Source: EURLEX
Language: en
Format: md

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COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 08.05.1996
COM(96) 192 final

**Commercial Communications in the Internal Market**

Green paper from the Commission.

**• '***

**Contents**

**Executive summary**

**Introduction** **1**

**Part I. Commercial communications in the European Community** 4

_Summary_ 4

Internal Market Objectives 4

Meeting other Community Objectives 11

**Part II. Evaluation of the need for Community action** 17

_Summary_ 17

Reasons for existing or new Internal Market barriers 17

Threats to the coherence of Community measures 20

**Part III. Evaluation of the specific areas for Community action** **21**

_Summary_ 21

A Preliminary Review 21

The need for a further review of potential regulatory barriers 29

The need for an early notification mechanism 32

**Part IV. Proposals for consultation** **33**

_Summary_ 33

A methodology to deliver a more uniform assessment 33

Improved Co-ordination and Information at the European level 37

Footnotes 39

**Working Document of the** Services.

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 million [7] ; and

the total turnover for public relations companies was ECU 1,800 million [5] . 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 Mithouard [2] ^ 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 service [2] - [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**, financial services*-*, medicinal products***, data

protection* [7] and television broadcasts*^.

**Potential Internal Market benefits.**

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**

_**Invitation to comment.**_

_Internal Market objectives:_

_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**

PART II. EVALUATION OF THE 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

**18**

_**A)**_

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.

_Invitation to comment._

_Internal Market Objectives._

_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 Council [70], 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 restrictions [7] ^.

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 system [7] - [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 prizes [7] -*. 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 TV [7] - [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 proposal [76], 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**

beer [77] 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 Resolution [75] requested interested parties to submit views on how to limit

and reduce disparities in the other media. The Amsterdam Group [7] ^ 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 foodstuffs [50] . 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, in spite of its title, not to provisions relating to commercial

communications. The Council Directive on infant formulae [5] ^ contains a minimal clause in

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 use^ 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 insurance [5] -* and third non-life insurance directives [5] ^, 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 Directive [56] ).

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.

**THE 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** **. 2 9**

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._

**THE** 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 Court [57], 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.

IMPROVED CO-ORDINATION AND INFORMATION AT THE 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.

_Invitation to comment._

_The Commission would welcome views on:_

_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](http://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_ _"Making the most of the Internal Market": Strategic Programme. Communication from the_
_Commission to the Council_ _22.12.93 COM(93)_ _632 final._

_4_ _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._

_6_ _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._

_7_ _EAAA: European Advertising_ _Agencies'Association._

_8_ _CERP: Comité européen des relations publiques._

_9_ _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._

_'0_ _See Part_ _1_ _of the accompanying Working document._

_11_ _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**

'•* _The results of these are summarised in a publication available from the Commission's services._

_ï4_ _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_ _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._

_18_ _C-286/81_ _Re Oosthoek's_ _Uitgeversmaatschappij_ _1982 (4) ECR 4575 of_ _15.12.82._

_19_ _C-362/88 GB-1NN0-BM v Confederation du commerce Luxembourgeois 1990 (2) ECR_ _1-667_ _of_

_7.3.1990._

**»**
_20_ _C-126/91_ _Scutzverbandgegen_ _Unwesen in de Wirtschafrt e.V. v Yves Rocher GmbH_ _1991_ _(3) 1 -_
_2361 of_ _18.5.93._
_21_ _Case_ _C-267_ _and_ _C-268/91_ _Re Bernard Keck and Daniel Mithouard_ _1993_ _(7) ECR_ _1-6097_ _of_

_24.11.93._

_22_ _C-267_ _and_ _C-268/91_ _of_ _24.11.93,_ _Paragraph 16 cited above._

_23_ _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._

_24_ _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)._

_25_ _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._

_26_ _C-384/93_ _AI_ _pine Investments_ _BVv._ _Minister van_ _Financiën_ _ECR 833 of_ _10.05.95._

_27_ _Op_ _cit,_ _Paragraph 28._

_28_ _See "Commission interpretative Communication concerning the free movement of services across_
_frontiers_ _"_ _OJC_ _334,_ _9.12.93._

_29_ _C-288/89_ _Stichting Collectieve Antennevoorziening_ _Gouda and Others v Commissariat voor de_
_Media. "Mediawet Case"_ _1991_ _(1) ECR 4007, paragraph 13._

_30_ _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._

_31_ _C-220/83_ _Commission v France_ _1986_ _(4) ECR 3663, paragraph 20._

_32_ _C- 62/79 S.A. Compagnie_ _Générale_ _pour la Diffusion de la Television Coditel and Others (1980)_
_ECR_ _881,_ _paragraph 15._

_33_ _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_ _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._

_35_ _C-288/89,_ _cited_ _above,_ _in note 29 paragraph 23._

_36_ _C-379/87_ _Anita Groener v Minister for Education and City of Dublin Vocational Committee 1989_
_(4) ECR_ _3967_ _(28.11.1989)._

