  rather than discriminatory  measures based on nationality. To 

the  extent  that  such  measures  give  rise  to  impediments  of  free  movement,  their  compatibility 

with  Internal  Market law depends principally on the nature of the objectives  these pursue and on 

the  proportionality  of the  presumed  restrictions.  Given  that  the  safeguarding  of  general  interest 

objectives  is the  key  aim  of these  measures, any  assessment  of the  need  for  Community  action 

therefore  will  normally  focus  on  the  application  of  the  principle  of  proportionality.  However, 

the  range  of  potential  actions  in  this  field  is  very  wide:  the  assessment  of  proportionality 

therefore  requires a case by case approach. 

Two joint Community actions could nevertheless be required  to assist this step by step approach. 

First  it would  be useful  to have  a framework  on  which  the  assessment  of the  proportionality  of 

measures  in the field of commercial  communications field might be based. A proposal  for  such a 

framework  is made  in  Part  IV.  Second,  a more  extensive  review  of  the  types  of  measures  that 

could  give rise to problems in terms of proportionality  would  be  useful. 

From  the preliminary  review three types of national  measures have been  identified  as needing to 

feature  in this review: 

Category I:  Regulatory  bans. 

Certain  Member States ban particular types or content of commercial  communications which are 

permitted  in others. Such  measures  could  give  rise to  a problem  of disproportionality  if applied 

to services originating  in another Member State. Regulatory  bans might include: 

• 

Regulations banning the use of discounts, loyalty premia  and other price  discounting  forms 

of  commercial  communications.  These  relate  to  introductory  or  other  price  promotional 

offers  (e.g.  10% off),  package  offers  (e.g.  "three  for  the  price  of  two")  or  loyalty  offers 

(whereby  repeat purchase allows the consumer  to benefit  (for  example with  coupons) from 

a price reduction on a subsequent purchase). 

• 

Regulations  banning  the  use  of  concessionary  gifts.  These  cover  "free  gifts"  which  are 

given with the purchase of a product or  independently. 

•  Regulations  banning  broadcasters  from  selling  overspill  audiences  to  media  buyers  and 

advertisers.  This  kind  of  ban  is found  within  TV/radio  licensing  procedures  and  applied  to 

"overspill  audiences"  which  are  audiences  in  neighbouring  markets  that  fall  within  the 

footprint  of a transmission  or via re transmission  over a cable network. 

•  Regulations  banning the use of certain media  by specific  categories of advertisers  in  order 

to  preserve  pluralism  in  other  media.  Such  regulations  typically  seek  to  divert  certain 

30 

advertising  revenues  away  from  Television  to  support  other  media  such  as  the  regional 

press. 

•  Regulations  leading to bans in the use of commercial  communications for  the professions. 

•  Regulations banning advertising on teleshopping  channels  or on-line services  for reasons of 

protection  of pluralism. These typically seek  to ensure  that TV advertising  revenues are not 

adversely  affected. 

•  Measures banning the use of foreign  languages  in commercial  communications. 

Category II:  Horizontal  regulatory  limitations. 

Some  Member  states  have  chosen  to  apply  strict  limitations  on  general  forms  of  commercial 

communications. These include: 

•  Regulations  limiting  the  use  of  discounts,  loyalty  premiums  and  other  price  discounting 

forms  of commercial  communications. 

•  Regulations limiting the value and nature of concessionary  gifts. 

•  Regulations limiting advertising to children. 

•  Regulations limiting the content of teleshopping  or on-line services  for reasons of protection 

of pluralism. 

•  Regulations  on  media  buying 

limiting  the  possibilities  for  cross-border  media  buying 

services. 

•  Regulations on misleading advertising limiting competitive  advertising. 

•  Regulations limiting the use of brand  diversification. 

•  Regulations  (other  than  fiscal)  limiting  the  sponsorship  of  both  events  and  audio-visual 

programmes. 

Category III:  Specific  regulatory  limitations. 

A  number of Member  States have applied  strict  limitations  on  specific  sector or  product/service 

related  forms of commercial  communications. 

•  Regulations limiting advertising by professions  which  could  severely hamper their provision 

especially  when  using  the  new  on-line  techniques  being  developed  in  the  Information 

Society. 

•  Regulations  limiting  non-prescribed pharmaceuticals  advertising.  These  measures  appear, 

in certain cases, to prevent the effective  use of umbrella brands across borders. 

•  Regulations limiting alcohol  advertising. 

•  Regulations  limiting  commercial  communications  related  to  baby foods  other  than  infant 

formulae. 

31 

•  Regulations  limiting  commercial  communications  associated  with  TV  advertising  of 

retailing. 

•  Regulations limiting the use of commercial communications  by the financial  services sector. 

T HE  NEED  FOR  AN  EARLY  NOTIFICATION  MECHANISM. 

Since  the  advent  of  the  Information  Society  will  lead  to  an  increase  in  cross  border  forms  of 

commercial  communications  that could  incite regulatory  reactions  it could  be appropriate  to put 

into  place  a mechanism  aimed  at  avoiding  that  a re  fragmentation  of the  Internal  Market  takes 

place.  A  communication  proposing  a  regulatory  transparency  mechanism  for  Information 

Society  services will  explain  how a notification  system  for  such  services  could  help detect  and, 

where necessary, diffuse  the pressure to regulate. Such  a mechanism  could  in particular  involve 

an obligation  for the Member  States to notify  their draft  legislation  (including that pertaining  to 

commercial  communication  services)  to  all  other  Member  States  and  to  the  Commission  for 

possible  reactions.  Any  problems  that  are  identified  could  then  be  analysed  in  terms  of  their 

compatibility with Community  law. 

Invitation to  comment. 

The  Commission  would  wish  to  receive  views  and  additional  information  on  the  regulatory 

situation  in  the  various  areas  of  commercial  communications  covered  in  this  preliminary 

review. 

