Regulatory Outlook | Advertising and Marketing | July 2017
Published on 6th Jul 2017
Brexit and advertising regulation
Regardless of what the final Brexit deal looks like, it seems unlikely that advertising regulation will change significantly in the short to mid-term. The Committee of Advertising Practice is on record as saying there are unlikely to be any changes in the short term to the Codes ruled on by the Advertising Standards Authority (ASA) or to the ASA’s overall regulatory activity. However, there are certain areas of European law where some advertisers might hope to see a new approach post-Brexit. One is in the area of comparative advertising, where the doctrine of ‘riding on the coat-tails’ potentially helps entrench the position of dominant market players to the detriment of challenger brands. Another is in the area of health and nutrition claims relating to foods, currently regulated under an EU Regulation, which has caused considerable frustration for many food and drinks advertisers.
The European Commission’s proposal for updating the ePrivacy Directive was published on 10 January 2017. The legislation is drafted as a Regulation and, since it aims to sit alongside and be consistent with the GDPR, the proposal aims for the Regulation to come into force on the same day as the GDPR (25 May 2018). It is still in draft form and may change before it is approved by the European Parliament. However, as currently drafted, the Regulation would introduce significant changes in relation to cookies and direct marketing. For more information on the ePrivacy Regulation and how this will impact advertising, please see here.
Misleading and Comparative Advertising Directive
As part of its Smart Regulation policy, the European Commission is running a Regulatory Fitness and Performance Programme, aiming to simplify law, reduce regulatory costs and contribute to a clear, stable and predictable regulatory framework. This process includes a review of the Misleading and Comparative Advertising Directive.
The period of consultation ended on 12 September 2016 and publication of the Commission report is expected in the second quarter of 2017.
Following a series of research projects into broadband advertising, the ASA and its sister body CAP are moving forward with two separate initiatives. On 31 March 2017, the ASA launched an investigation into the use of ‘fibre’ in advertisements for part-fibre broadband services. The ASA’s findings are expected in summer 2017. CAP has since published a public consultation seeking views on different options to ‘strengthen the standards around broadband speed claims’. Currently broadband service providers are permitted to use ‘up to’ claims to advertise their maximum speed, if that speed is achievable by just 10% or more of their customers. The consultation proposes various alternative options to replace this rule, such as ‘peak-time median download speed’ and a ‘range of 24-hour national download speeds available to the 20th to 80th percentile of users’. The consultation closes on 13 July 2017.
Advertising HFSS products:
CAP has announced that from 1 July 2017, advertising of food and drink products high in fat, salt or sugar (HFSS) will be banned in children’s non-broadcast media, including print, cinema, online,and social media advertising, targeted at under 16s. This follows Ofcom’s research that children aged between 5 and 15 are now viewing online content more than television. For a summary of the new rules see our update. The ASA has also published guidance on differentiating HFSS product ads from brand TV ads, which fall outside the ban.
In focus: Personal liability
Advertising regulation in the UK has historically been dominated by the self-regulatory/co-regulatory regime operated by the ASA. However, other regulators also have roles to play and have been increasingly active.
Consumer and business protection regulations
The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 apply to advertising communications and generally prohibit misleading actions and omissions. A breach can result in a criminal prosecution, unlimited fine and up to two years’ imprisonment. Directors, managers, secretaries or other officers of a company can be liable under the Act if the breach was committed with their consent or connivance. Similar sanctions can be imposed for breaches of other statutory rules governing, for example, gambling, tobacco, pharmaceuticals and e-cigarette advertising.
In 2017, a company director was found guilty of offences under the CPRs after his motor-dealer company provided misleading information to consumers. The company falsely advertised the service history and mileage on two cars and the director was fined £400 and ordered to pay a £30 victim surcharge, £4,750 in compensation and £3,000 in costs, by virtue of his consent, connivance or neglect. The breach came to the attention of Trading Standards via the Citizens’ Advice Consumer Helpline.
If a consumer or competitor complains to the ASA about a particular advertisement via their self-regulatory system, the ASA will contact the advertiser directly if it considers the advertisement complained of has broken advertising rules. Directors and employees of advertisers would not normally be personally investigated or named by the ASA.
Dates for the diary
27 June 2017 – Section 96 of the Digital Economy Act 2017 in force, requiring the ICO to prepare a ‘Direct Marketing Code’.
Q2 2017 – CAP to provide an update in relation to the use of ‘fibre’ in broadband ads.
Q2-Q4 2017 – Draft ePrivacy Regulation continues through the legislative process, including consideration by the European Parliament.
Q2 2017 – European Commission’s ‘Fitness Check’ of the Misleading and Comparative Advertising Directive and the Unfair Commercial Practices Directive expected to be completed.
1 July 2017 – New CAP rules come into force, banning the advertising of HFSS food and drink products in children’s non-broadcast media.
13 July 2017 – CAP consultation on broadband speed claims closes.
25 May 2018 – GDPR becomes directly effective across all EU Members States.
25 May 2018 – ePrivacy Regulation also expected to come into force.
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