_37_ _C-384/93_ _Alpine Investments_ _BV.para_ _45,_ _cited above in note_ _15._

_38_ _C-288/89_ _cited above in note_ _29,_ _paragraph_ _15._

_39_ _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._

_40_ _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))._

_41_ _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._

_42_ _In_ _the light_ _ofC_ _4/73_ _J.N_ _old, Kohlen v BaustoffgroBhandlung v Commission_ _"The Nold_ _Case"_ _1974_
_(1) ECR_ _491_ _paragraph 13._

_43_ _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._

_44_ _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._

_45_ _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._

_46_ _Council directive 92/28/EEC, of_ _31.3._ _92, on the advertising of medicinal products for human use,_
_OJNo LI_ _13,_ _1992._

_47_ _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._

_48_ _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._

_49_ _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"_ _This and following_ _summaries_ _are drawn from the results of both surveys described_ _in the_
_introduction;_ _more extensive summaries_ _of the results are provided_ _in a separate_ _document_
_available from the Commission._

_5*_ _"Below the line" refers to commercial communication services that do not involve the purchase of_

_media space. Thus, the term covers all forms of commercial communications_ _except for_ _advertising._

_5*_ _As an example Forrester Research expects purchases over the Internet to grow from $240 million in_
_1994 to_ _$6.9 billion by 2000._

_5 3_ _See Part 1 of the Working document._

_*4_ _For further information, see_ _COM(94) 319_ _final._

_55_ _Other Directives are complementary_ _and pursue the same basic aims, such as the "cable and_

_satellite" copyright Directive adopted in_ _1993_ _and the transmission standards Directive adopted in_

_1985._

_56_ _"New prospects for Community_ _cultural action" Communication_ _from_ _the Commission_ _to the_

_Council, the European Parliament and the Economic and Social Committee,_ _COM(92) 149_ _final of_

_29.4.92._

_5'_ _European Committee on business, the arts and culture (CEREC) (operational since March_ _1991)._

_5°_ _The principle does not apply to Internal Market measures because the Community has exclusive_
_powers under Article_ _100_ _A,_ _so only the issue of proportionality_ _arises (Article 3B(3))._

_59_ _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_

_Planck Institute (Munich) for the Commission._ _In_ _addition to the comparative report_ _(Vergleichende_

_Analyse_ _der_ _gesetzlichen_ _und_ _Selbstkontrollregelungen_ _im_ _Bereich_ _der_ _"Commercial_

_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._

_60_ _In Anglo-Saxon_ _law the term unfair competition is rarely found but these objectives are pursued_

_within the context of the Law of "Tort"._

_61_ _This branch of law dates back to the middle of the nineteenth century. Following the industrial_

_revolution, rules relating to trades were replaced with laws that would prevent abuses of the newly_

_established commercial and industrial freedom to compete._

_62_ _U_ _dates back to the_ _I960's_ _and_ _1970's_ _in most Member States._

_63_ _ECHR: signed in Rome on 4 November_ _1950_ _and ratified by all the Member States._

_6^_ _See Country Tables provided in the accompanying working_ _document._

_6^_ _This has been indicated by the survey results summarised in Part I._

_66_ _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. OJ No L_

_250,_ _1984._ _Although in recitals this directive proposed that at a later stage both unfair_ _advertising_

_and comparative_ _advertising should be considered by the Community,_ _the Commission is of the_

_belief that the very wide span and lack of agreement on the term "unfair" would prevent any useful_

_horizontal action being accomplished in this domain. This does not exclude specific intiatives on_

_certain_ _more narrowly_ _defined forms_ _of commercial_ _communications_ _that certain_ _national_

_regulations_ _might_ _encompass_ _in their interpretation_ _of_ _"unfair"._ _Meanwhile,_ _comparative_

_advertising has been addressed as explained in the text._

_67_ _Solicitors are now permitted to advertise in the United Kingdom._

_68_ _Article 3 bis. Proposed revision of directive 84/450/EEC on misleading advertising to account for_
_comparative_ _advertising._

_69_ _Common Position (EC) No 19/95 of 29.6.95 with a view to adopting the Directive on the protection_
_of consumers in respect of distance contracts. OJ No C 288,_ _30.10.95._

**42**

_70_ _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)._

_73_ _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._

_74_ _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._

_'5_ _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._

_76_ _Modified Proposal for a Council Directive on the Advertising of Tobacco Products (COM (91)_
_Final - SYN 194)._

_77_ _This refers to beer with an alcohol content of above 1.8 and up to 2.8% and fermented apple juice_
_(cider)._

_78_ _Resolution 86/C184/02 of the Council of Health Ministers of the European Community on Alcohol_
_Abuse._

_79_
_An association of 14 of Europe's major companies in the alcoholic drinks_ _sector._

_80_ _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._

_81_ _Directive_ _91/321/EEC_ _of 14.5.91_

_82_ _Directive 92/28/EEC, of 31.3.92, on the advertising of medicinal products for human use, OJ No L_
_113,_ _1992._

_83_ _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._

_84_ _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._

_85_ _Council Directive_ _85/611/EEC of_ _20.12.85,_ _OJ No L 3_ _75,_ _1985._

_86_ _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._

_87_ _See Section I._

5 5 _See definitions in the Introduction._

_89_ _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**

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