The Commission  would welcome views on the scope  of  this proposed  review. In particular,  the 

Commission  asks respondents to draw its attention  to additional  Internal  Market problems  they 

may be experiencing in this domain and to identify those which require urgent examination. 

32 

PART IV. PROPOSALS FOR  CONSULTATION. 

Summary. 

Two proposals  are made for  improving the Commission's  ability to assess the proportionality  of 
national  measures  that could  pose Internal  Market  problems. The proposals  are also  intended  to 
help  the  Commission  to  ensure  that  its  own  proposals  are  coherent  with  other  policies  and 
proportionate to the problems being tackled. The first proposes the application  of a methodology 
designed  to  assist  the  Commission's  assessment  of  proportionality  and  is  intended  to  combine 
recognised jurisprudence  with  a detailed  impact  analysis.  It  would  only  be a tool  for  a case  by 
case  assessment  and  would  be  neither  an  automatic  nor  mandatory  assessment  system.  The 
second  proposal  comprises  a  set  of  elements  which  seek  to  improve  co-ordination  and 
information  exchange  between  the  Commission,  Member  States  and  interested  parties.  The 
effect  of  the  application  of  these  measures  could  lead,  where  necessary,  to  the  Commission 
proposing secondary  legislation  at a later stage. 

The  previous  parts  of this Green  paper  have demonstrated  the  need,  for  an  efficient  assessment 

of  proportionality  so  that  the  Community,  once  a  restriction  on  transborder  services  has  been 

identified,  on  a  case  by  case  basis,  can  accurately  assess  (i)  the  compatibility  of  national 

regulations  with  Internal  Market  principles and (ii) the coherence  and  proportionality  of  its own 

initiatives. (This latter requirement also corresponds with the obligation  to apply the principle of 

proportionality  as enshrined  in Article 3B§3 of the Treaty of the European  Union.) Furthermore, 

it is evident that for Community  intervention  to be of the highest quality  in this rapidly  evolving 

field  the  dialogue  with  all  interested  parties  must  be  improved.  The  Commission  therefore 

invites comments on the following  proposals: 

A  METHODOLOGY  TO DELIVER  A MORE UNIFORM  ASSESSMENT. 

According  to the case-law of the Court57, the proportionality  test requires  :first,  the  verification 

of  the  appropriateness  of the  national  restrictive  measure  vis  à  vis the  pursued  objective  i.e. // 

must  be  such  as  to guarantee  the achievement  of  the  intended  aim;  secondly,  testing  that  the 

national  restrictive  measure does not go beyond that  which is necessary  in order to achieve that 

objective;  the  Court  adds  that,  in  other  words,  the  same  result  cannot  be  obtained  by  less 

restrictive  rules. 

The jurisprudence  of  the  Court  has  not,  as yet,  provided  more  precisely  defined  elements  that 

would  allow  the  assessment  of  the  proportionality  of  national  or  Community  measures.  The 

Commission  believes  that,  in  the  absence  of  such  precision,  it  would  be  helpful  to  develop  a 

methodology  which  could  help  to  appreciate  the  proportionality  and  coherence  of  national  or 

Community  measures  in  the  field  of  commercial  communications.  However,  it  is  important  to 

underline that the Commission  is not proposing an automatic and obligatory  assessment  system: 

rather  a  number  of  criteria  are  suggested  which  could  contribute  towards  the  evaluation  of the 

proportionality  of  a measure.  Indeed,  criteria  could  help  in  achieving  greater  transparency  and 

improving the quality of a proposal. This methodology  is aimed  to be a useful  "tool" for policy 

making.  For  that  reason,  it  should  be  stressed  that  if  it  is  favourably  responded  to,  the 

Commission  would  propose  that  it  is applied  where  useful  to  enhance  efficient  policy-making. 

33 

This  methodology  could  help  Member  States  in  designing  coherent  measures.  The  same 

analytical  framework  could be used for assessing coherence of proposed  Community  legislation. 

The  proposed  methodology  would  comprise  essentially  of  two  steps.  First,  the  main 

characteristics  of the measure could  be identified  in accordance  with  specific  defined  criteria. In 

turn,  these  characteristics  could  be  used  in  assessing  the  proportionality  of  the  measure  or 

proposal.  The  approach  would  thus  focus  on  the  set  of  indices  on  which  the  final  decision 

regarding proportionality  could be taken rather than  on the decision  as such. It does not  prejudge 

the outcome. 

Step  1. The assessment  methodology  to characterise  the  measure. 

The  objective  of  this  first  step  is  not  to  make  the  proportionality  test  as  such  but  to  set  out  a 

complete  "picture"  of  the  characteristics  of the  measure.  The  aim  is  not  to  identify  restrictions 

but to provide  a factual  overview  of all possible  effects  of a measure  in the market  in  particular 

on activities that the measure  is meart to regulate. 

The five identified  key assessment criteria are as follows: 

Assessment  criterion A.  What is the potential  "chain  reaction"  caused  by the  measure? 

Essentially this criterion  involves an examination  of the potential  market reactions to a measure. 

For  commercial  communications  the  relevant  market  forces  are  centred  on  three,  inter-linked, • 
groups of economic actors (users,  suppliers and carriers)55. Together they make up what can be 

referred  to as the  "commercial  communications  chain"  which  links the  user to the  final  receiver 

or viewer of the commercial  communications. 

In  any  commercial  communications  activity  all  three  groups  will  be  involved  either  directly  or 

indirectly.  Hence, the  assessment  must,  systematically,  cover  the  linkages  between  these  three 

groups.  The  assessment  of the  reaction  through  this  chain  (the  "chain  reaction")  comprises  two 

elements:  (i) the  identification  of the  key  group  that  the  measure  is  intended  to  affect  and  (ii) 

the  identification  of  the  most  likely  reactions  within  the  commercial  communications  chain  to 

the  existing  or  proposed  regulatory  measure.  These  factors  are  fully  examined  in  the  Working 

Document. 

