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In March 1998, the European Commission has adopted a Communication outlining a series of measures to facilitate the cross-border provision of commercial communications services while ensuring appropriate protection of public interest objectives such as health and protection of consumers and the environment. The measures include the application of a transparent method of assessing whether restrictions on cross-border commercial communications are proportional to the public interest objective pursued and the creation of a group of Member States' experts which would, inter alia, seek solutions to restrictions. Commercial communication services include all forms of advertising, direct marketing sponsorship, sales promotions, public relations and packaging design (except labelling) and their potential for further job creation in the future is very high. This Communication prepared the legal ground for a vibrant commercial communications sector in the EU.
The commercial communications sector plays a key role in the EU. The sector directly employs in excess of 1 million people and it is growing rapidly thanks to the development of new communications technologies and buoyant demand. For example, in the specialised area of telemarketing the current number of 193,500 employees in Europe is forecast to grow to 669,500 in the year 2001. Growth of Internet-related commercial communications is similarly expected to increase. For France, Germany, the Netherlands and the United Kingdom alone, the value of these new commercial communication services is forecast to grow to ECU 1.3 billion in 2002. This is reflected in the development of new specialised on-line agencies and Internet audience measurement specialists.
The sector has particular potential to create jobs for young people because of this strong demand for new young creative talent. Apart from those employed directly by the commercial communications sector as such, there are also many jobs in marketing and marketing research among the users of commercial communications.
The sector also plays a key role in promoting the competitiveness of European business. Without cost-effective marketing campaigns, businesses cannot develop markets or indeed are unable to undertake viable investments in new products or services. Furthermore, commercial communication services are critically important for the realisation of the Single Market given that if businesses cannot communicate their presence, products and services across borders, they are less able to engage in cross-border trade.
Finally, these services also help finance all media. It is recognised internationally that the development of information society services and electronic commerce are, and will continue to be, largely financed by revenues earned from carriage of these services.
The Commission acknowledges that an Internal Market approach was required in this area given that there existed no co-ordinated framework for the sector even though it is regulated for a wide variety of public interest objectives and increasingly offering services across borders, thanks to the development of new communications channels.
The Commission's approach to the area of commercial communications has to take account of the importance and sensitivity of the various public interest objectives - such as health, safety, environmental and consumer protection - which may be pursued by Member State measures giving rise to difficulties for cross-border commercial communications. Article 100a of the Treaty makes it clear that Internal Market measures which affect such public interest objectives must take as a base a high level of protection. The importance accorded to these public interest objectives by Community law is reflected also in Article 129, 129a and 130r of the Treaty.
It follows that in establishing the Internal Market in this area actions taken by the Commission must ensure that an efficient protection of these other objectives is achieved at the cross-border level. In determining what action the Commission should take in this area, a certain sensitivity must be shown towards the different social and cultural situations in the various Member States.
The Commission's objective is therefore to facilitate the cross-border provision of commercial communication services through the establishment of an efficient and transparent framework which will also ensure an appropriate protection of public interest objectives concerned. These measures reinforce the Commission's commitment to improving enforcement in the Single Market, in accordance with the Single Market Action Plan endorsed by the European Council (see SMN N.8). The Commission has agreed to implement the following actions.
The Expert Group will be chaired by an official of the Commission. Its members will consist of two representatives appointed by each Member State. The Commission will invite groups, where they exist, made up of national representatives of interested parties (from all areas including consumer associations) to present their positions on the issues being considered. The Expert Group will meet on a regular basis. The Commission will decide on its agenda which will be made public via the information network where appropriate. The Expert Group should seek to reach an opinion on a specific point within six months. Its opinion, where appropriate, will be made public by the Commission's central contact point to interested parties.
The Expert Group represents a new tool for implementing Commission policy in this field. It will increase problem resolution efficiency and transparency of the policy-making process. Interested parties, in particular consumer associations, will benefit from the Expert Group notably because they will have far easier access to information in this field and can submit written representations.
The contact point will maintain communications between the Commission, the Parliament and the Member States. Other Commission services will be closely associated with and be kept fully involved by the central contact point in order to ensure a better flow of information.
As a complement to the existing Commercial Communications newsletter, the Commission will establish a website. It will make available information on the Expert Group's work and give access to the database on European commercial communication regulations. The website will take a number of months to establish so the Commission has already opened an e-mail address for queries or information from interested parties:
The principles of this approach, in particular the objective of further improving the analysis of proportionality and coherence of regulation in this field, have already been welcomed by our major trading partners as well as many operators. Given that the advent of the Information Society leads to the globalisation of commercial communication services, cross-border problems with such services from third countries are likely to increase. Therefore, there is a need to find international solutions to achieve more efficient protection of public interest objectives in an increasingly cross-border trading environment. The Internal Market regulatory framework represents a good starting point for reaching such solutions and therefore the Community should be involved in international discussions on these issues.
