Current issues: July 2019

CMA to investigate online advertising

The CMA has announced that it will launch an investigation into online advertising. This is in response to an official request by the Chancellor, Philip Hammond, which was triggered by the recommendations of the Caincross Review.

The investigation will focus on three topics:

  • The extent to which online platforms have market power in user-facing markets, and what impact this has on consumers.
  • Whether consumers are able and willing to control how data about them is used and collected by online platforms.
  • Whether competition in the digital advertising market may be distorted by any market power held by platforms.

The CMA has previously suggested that remedies might include: increasing competition through data mobility, open standards and open data; giving consumers greater protection in relation to data; limiting platforms’ market power; improving transparency and oversight for advertisers; and institutional reform.

Regulator using online “avatars” to identify adverts unlawfully targeted at children

The Advertising Standards Authority (ASA) has started using “avatars”: online profiles that simulate children’s online web browsing activity. These avatars flag when they are served with online ads for age-restricted categories. This was first rolled out to identify unlawfully targeted gambling ads and resulted in enforcement by the ASA against five gambling brands.

Guy Parker, Chief Executive of the ASA, has publicly said that the ASA is looking to expand this work, which suggests that the technology will be used to identify adverts served to children for other age restricted categories such as alcohol and so-called “junk” foods. This increases the likelihood of enforcement in these areas.

Rules on publication of prizewinners’ names updated to be GDPR-compliant

The Committees of Advertising Practice (CAP) consulted extensively on how to make the existing rules about the publication of winners’ names, under the non-broadcast advertising code, compliant with GDPR. As a result of the consultations, a new law has been introduced governing how prizewinners’ names should be published.

The rules have been amended to require companies who run prize draws or competitions to publish or make available information that indicates that a valid award took place. This should normally be the surname and country of the major prizewinners. However, prizewinners will need to be given the opportunity to opt out of any publication. Even if the prizewinner does opt out, the company will still need to retain this information internally as they will need to provide the information and a copy of the winning entry to the ASA if challenged.

UK government consults on increasing restrictions for advertising “junk” food

The consultation, which concerns foods which are high in fat, salt and sugar (HFSS), proposes various options, such as a 9pm broadcast watershed ban, along some novel restrictions for online advertising. These include introducing a “ladder” into the HFSS rating to incentivise reformulation by allowing greater advertising privileges to products which lower the number of points on the HFSS rating scale.

Imposing broadcast-like restrictions of a watershed ban online is unprecedented and may require platform owners to develop their platforms to ensure they are compliant.

For more on the proposals, see our video.

New CAP guidance on gambling advertising and minors

The new CAP guidance requires advertisers to have robust evidence to show they have “been diligent in forecasting the likely audience” and taken “all reasonable steps to use the data available to include or exclude individuals” on the basis of age or other criteria. Specific guidance is provided on how to do this in relation to social media and influencers.

In Focus | Regulatory powers and trends

Who are the regulators?

The main regulator is the ASA.

In some cases, the Competition and Markets Authority (CMA) also investigates specific advertising-related issues, such as reviews, influencer marketing and digital advertising. However, this is not the standard mechanism for enforcement against individual companies as the CMA typically investigates thematically and focuses on one specific area or issue at any one time. Currently the ASA is looking at influencer marketing and there are plans to start an investigation into digital advertising.

Do they have powers to compel businesses to hand over documents?

The ASA does not have the power to compel businesses to hand over documents.

Do they conduct dawn raids?

No.

Are they able to bring criminal prosecutions (and do they do so)?

The ASA does not have the power to bring a criminal prosecution. However, occasionally, when the breach is particularly flagrant and criminal prosecution may be merited, the ASA will refer an advertiser to trading standards for criminal prosecution. The CMA may also bring criminal prosecutions.

Do they bring prosecutions against individuals?

While the ASA does not bring prosecutions itself, the references discussed above to trading standards could relate to either corporations or individuals.

Is there a self-reporting / leniency regime?

Advertisers may ask for informal resolution of a matter. This is discretionary and, where granted, will typically involve the advertiser agreeing to take down the advert immediately. As a consequence, in such cases, there is no public ruling on the matter.

Are there any plans to introduce new powers (or use existing powers differently)?

There are no plans to extend the ASA’s powers. However, the government has announced plans to consult on giving the CMA the power to impose civil fines.

Are there any areas of new technology that are a particular focus of regulatory attention?

The CMA is currently looking at influencer marketing, on social media and other channels. The CMA has also announced that it will be launching an investigation into online advertising.

How has digital transformation affected the regulator’s own behaviours?

The ASA has recently announced that it is using “avatars” which mimic browsing habits of children to identify inappropriately targeted adverts. Five gambling operators were prosecuted as a result of the trial and the ASA has announced its intention to expand the use of avatars to look for inappropriately targeted adverts for alcohol, weight control products and HFSS foods.

Read the full Regulatory Outlook here >