Within  each  group of economic actors the following  issues will need to be considered: 

The  impact  on  the  user group  requires  an  estimation  of  the  probable  type  of  reaction  of  users 

that  could  result  from  a restriction  applied  to a particular  form  of commercial  communications. 

Of-course  each  and  every  sector  or  firm  might  be  expected  to  react  differently.  However,  as 

explained  in the Working document  (see Table  1 of Part  1), it  is possible to  identify  six typical 

branding strategies from  which  logical strategic reactions by users to restrictions on one or other 

form  of commercial  communications can be  defined. 

The  impact  on  the suppliers'  group  requires the  assessment  of  (i) the  ease  with  which  different 

forms  of commercial  communication  services can be combined  or substituted  for  each  other, (ii) 

34 

the scale effects  that could  be threatened  by a  measure and  (iii) the location  of these  economies 

of scale/scope  possibilities  within  the commercial  communications  sectors  (See Table 2 of Part 

1  of  the  Working  document).  The  resulting  potential 

loss  of  scale  or  scope  economies  and 

substitution  effects  can then be used to first, measure how the restriction  on the targeted type of 

commercial  communications  might  spill  over 

into  the  demand  for  other  commercial 

communication  services  and,  secondly,  to  assess  whether  the  restriction  is  such  that  it  reduces 

the  efficiency  of  the  targeted  service  provision  and  makes  it  more  costly.  Such  changes  in 

demand  and/or  costs  of  supply  would  lead  to  follow-on  reactions  at  the  levels  of  users  and 

carriers. 

The  impact  at  the  level  of  the  "carriers"  group 

requires  evaluation  of  how  a  commercial 

communications  regulatory  measure  on  a  media  or  cultural/sporting  event  will  effect  the 

behaviour of that carrier. This will depend on the commercial  reactions that it will adopt  in order 

to compensate for the resulting restriction  (see Table 3 of Part  1  of the Working document). 

The chain  reaction  will thus be assessed  and the overall  impact  on the final receiving group (the 

general  public, minors, consumers, etc.) can be evaluated. 

Assessment  criterion  B.  What are the  Objectives of the  measure? 

It  is necessary  to  identify  and  specify  the target  objective  of the  measure.  In  addition  all  other 

indirectly  implied  objectives  must  be  considered.  For  a  national  measure  such  identification 

permits the evaluation  of whether the legal principles of proportionality  and  non-duplication  are 

met.  For  any  proposed  Community  regulatory  action  the  identification  of  objectives  allows  the 

appropriate  legal  basis  to  be  determined  and  permits  compliance  with  the  principles  of 

subsidiarity and proportionality to be checked. 

Any  proposed  action justified  on  public  interest  grounds  will  almost  certainly  be  targeted  at a 

particular  group  (minors,  consumers,  the  general  public,  competitors,  distributors  etc.).  This 

group  needs  to  be  specified  together  with  the  objective  which  the  measure  (at  national  or 

Community  level)  is seeking  to achieve. The chain  reaction  needs to  be  used  to  identify  which 

target  (receiving)  group  will  in  practice  benefit  from  the  national  measure  or  the  proposed 

Community  regulatory  action  and  consequently  which  kind  of  objective  is  actually  being 

pursued. 

Assessment  criterion  C. Is  the measure  linked  to the  objective? 

The specifications,  definitions,  distinctions, criteria etc. that are used to determine the content of 

the  proposed  measure  should  be  directly  linked  to  its  objective.  If they  were  not,  the  measure 

could  be presumed  to be arbitrary.  It would therefore  be essential  to have access to  information 

regarding: analysis undertaken  prior to the measure being adopted; its explanatory  memorandum 

35 

; the justification  of  its content  ;  the context within  which  it was adopted  and  all  other  data on 

relevant decisional  factors. 

Assessment  criterion D. Does the measure affect other objectives? 

The  proposed  measure could work against another general  interest or Community objective.  To 

measure  this the  indicator  of  selectivity  could  be helpful  (i.e. whether  the  measure  is  precisely 

targeted  at  the  objective  pursued). The  less specific  the  measure  the  greater  the  risk  of  counter 

productive effects.  The application  of the chain reaction  of the measure will  help assess both  the 

selectivity  and  therefore  adverse  effects  of  the  measure.  By  identifying  unwanted  potential 

market  reactions  a  direct  check  on  possible  negative  effects  on  other  policy  objectives  can  be 

drawn. (See Table 4 of Part  1  of the Working document). 

Assessment  criterion  E. Efficiency  of the measure. 

The  final  criterion  is designed  to test  whether  the  specific  type  and  the  degree  of  restriction  of 

the  measure  are able  to achieve  the objective.  The chain  reaction  assessment  should  be  used  to 

determine  how the  target  group  is affected  and  whether  the  key  reactions  might  work  against 

the pursued  objective  . More detailed  information  could  be collected  to allow  for  an  assessment 

of the  level  of restriction  beyond  which  the  negative  reactions  would  be  likely  to  outweigh  the 

desired  reactions. 

Step  2.  Applying  the  results  of  the  assessment  to  the  decision  on  proportionality  and/or 

coherence. 

By  knowing  the  key  characteristics  of  the  measure,  these  five  criteria  will  allow  a  relevant 

authority to be in a better position to assess its proportionality and coherence. 