Revenues generated from commercial communication services represent one of the major sources of funding for Information Society services. This form of funding needs to be promoted in order to ensure that the distribution of high quality information will increase and remain accessible free of charge. There are already indications that cross-border commercial communication services on the Internet are subject to legal insecurity and barriers. Other complex issues such as those relating to intellectual property rights and branded domain names also need to be addressed. Moreover, as regards new national proposals for regulations pertaining to on-line commercial communication services, the compatibility of these with the Treaty will be evaluated via the application of the currently proposed third amendment of Directive 83/189/EEC concerning regulatory transparency in the internal market for information society services. A common position was reached on this proposal in the Council on 26 January 1998..
Priority areas for the Expert Group's consideration
According to information and responses received during the consultation on the Green Paper, and, in order to ensure rapid and efficient results of its policy, the Commission will prioritise its work. During the two years following the adoption of this Communication, the Commission will call on the Expert Group to examine problems arising from cross-border commercial communications and the objectives, levels and means of protection of public interest objectives of differing national regulations pertaining to them in the following areas:
The protection of minors
In the field of television advertising the Commission has already undertaken minimal harmonisation regarding advertising to minors (Directive 89/552 EEC as amended by Directive 97/36/EC). How ever, further problems have been raised in the context of minors' advertising. The European Parliament in its resolution has requested for a more detailed assessment of the effects of commercial communications on children.
This issue has also been raised in a number of positions on the Green paper. Consumer associations and public health bodies have called for harmonisation of regulations and in some areas for strengthening of protection concerning commercial communications aimed at minors.
Operators complained about certain national restrictions causing barriers to cross-border services that were invoking the protection of minors.
The key problem areas that were highlighted and that will need to be addressed are:
This issue was raised by the European Parliament who called for a framework of rules on dishonest marketing methods. Certain consumer associations also felt that harmonisation of laws preventing unfair marketing practices was necessary. This is a particularly important point in view of the development of electronic commerce. Consumer associations also wished to ensure that fraudulent schemes and pyramid selling techniques are outlawed across the Community.
Operators pointed to the significant variations in national regulations concerning discounts, gifts and competitions, which effectively impeded the development of cross-border promotional campaigns. They also noted that multi-level marketing techniques (i.e. promotion and selling of products through networks of independent (non-salaried) distributors) could develop as a consequence of the possibility of networking independent agents globally.
More specifically, the following problem areas will be addressed:
Whilst recognising that certain aspects of TV sponsorship had already been subject to harmonisation by Directive 89/552 EEC as amended by Directive 97/36/EC the European Parliament called for the different national regulations relating to sponsorship which are not harmonised by this Directive and patronage to be examined.
A number of interested parties noted the differences in definitions of sponsorship or even their absence (whereby sponsorship is treated as identical to advertising) for regulatory purposes across the Member States. They complained of the legal uncertainty that arose as a consequence. Likewise, certain parties also noted that TV sponsorship regulations vary significantly between countries.
The following problems will be addressed differing national regulations:
Claims and misleading advertising
The Green paper noted that Directive 84/450 EEC has already harmonised misleading advertising and more recently comparative advertising. However, additional calls for action were made in this field as regarded claims. Consumer associations and public health bodies wished to see stricter harmonised rules at the European level controlling the use of certain health and nutritional claims. Consumer organisations noted that differences remain in the interpretation of what is misleading advertising between the Member States. They pointed out that this leads to great difficulties in the processing of cross-border complaints.
Operators criticised differing national restrictions on requirements of packaging which went beyond the prescribed requirements of labelling legislation. These not only covered "product information" (i.e. claims) but also use of brand names (certain Member States have restrictions on brand diversification for brands associated with particular product categories), and the use of licensed graphics.
The following problems will be addressed:
The Commission has already proposed to improve access to justice with its modified proposal for a Directive on injunctions for consumers interests (Council Common position CE n. 48/97). Whilst welcoming this action, consumer associations called for improvements in both judicial and extra-judicial cross-border redress systems against misleading and fraudulent commercial communication services.
The Expert Group will examine how existing redress and dispute settlement systems (including those operated by self-regulatory bodies) can be improved in a cross-border environment.
Application of the proportionality assessment methodology at national level
Some national authorities have indicated to the Commission their support for the application of the assessment methodology. The Commission would recommend its assessment methodology to be applied at national level by relevant national authorities. In this context the members of the Expert Group will be invited to indicate how they apply the principle of proportionality, to what extent they are applying the Commission's methodology and, if not, whether they would be prepared to adopt this methodology.
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