In relation to national  measures,  the characterisation  of the chain  reaction  assessment  criterion 

(A) could demonstrate that the objectives  met by the measure differ  from  that or those which  are 

implied  (according  to  assessment  criterion  (B)):  Should  these  analyses  reveal  that  the  objective 

sought  is missed  and  no other recognised  public  interest  objective  can be identified,  the  measure 

could  be  incompatible  with  Community  law.  With  regard  to  whether  the  measure  is 

"appropriate"  , the  evaluation  of the  chain  reaction  (assessment  criterion  A),  "the  link  with  the 

objective" (assessment criterion  C) and  "counter productivity" (assessment criterion  D) will  help 

to appreciate  whether  this property  has been  met. For example, a relevant  authority  could  come 

to  the  conclusion  that  a  measure  is  somewhat  loosely  linked  to  the  objective,  has  no 

counterproductive  effect  and  is relatively  efficient.  As  regards  the  "level  of  restriction"  part  of 

the  proportionality  evaluation, 

the  "efficiency"  assessment  criterion  (E)  will  be  crucial  in 

determining  whether  the  level  of restriction  is really  necessary  for  achieving  the  intended  aim. 
Finally,  as  regards  the  "alternative  measures  test"  &9 the  application  of  the  five  assessment 

criteria to competing measures will allow for the identification  of the least restrictive  measure. 

In relation  to  Community  regulatory  actions, the  characterisation  of the  measure  with  the  five 

assessment criteria  would  also assist  in avoiding incoherence,  in particular  counter  productivity 

36 

vis  à  vis  other  Community  objectives.  This  should  be  achieved,  when  choosing  between  two 

measures,  by  actively  seeking  and  giving  preference  to  that  measure  which  avoids  counter 

productive  effects  on  other  Community  objectives.  Concerning  proportionality,  the  choice 

should  be  made  in  favour  of  the  measure  with  the  lesser  restrictive  effect  on  the  targeted 

economic  group. In some cases, of course, it may be impossible to avoid  using a measure which 

is  incoherent  with  other  objectives  or  measures.  In  such  cases,  the  methodology  proposed  will 

provide the Commission  with a tool assisting it in justifying  the proposal. 

I M P R O V ED  CO-ORDINATION  AND  INFORMATION  AT T HE  EUROPEAN  LEVEL 

The  survey  respondents  have  called  for  improved  information  exchange  and  communication 

between themselves, the Commission  and national regulatory bodies. The analysis of  regulations 

has also shown  the differences  in approaches between  Member States which  could  give rise to a 

growing  number  of  European  level  regulatory  problems  as  commercial  communications 

increasingly  cross  borders. It  follows  that  improved  co-ordination  and  information  exchange  at 

the  European  level  is  required  if  Commercial  Communications  are  to  achieve  the  beneficial 

roles  in  the  Internal  Market  and  the  Information  Society  that  have  been  set  out  earlier  in  this 

Green  Paper. To meet this objective the Commission  would propose the  following: 

The  Commission  proposes  to  establish  a  committee  to  consider  commercial  communications 

issues in particular to safeguard  an effective  dialogue with and between the Member  States. This 

committee  would  not,  obviously,  limit  the  powers  of  initiative  of  the  Commission,  but  would 

assist  the  Commission  in  making  its  actions  more  transparent  through  discussing  commercial 

communication  issues  on the  basis  of the  proposed  assessment  methodology  developed  above. 

In this manner the Committee could  help safeguard  the coherence of policy initiatives and avoid, 

where  possible,  the  need  to act through  the  infringement  procedure  of the  Treaty.  It would  also 

act  as  the  forum  for  administrative  co-operation  in  the  field  of  commercial  communications  in 

particular  allowing  for  an  exchange  of  information  on  issues  relating  to  new  developments  in 

this  field.  Given  the  global  nature  of  the  Information  Society  it  would  also  consider  how  the 

Community  approach  for  commercial  communications  in  the  European  Community  could  be 

promoted  at the international  level^. 

The  Committee  would  be  chaired  by  a representative  of  the  Commission  and  would  consist  of 

representatives  from 

the  Member  States' 

authorities,  where  necessary,  accompanied  by 

representatives  of  self-regulatory  bodies.  The  Commission  would  periodically  report  to  this 

committee  on  relevant  information.  At the Commission's  request  the committee  would  convene 

meetings  on  specific  issues. The  first  series  of meetings  of the  Committee  would  consist  of an 

exchange  of  views  on  sales  promotions  and  sponsorship  that  were  identified  in  the  surveys  as 

those forms  of cross border  commercial  communication  services facing  the greatest  difficulties. 

More  generally, 

the  Committee  would  begin 

to  consider  how  existing  commercial 

communications  regulations may impact on the development  of electronic commerce. 

37 

The  Commission  also  recognises  that  although  market  data  are  easily  found  for  certain 

commercial  communication  services  (e.g. national  advertising  statistics)  other  information  (for 

example  on  cross-border  commercial  communications 

in  general,  direct  marketing,  sales 

promotion  and  sponsorship  services)  required  for  efficient  policy  appraisal  are  at  times  not 

collected  or  difficult  to  have  speedy  access  to.  Given  that  certain  commercial  (notably  in  the 

field of media  buying  and  market  research), academic  and  consumer  interests  collate  and  work 

with  the  relevant  market  information  and  that  these  would  have  an  interest  in  regulatory  data, 

they  should  be  encouraged  to  participate  in  the  European  commercial  communications  policy 

process  in  so far  as their  inside  knowledge  would  enhance the effectiveness  of this  policy.  The 

Commission  will  therefore  seek  to  improve  exchange  of  data  between 

these  various 

organisations and the national  and European regulatory authorities. 

Interested  parties  are  also calling  for  a single  contact  point  able  to  provide  help  in  identifying 

which  Directorate  General  is  responsible  in  the  Commission  for  particular  enquiries  regarding 

its Commercial  Communication  policies.  A co-ordination/contact  point  is needed  to maintain a 

general overview of activities and developments  in this area. 

In  order  to  meet  these  objectives  the  contact/co-ordination  point  could  rely  on  an  on-line 

commercial  communications  contact network. This would  complement  the existing  commercial 

communications  newsletter^.  The  network  would  encourage  the  development  of  two-way 

contacts between  interested  parties and the Commission. In this manner  the Commission's  work 

could  have  a  direct  source  of  information  when  required.  The  management  and  resources 

required  for  such  an  on-line  communications  network  will  be the  subject  of  a  feasibility  study 

which the Commission  has  launched. 

The  Commission would welcome views on: 

Invitation  to  comment. 

The proposed  assessment  methodology. 
The proposal  to improve co-ordination  and information. 

38 

Reference to be inserted when this document will have been registered. 

Confidentiality:  Unless they clearly  specify  otherwise,  replies  to  this  consultation  received  by the 
Commission  will  not  be  treated  in  confidence  and  may  therefore  be  disseminated  outside  the 
Commission. 

Persons to contact: Further information should  be requested from  and/or responses should  be sent 
to Ms Margot Frohlinger, Head  of  Unit E/5  (The Media,  Commercial Communication and Unfair 
Competition) in Directorate  General DGXV  (Internal  Market  and  Financial Services)  on  (+ 32-2) 
295 93 50 or 296 01 10, or Mr Jean Bergevin, on (+32-2) 295  16 39 or 296 01 10. Fax: 295  77  12. 
The postal  address  is: European  Commission, DGXV  E-5,  C-107 8/59, 200 rue  de la Loi,  B-1049 
Brussels. The E-mail address is : E5@  dgl5.cec.be 

If you  wish to receive another language version  of the  Green Paper please fax  your  request to Ms 
hauler,  Ms  Van de  Vorle or  Ms  Volon on  295  77  12  or  write  or  e-mail  to  the  above  addresses 
specifying the language you  would prefer. 

3 

4 

•> 

6 

7 

8 

9 

'0 

11 

"Making  the  most  of  the  Internal  Market":  Strategic  Programme.  Communication  from  the 
Commission to the Council 22.12.93 COM(93) 632 final. 

Europe's  way  to  the  Information  Society.  An  Action  Plan.  Communication from  the Commission; 
9.8.94 COM(94) 347final. 

This definition covers all forms  of remunerated  commercial  communication services  irrespective of 
the  nature  of  the  paying  company  or  organisation.  Thus, for  example,  a  political  advertising 
campaign would be included whereas party  TV political  broadcasts  imposed by law and for  which 
political parties or organisations do not pay  would be excluded. 

This is  because  (i) packaging  and  labelling  regulations  should  be  kept  separate from  non-pack 
commercial  communication  regulations  and  (ii) 
the  pack  is  typically  part  of  the  in-house 
manufacturing  process  rather  than  a  part  of  that  element  of  the  marketing  mix  which  is  sub 
contracted  to  a  specialist  service  provider  as  is  the  case  for  the  commercial  communication 
activities covered by this Green Paper.  In the same  manner,  sales  representatives have also been 
excluded from  the scope of this review. 

EAAA:  European Advertising  Agencies'Association. 

CERP: Comité européen des relations publiques. 

For  1991, the EAAA estimated 155,000 were employed  in the European Community.  Other sources 
mention a figure  of 266,088  employed in advertising  and direct marketing in the same year  in only 
eight  of the Member States  (B, DK, D,  E(1990),  F,  Eir(1988),  Lux, NL)  (Eurostat, Mercure). For 
Belgium and Germany this figure  includes only the number  of employees.  A Eurostat study of 1994 
on  the advertising sector  reports  that  in  1993 the  15  largest  European  agency  networks together 
employed  around  40,000 people  in  the  whole  of  Europe.  CERP  estimates  6,282 employees  and 
13,670 freelance  consultants were active in the public  relations sector in 1993. 

See Part 1  of the accompanying  Working document. 

The  Max  Planck  Institute  was  commissioned  to  provide  the  Commission  with  detailed  country 
reports for  all fifteen  Member States.  These examined  the source  and  nature of national restrictive 
measures. They were then summarised in a comparative  study  by the consultants.  This comparative 
report  (in  German)  is  available  from  the  Commission's  services.  (The  national  regulatory  tables 
provided  in Part  II  of  the  Working document  are  based  on  this  study.  These tables  classify  and 
compare  existing  national  measures  according  to  their  national  policy  objectives  and  the 

,  Community general interest objectives that they seek to safeguard). 

12 

This  was  undertaken  by  the  Commission's  services  and  is  reproduced  in  Part  I  of  the  Working 
document. 

39 

'•* 

ï4 

The results of these are summarised in a publication  available from the Commission's services. 

This was an open postal  "call for  comment" sent out by the services of the Commission. 

*•*  Five  questionnaires  were  sent  out  to  the  five  groups  of  interested  parties,  viz.:  "users"  of 
commercial  communications,  "suppliers"  of  commercial  communications,  "carriers"  (media  and 
other  carriers  of  such  services),  consumer  associations  and  relevant  self-regulatory  bodies.  A 
detailed  analysis  of  the  breakdown  of  these  responses  has  been  provided  in  the first  issue  of  a 
Journal  sponsored  by  the Commission entitled  "Commercial Communications"  which  is available 
on request from the Commission's services.  Some  2,785  questionnaires  were issued directly by the 
Commission: in addition numerous Trade Associations  duplicated copies to send to their members. 

16 

*' 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 
32 

33 

The detailed results of these surveys (in English) are available on request from  the Commission. 

5,200  users,  530  suppliers,  47  carriers  ,  15  national  self-regulatory  bodies  and  27  consumer 
associations  were  contacted.  Of  these  532  users,  132  suppliers,  20  carriers,  10  self-regulatory 
bodies and  10 consumer associations responded. 

C-286/81 Re Oosthoek's Uitgeversmaatschappij 1982 (4) ECR 4575 of 15.12.82. 

C-362/88  GB-1NN0-BM  v  Confederation  du  commerce  Luxembourgeois  1990  (2)  ECR  1-667  of 
7.3.1990. 

» 

C-126/91 Scutzverbandgegen  Unwesen in de  Wirtschafrt e.V.  v  Yves Rocher  GmbH  1991 (3) 1  -
2361  of 18.5.93. 
Case  C-267  and  C-268/91 Re  Bernard  Keck  and  Daniel  Mithouard  1993  (7)  ECR  1-6097 of 
24.11.93. 

C-267 and C-268/91  of 24.11.93, Paragraph  16 cited above. 

For  example:  C-292/92 Ruth  Hùnermunde  e.a.  v  Landesapothekerkammer  Baden-Worttemberg 
1993 (8) ECR 1-6787 of  15.12.93 ; Société  d'Importation  Edouard  Leclerc-Siplec  v  TF1 Publicité 
S.A.  and M6 Publicité 1995 ECR 1-179 of 9.02.95. 

C-352/85  Bond  van  Adverteerdeers  (vereniging)  v  The  Netherlands  1988  (2)  ECR  2085  of 
26.04.1988  In this case the Court explained that for  the application  of free  movement  of services it 
is necessary first  to identify the services  in question,  secondly  to consider  whether the services are 
transfrontier in nature for  the purposes  of Article  59  of the  Treaty and  lastly,  to establish whether 
the  services  in  question  are  services  normally  provided  for  remuneration  within  the  meaning  of 
Article 60 of the Treaty. (Paragraph 12). 

See,  for  example;  C-l55/73  Re  Guiseppe  Sacchi  1974  (1)  ECR  409  of  30.04.1974,  C-52/79 
Procureur du Roi v. Marc JVC Debauvee and Others 1980 ECR 833  of 18.03.1980. 

C-384/93 AI pine Investments BVv.  Minister van Financiën ECR 833 of 10.05.95. 

Op cit, Paragraph 28. 

See  "Commission interpretative Communication  concerning  the  free  movement  of services  across 
frontiers " OJC 334, 9.12.93. 

C-288/89 Stichting  Collectieve Antennevoorziening  Gouda  and  Others  v  Commissariat  voor  de 
Media.  "Mediawet Case" 1991 (1) ECR 4007, paragraph  13. 

C-279/80 Re Alfred John  Webb 1981  ECR 3305, paragraph  19; Joined  Cases 62/81,  63/81 Seco SA 
and Desquenne and Giral SA  v Etablissement  d'Assurance  contre  la  Vieillesse et l'Invalidité 1982 
(1) ECR 223, paragraph  14; C-l 13/89 Rush Portuguesa  Lda v Office National  d'Immigration 1990 
(2) ECR 1-1417, paragraph 18. 

C-220/83 Commission v France 1986 (4) ECR 3663, paragraph  20. 

C-  62/79 S.A.  Compagnie Générale pour  la  Diffusion  de  la  Television  Coditel  and  Others (1980) 
ECR 881, paragraph 15. 

Case C-180/89 Commission v Italy 1991 (2) ECR 1-709, paragraph  20; Case C-l54/89 Commission 
v France  1991 (2)  ECR 1-659, paragraph  17; Case C-l98/89  Commission v Greece  1991 (2)  ECR 
I- 72 7, paragraph 21. 

40 

34 

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

45 

46 

47 

48 

49 

Joined  Cases  110  ,  111/78  Ministère  Public  and  Chambre  Syndicale  des  Agents  Artistiques  et 
Impresarii  de Belgique, A.S.B.L.  v  Willy van  Wesemael and  Others  "Van Wesemael Case"  1979 (1) 
ECR 35, paragraph  28. 

C-288/89, cited above, in note 29 paragraph 23. 

C-379/87 Anita  Groener v Minister for  Education  and  City  of Dublin  Vocational Committee 1989 
(4) ECR 3967 (28.11.1989). 

C-384/93 Alpine Investments BV.para 45, cited above in note 15. 

C-288/89 cited above in note 29, paragraph 15. 

Communications Nos  359/1989 and 385/1989 Ballantyne  Davidson  Mclntyre,  decision  of 31.3.93. 
CCPR/C/47/D/359/1989 and 385/1989/Rev. 1. 

See cases markt intern  Veralg GmbH and Klaus Beerman, Series  A No 165, 20.11.89 and Groppera 
Radio AG and  others V.  Switzerland - Series A  no.  173 of 28.03.90  In recent case law, it appears 
that the European Commission of Human Rights considers  that  there  is no doubt that advertising is 
protected  by Article  10. In two recent decisions on the admissibility  of Applications  to the European 
Court  of  Human  Rights,  under  the  ECHR,  the  Commission  took  the  view  that  a  restriction  on 
advertising  would fall  under  Article  10  ECHR  (Decision  of  September  5  1991  re  Application 
no. 16632/90  (Colman  v.  UK)  andDecision  of  December  2  1991  re  Application  no. 15450/89 
(Cosado Coca v. Spain)). 

C-260/89  Elleniki  Radiophonia  Tiléorassi  AE  v  Dimotiki  Etaireia  Pliroforissis  and  Sotiros 
Kouvelas  1991 ECR 1-2925 of 18.06.91, Paragraphs  41-44. 

In the light ofC  4/73 J.N old, Kohlen v BaustoffgroBhandlung  v Commission  "The Nold Case" 1974 
(1) ECR 491 paragraph 13. 

Council directive 84/450/EEC of 10.9.84 relating to the approximation  of the laws, regulations and 
administrative provisions  of the Member States concerning  misleading  advertising. 

Council directive  79/112/EEC,  of 18.12.78, on the approximation  of the laws of the Member States 
relating  to  the  labelling,  presentation  and  advertising  of  foodstuffs  for  sale  to  the  ultimate 
consumer,  OJ No L 33, 1979. 

Council  Directive  92/96/EEC  of  10.11.92,  on  the  co-ordination  of  laws,  regulations  and 
administrative  provisions  relating  to  direct  life  assurance  and  amending  Directives  79/267/EEC 
and  90/619/EEC (third life assurance Directive), OJ No L 360,  1992. Council Directive 92/49/EEC 
of  18 .6.1992,  on  the co-ordination  of laws, regulations  and  administrative  provisions  relating to 
direct  insurance other than life assurance and  amending  Directives  73/239/EEC and 88/35'/'/EEC 
(third non-life insurance Directive), OJ No L 228,  1992. Council  directive  85/611/EEC of 20.12.85 
on the co-ordination of laws, regulations and administrative provisions  relating to the undertakings 
for  collective investment in transferable securities,  OJ No L 375,  1985. Second  Council Directive of 
15.12.89,  on  the  co-ordination  of laws,  regulations  and  administrative  provisions  relating  to  the 
taking  up and pursuit  of the business of credit institutions and  amending  Directive  77/780/EEC.  OJ 
No L 386, 1989. 

Council directive  92/28/EEC, of 31.3. 92, on the advertising  of medicinal products for  human use, 
OJNo  LI  13, 1992. 

Directive  of the European Parliament and the Council  95/46/EEC  of 24.10.95  on the protection  of 
individuals with regard to the processing of personal  data and  on the free  movement of such data. 

Council  directive  89/552/EEC  of 3.10.89, on the co-ordination  of certain provisions  laid down by 
law,  regulation  or  administrative  action  in  Member  States  concerning  the  pursuit  of  television 
broadcasting activities. OJ No L 298, 1989. 

MRB  International  were asked  to approach a  representative  sample  of each  of the five  audiences 
that  were  mailed  the  "call for  comment." All  the  "users"  covered  by  this  survey  were  offices of 
companies  who  traded  across  borders  and  who  had  control  over  a  significant  proportion  of 
marketing budgets for  commercial communications in their non-domestic  markets. 

41 

5" 

5* 

5* 

5 3 

*4 

55 

56 

5' 

5° 

59 

60 

61 

62 

63 

6^ 

6^ 

66 

67 

68 

69 

This  and  following 
introduction;  more  extensive  summaries  of  the  results  are  provided 
available  from  the  Commission. 

summaries  are  drawn 

from 

the  results  of  both  surveys  described 

in  a  separate 

in  the 
document 

"Below  the  line"  refers  to  commercial  communication  services 
media  space.  Thus,  the  term  covers  all forms  of commercial  communications 

that  do  not  involve  the  purchase  of 
except  for  advertising. 

As  an  example  Forrester  Research  expects  purchases  over  the  Internet 
1994  to  $6.9  billion  by  2000. 

to grow  from  $240  million  in 

See  Part  1 of  the  Working  document. 

For further 

information,  see  COM(94)  319  final. 

the  same  basic  aims,  such  as  the  "cable  and 
Other  Directives  are  complementary  and  pursue 
satellite"  copyright  Directive  adopted  in  1993  and  the  transmission  standards  Directive  adopted  in 
1985. 

for  Community  cultural  action"  Communication 

to  the 
"New  prospects 
Council,  the  European  Parliament  and  the  Economic  and  Social  Committee,  COM(92)  149 final  of 
29.4.92. 

the  Commission 

from 

European  Committee  on  business,  the  arts  and  culture  (CEREC)  (operational  since  March  1991). 

The  principle  does  not  apply  to  Internal  Market  measures  because 
powers  under  Article  100 A,  so  only  the  issue  of proportionality  arises  (Article  3B(3)). 

the  Community  has  exclusive 

This  is shown  in  the  commissioned  regulatory  review.  Copies,  in  German,  of  this  comparative 
study 
will  be  made  available  on  request.  The  report  was  undertaken  by  Professor  Schricker  of  the  Max 
(Vergleichende 
Planck  Institute  (Munich)  for  the  Commission.  In  addition  to  the  comparative  report 
Analyse 
"Commercial 
der 
Communication" 
in  den  Mitgliedstaaten  der  EWG  sowie  in  Finnland,  Norwegen,  Osterreich,  der 
Schweiz  und  Schweden)  seventeen  more  detailed  country  reports  were  prepared  for  the  Commission 
covering  each  of  the  Member  States  as  well  as Norway  and  Switzerland. 

Selbstkontrollregelungen 

im  Bereich 

gesetzlichen 

und 

der 

In  Anglo-Saxon 
within  the  context  of  the  Law  of  "Tort". 

law  the  term  unfair  competition 

is  rarely  found  but  these  objectives  are  pursued 

industrial 
This  branch  of  law  dates  back  to  the  middle  of  the  nineteenth  century.  Following 
revolution,  rules  relating  to  trades  were  replaced  with  laws  that  would  prevent  abuses  of  the  newly 
established  commercial  and  industrial  freedom 

to  compete. 

the 

U dates  back  to  the  I960's  and  1970's  in most  Member  States. 

ECHR:  signed  in Rome  on  4 November  1950  and  ratified  by  all  the  Member  States. 

See  Country  Tables  provided 

in the  accompanying  working  document. 

This  has  been  indicated  by  the  survey  results  summarised 

in  Part  I. 

in  recitals  this  directive  proposed 

Council  Directive  84/450/EEC  of  10.9.84,  relating  to  the  approximation 
regulations 
and  administrative  provisions  of  the  Member  States  concerning  misleading  advertising.  OJ  No  L 
that  at  a  later  stage  both  unfair  advertising 
250,  1984.  Although 
and  comparative  advertising  should  be  considered  by  the  Community, 
is  of  the 
belief  that  the  very  wide  span  and  lack  of  agreement  on  the  term  "unfair"  would  prevent  any  useful 
intiatives  on 
horizontal  action  being  accomplished 
national 
certain  more  narrowly  defined 
regulations  might  encompass 
comparative 
advertising  has  been  addressed  as  explained 

forms  of  commercial 
interpretation 
in 
in  the  text. 

communications 
of  "unfair".  Meanwhile, 

in  this  domain.  This  does  not  exclude  specific 

the  Commission 

that  certain 

of  the  laws, 

their 

Solicitors  are  now  permitted 

to advertise  in  the  United  Kingdom. 

Article  3  bis.  Proposed  revision  of  directive  84/450/EEC  on  misleading  advertising 
comparative 

advertising. 

to  account 

for 

Common  Position  (EC)  No  19/95  of  29.6.95  with  a  view  to  adopting 
of  consumers 

in respect  of distance  contracts.  OJ No  C 288,  30.10.95. 

the  Directive  on  the  protection 

42 

70 

'* 

'* 

73 

74 

'5 

76 

77 

78 

79 

80 

81 

82 

83 

84 

85 

86 

87 

55 

89 

Directive  of the European Parliament and the Council 95/46/EEC  of 24.10.95  on the protection  of 
individuals  with regard to the processing of personal data and on the free movement  of such data. 

Obviously, such practices,  if used in a manner to restrict competition, could fall foul  of Article 86 of 
the Treaty. 

This was recognised as a justified  restriction by the ECJ in the Oosthoek judgement  (see footnote  18 
above). 

In  its Schindler  Judgement  (Case C-275/92,  (1994) ECR 1-1039) the ECJ  ruled  that  bans  on the 
cross-border  promotion  of  "major" (in this case State or regional State)  lotteries could  be justified 
because  of the need to protect  social order and to prevent fraud. 

Council  directive  89/552/EEC of 3.10.89, on the co-ordination  of certain provisions  laid  down  by 
law,  regulation  or  administrative  action  in  Member  States  concerning  the  pursuit  of  television 
broadcasting  activities. OJNoL298,  1989. 

The  Television  Without  frontiers  directive  (89/552/EEC)  harmonised  the  ban  on  TV  tobacco 
advertising  and  TV sponsorship  which already existed across  the Member  States  at  the  time  of its 
adoption. 

Modified  Proposal for  a  Council  Directive  on  the  Advertising  of  Tobacco  Products  (COM  (91) 
Final - SYN 194). 

This refers  to beer with an alcohol content of above  1.8 and  up to 2.8% and fermented  apple  juice 
(cider). 

Resolution  86/C184/02  of the Council of Health Ministers of the European  Community  on Alcohol 
Abuse. 

An  association  of 14 of Europe's major companies in the alcoholic drinks  sector. 

Directive  79/112/EEC,  of 18.12.78, on the approximation of the laws of the Member States  relating 
to the labelling, presentation  and advertising of foodstuffs for  sale to the ultimate consumer,  OJ No 
L 33, 1979. 

Directive 91/321/EEC of 14.5.91 

Directive  92/28/EEC,  of 31.3.92, on the advertising of medicinal products for  human  use,  OJ No L 
113, 1992. 

Council  Directive  92/96/EEC  of  10.11.92,  on  the  co-ordination  of  laws,  regulations  and 
administrative  provisions  relating  to  direct  life  assurance  and  amending  Directives  79/267/EEC 
and  90/619/EEC (third life assurance Directive), OJ No L 360, 1992. 

Council  Directive  92/49/EEC  of  18.6.92,  on  the  co-ordination  of  laws,  regulations  and 
administrative  provisions  relating  to  direct  insurance  other  than  life  assurance  and  amending 
Directives  73/239/EEC and 88/357/EEC (thirdnon-life  insurance Directive), OJNoL228,  1992. 

Council Directive 85/611/EEC of 20.12.85, OJ No L 3 75, 1985. 

Second  Council  Directive  of  15  December  1989,  on  the  co-ordination  of  laws,  regulations  and 
administrative provisions  relating to the taking up and pursuit  of the business  of credit  institutions 
and amending Directive  77/780/EEC.  OJ No L 386, 1989. 

See Section I. 

See  definitions  in the Introduction. 

This final  assessment  is similar to the previous  one. It differs only in so far  as the measure  used for 
evaluation  is not the specific  restrictive measure under assessment  as such  but another  alternative 
measure  which could result in a less restrictive effect:  The objective  of this step  is therefore  not to 
analyse  the  restrictive  measure  but  to  identify  other  appropriate  measures  that  could  meet  the 
objective  whilst being less restrictive. 

90 

In  this  respect,  when proposing  initiatives, the Commission and  the Member  States  should  always 
give  due  regard  to  the  trade  liberalisation  commitments  taken  in  the  GATS  Treaty  and  their 
application  by the WTO. 

43 

91 

The  Commission  has  already  launched  the newsletter  on  commercial  communications  to  begin  to 
develop  these contacts. By relying on an independent editor and giving equal weight to  information 
and  views  from  the  Commission's  services  and  interested  parties,  this  newsletter  encourages 
participants  to  draw  to  the  attention  of the  Commission,  the problems  arising  within  the  Internal 
Market for  commercial  communications.  The newsletter  was  launched  before  this  Green paper  so 
that 
interested  parties  could  learn  of  the  proposed  new  policy  approach.  "Commercial 
Communications"  is a  bi-monthly publication.  Enquiries  on  this  newsletter should  be  made  to the 
Editor (Fax (00 44)  1 273 772727). 

44 

ISSN 0254-1475 

COM(96) 192  final 

DOCUMENTS 

EN 

10 

Catalogue number  : CB-CO-96-221-EN-C 

ISBN 92-78-04000-2 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg