Transcript Document

EU-China Workshop on Combating
Illegal Publicity/Propaganda
Behaviour of Businesses
Day 1
Unfair Competition law:
false advertising, false
representation, false
publicity / propaganda
Kunming, 14 – 15 October 2010
Table of contents
1.
Legal Framework
2.
Case Law
3.
Conclusions
1.
Legal framework
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
1.Legal Framework
2.Case Law
3.Conclusions
Advertising
race for
Challengehas
forbecome
Advertising
unique, cutting-edge, enticing way
of ...
passing on information to
customers
facilitating and positively
influencing
their
buying
decisions
Difficult to keep content true to
facts
Human
tendency
to
exaggerate
benefits
of
products
Easy to cross thin line
demarcating
puffery from
misleading, deceptive or false
advertisement
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Interests to be protected
1.Legal Framework
Competitors
2.Case Law
3.Conclusions
Market
Consumer
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Main Regulation on illegal advertising
Constitutional
Rules
National
Regulation
Article 21
Legislative Decree
No. 145/2007
Directive
29/2005/EC
Article 41
Legislative Decree
No. 146/2007
European Parliament
Resolution
on January 13, 2009
1.Legal Framework
2.Case Law
Legislative Decree
No. 177/2005
3.Conclusions
International
Regulation
Consumer
Code
(Legislative Decree
No. 206/2005)
Art. 2598 of Civil
Code
SelfRegulation
Code
of
Discipline
Self-
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
New provisions governing
Unfair Commercial Practices
Directive 2005/29/EC
1.Legal Framework
2.Case Law
3.Conclusions
Law Decree
2 August
2007, n. 145
Law Decree
2 August
2007, n. 146
Ad hoc provisions on
“Misleading and comparative
advertisement”, aimed at
protecting businesses in their
commercial relations
Amended articles 18-27 of the
2005 Consumers’ Code in
connection with
“Unfair business-to-consumer
commercial practices”,
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What is clearness?
1.Legal Framework
2.Case Law
3.Conclusions
 Advertising communication must be clearly
distinguishable as such. When a medium
presents news and other editorial matter to
the public together with marketing
communication, it should be ensured that
the marketing communication is readily
distinguishable as such;
 Subliminal advertisement is forbidden
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What is lawful?
Advertising communication shall include
1.Legal Framework
2.Case Law
3.Conclusions
①Terms, quotations and references to scientific and technical tests;
②Authentic Testimonials;
③Contents and conditions of the guarantee or warranty offered;
④Clear indication of dangers to health, safety or the environment,
especially when such dangers are not immediately recognisable;
⑤Full compliance with provisions set forth for special type of
products,
i.
Alcoholic Beverages
ii.
Cosmetics and Personal Hygiene Products
iii.
Food supplements and health foods
iv.
Physical and Aesthetic Treatments
v.
Medicinal Products and Curative Treatments
vi.
Courses and Study or Teaching Methods
vii. Financial and real estate transactions
viii. Package Tours
ix.
Games, Toys and Educational Products for Children
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What is unlawful?
Advertising communication shall not
1.Legal Framework
2.Case Law
3.Conclusions
①be misleading;
②play on superstition or credulity;
③contain statements or audio or visual treatments depicting
physical or moral violence that may be considered indecent, vulgar
or repugnant to prevailing standards of decency;
④offend moral, civil and religious beliefs;
⑤cause psychological, moral or physical harm, and exploit the
credulity, inexperience or sense of loyalty of children or young
people;
⑥Contain statement that may potentially endanger health, safety or
the environment;
⑦copy or slavishly imitate communication of others (risk of
generating confusion) or name, trademark, notoriety and corporate
image of other marketers;
⑧denigrate the activities, companies or products of others.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What is unlawful?
1.Legal Framework
2.Case Law
3.Conclusions
(Following) Psychological, moral or physical harm, and
exploit the credulity, inexperience or sense of loyalty of
children or young people:
①violating generally accepted rules of social
behaviour;
②acting dangerously or seeking exposure to
dangerous situations;
③suggesting that failure to posses the promoted
product means either their own inferiority or their
parents' failure to fulfil their duties;
④suggesting that the role of parents and educators is
inadequate in supplying healthy nutritional advice;
⑤suggesting poor eating habits or neglecting the
need for a healthy lifestyle;
⑥soliciting other people to purchase the promoted
product.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Comparative
The protection of the interests of businesses adversely
Advertising
affected by misleading
or unlawful comparative advertising
1.Legal Framework
2.Case Law
3.Conclusions
has been removed from the Consumer Code and entrusted
to separate ad hoc provisions contained in Legislative Decree
145 of 2 August 2007
Main requirements
Comparative advertising is permitted when it helps to
explain the technical or financial features and benefits
of promoted products and services, objectively
comparing the relevant basic, technically verifiable and
representative features of competitive goods and
services, that meet the same needs or are intended for
the same purpose.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
A legislative “revolution”
1.Legal Framework
2.Case Law
3.Conclusions
From
Misleading
Advertisement
pre-existing
legislation
wider
To
Unfair commercial
practices
legislation
Extension of the perimeter of
protection to forms of business
conduct that are likely to distort
the economic behaviour of
consumers but do not fall
squarely within the notion of
advertising
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What are Commercial Practices?
1.Legal Framework
2.Case Law
3.Conclusions
“Commercial practices are any act, omission, course of
conduct or representation, or commercial communication
including advertising and marketing, by a trader, directly
connected with the promotion, sale or supply of a product
to customer”
“A customer is any natural person who, in the commercial
practices is acting for purposes which are outside his
trade, business, craft or profession”
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What is unfair?
1.Legal Framework
2.Case Law
3.Conclusions
“A commercial practice is deemed to be unfair when
contrary to the requirements of professional diligence, it
materially distort the economic behaviour of the average
consumer whom it influences or to whom it is addressed”
“The concept of unlawful commercial practices is viewed
as the undue distortion of customers’ decision-making
process and the resulting impairment of their ability and
freedom to make informed market choices”
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Competition Rules and Consumer Protection
1.Legal Framework
2.Case Law
3.Conclusions
There are important elements of convergence between
the enforcement of competition rules and consumer
protection, since unfair commercial practices are often
used as an important “COMPETITION TOOL”.
Indeed, commercial practices, and especially comparative
advertising, are a powerful tool for the newcomers and a
way to lead consumers to choose the best options for
them, in terms of prices and quality, by means of more
conscious, rational and informed decisions.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What is misleading?
1.Legal Framework
2.Case Law
3.Conclusions
Actions
(a) the existence or nature of the product;
(b) the main characteristics of the product;
(c) the extent of the trader's commitments,
the motives for the commercial practice
and the nature of the sales process, any
statement or symbol in relation to direct
or indirect sponsorship or approval of
the trader or the product;
(d) the price or the manner in which the
price is calculated, or the existence of a
specific price advantage;
(e) the need for a service, part,
replacement or repair;
(f) the nature, attributes and rights of the
trader or his agent;
(g) the consumer's rights
(h) in its factual context, taking account of
all its features and circumstances, it
causes or is likely to cause the average
consumer to take a transactional
decision that he would not have taken
otherwise
Omissions
(a) in its factual context, taking account of
all its features and circumstances, it
omits material information that the
average consumer needs to take an
informed transactional decision and
thereby causes or is likely to cause the
average
consumer
to
take
a
transactional decision that he would not
have taken otherwise;
(b) It hides or provides in an unclear,
unintelligible, ambiguous or untimely
manner such material information, and
namely
① the main characteristics of the
product,
② the geographical address and the
identity of the trader,
③ the price inclusive of taxes,
④ the arrangements for payment,
delivery, performance and the
complaint ,
⑤ the existence of a right of
withdrawal or cancellation
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
What is aggressive?
1.Legal Framework
2.Case Law
3.Conclusions
In its factual context, taking account of all its features and circumstances,
by harassment, coercion, including the use of physical force, or undue
influence, it significantly impairs or is likely to significantly impair the
average consumer's freedom of choice or conduct with regard to the
product and thereby causes him or is likely to cause him to take a
transactional decision that he would not have taken otherwise.
Types of harassment, coercion and undue influence
(a)timing, location, nature or persistence;
(b)the use of threatening or abusive language or behaviour;
(c)the exploitation by the trader of any specific misfortune or circumstance
of such gravity as to impair the consumer's judgement, of which the trader
is aware, to influence the consumer's decision with regard to the product;
(d)any onerous or disproportionate non-contractual barriers imposed by the
trader where a consumer wishes to exercise rights under the contract,
including rights to terminate a contract or to switch to another product or
another trader;
(e)any threat to take any action that cannot legally be taken.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
General Rule on
Unfair Competition Acts
1.Legal Framework
2.Case Law
3.Conclusions
Article 2598, no. 3, of the Italian Civil Code: “…acts
of unfair competition are performed by whoever: …3)
avails himself directly or indirectly of any other
means which do not conform with the principles of
honest commercial practices and are likely to injure
another’s business” (unofficial translation).
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM Proceedings
1.Legal Framework
2.Case Law
3.Conclusions
In 2009 2.597 complaints were
submitted to the Authority. Of the
2.597 complaints received 1.882 were
dismissed and namely:
①70% of these referred to practices
not falling under the definition of
commercial practices under the
Consumer Code and Legislative
Decree No. 145/2007;
②24% of these were referred to
circumstances submitted according to
the law abrogated by Legislative
Decrees 145 and 146/2007,
③1% of these were referred to events
already decided by the Authority,
④1% were manifestly groundless;
⑤4% moral suasion.
(AGCM Report issued on 31 march 2010)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM Outcome of investigation
1.Legal Framework
In 2009, 272 complaints were examined by the Authority,
246 of these led to the adoption of a measure and 24
were closed by dismissal
2.Case Law
3.Conclusions
(AGCM Report issued on 31 march 2010)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM Investigations
Description
Number
Dismissal because ungrounded
1.Legal Framework
2.Case Law
3.Conclusions
13
Closure of investigation
2
Closure with a communication to the
Parliament, the Executive and Banca d’Italia
4
Acceptance of committment
6
Appliance of Reg. 2006/2004
1
Misleading and/or Unfair practices
239
Misleading (B2C)
181
Misleading and aggressive (B2C)
35
Aggressive (B2C)
13
Contrary to the requirements of professional
diligence
2
Misleading/Unfair Comparative (B2B)
6
Misleading (previous legislation)
2
Non-compliance with commitments
7
(AGCM Report issued on 31 march 2010)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM Compliant and findings
1.Legal Framework
2.Case Law
3.Conclusions
Total
Infringements
145
131
Consumers’ associations
40
37
Competitors
19
15
Government Department
32
32
Ex officio
28
24
1
0
Individual consumer
Competitors’ associations
(AGCM Report issued on 31 march 2010)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM Medium used to disseminate
the advertisement
1.Legal Framework
2.Case Law
3.Conclusions
Total
Infringements
Internet
84
76
Printed material (brochures, leaflets etc)
63
60
Daily and periodical press
48
44
National television
30
29
Packaging
2
2
Telephone
11
11
External advertising
10
10
Local television
3
3
Postal service
4
4
E-mail
1
1
Radio
4
3
SMS
4
4
Inventories
4
4
38
29
Others
(AGCM Report issued on 31 march 2010)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM Fines resulting from proceedings
Total
Fines
(Euro)
231
34,925,000
1.Legal Framework
Unfair Commercial
Practices
2.Case Law
Misleading and
Comparative Advertising
6
355,000
3.Conclusions
Misleading Aderertising
(previous legislation)
2
2,000
Failure to comply with
commitments
7
358,000
246
35,640,000
Total
(AGCM Report issued on 31 march 2010)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM Fines resulting from proceedings/ Sectors
Sector
Total
Fines
(Euro)
Telecommunications
60
13,644,000
Banking and Insurance
53
8,171,000
2.Case Law
Foodstaff, Pharmaceutical
and Transport
40
5,427,000
3.Conclusions
Energy and Industry
41
4,776,000
Services
45
3,264,000
239
35,282,000
1.Legal Framework
Total
(AGCM Report issued on 31 march 2010)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM’s view on Unfair Commercial Practices
Telecommunications
Mobile internet services (shock billings)
1.Legal Framework
2.Case Law
3.Conclusions
The Agcm dealt with mobile internet services that lead to
abnormally expensive bills for consumers and related advertising
campaigns. In particular, the above-mentioned campaigns
promoted hi-speed web-surfing, up to a 5 GB monthly download
threshold, for a very low monthly rate.
The Agcm fined the companies under investigation:
a)for providing insufficient information to consumers, with
specific regard to the (very expensive) tariff applicable after
overcoming the 5 GB monthly threshold;
b)for not giving consumers the possibility to monitor their
download traffic in order to stay safely under the 5 GB monthly
threshold or assess their over-the-threshold traffic;
c)for providing insufficient information to consumers about the
areas not covered by the H3G network.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM’s view on Unfair Commercial Practices
Energy
Enel Energia
1.Legal Framework
2.Case Law
Enel Energia, a company of the Enel group operating on the
electricity supply free market, was judged to have adopted unfair
commercial practices:
a)by moving customers from the so-called “protected market” to
the “free market”;
b)by initiating an unsolicited supply of natural gas;
3.Conclusions
The company started unsolicited electricity and gas supplies and
in some cases demanded payment, hindering the exercise of the
right to second thoughts and using aggressive marketing
procedures.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
AGCM’s view on Unfair Commercial Practices
Transport
Meridiana (Sweep 2007)
1.Legal Framework
2.Case Law
3.Conclusions
Agcm fined Meridiana for violating the Consumers’ Code and deemed
unfair
the
company’s
practices
in
the
following
areas:
a)Transparency of fares: On its website, Meridiana included a fuel
surcharge linked to oil prices within the category “airport taxes and
charges”;
b)Insurance Policy: Absent a precise choice by the consumer to refuse
the insurance policy (by un-ticking a box on Meridiana’s website), the
company took for granted his consent;
c)Compensation to Passengers for Flight Delays: The airline did not
comply with the current regulations and did not offer consumers adequate
information;
d)The “HI-FLY 2007/2009” Loyalty Program: Consumers wishing to join
the loyalty program had to purchase a “co-branded” credit card: therefore,
some consumers were not admitted to the program, while some costs and
charges were not clearly explained by the airline.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Courts’ view on Unfair Commercial Practices
1.Legal Framework
2.Case Law
3.Conclusions
“it is deemed to be an unfair commercial
practice for denigration, the circumstance
that a market operator communicates that
a claim against a competitor has been
awarded before a Court” (Court of Venice,
21 march 2007)
“it is deemed to be unfair the practice of a
market operator who communicates true
circumstances or facts regarding the
competitor in order to discredit him”
(Court of Eboli, 2 May 2004)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Courts’ view on Unfair Commercial Practices
1.Legal Framework
2.Case Law
3.Conclusions
“it is deemed to be unfair for exaggeration,
the commercial practice of a market
operator who promotes its products as
the sole and unique with specific
characteristics or qualities” (Court of
Appeal of Florence, 15 January 2002)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Courts’ view on Unfair Commercial Practices
1.Legal Framework
2.Case Law
3.Conclusions
“it is unfair the comparison of a product to
others, to the extent that this practice is
deemed to be used in order to draw unfair
advantage from the notoriety of others”
(Court of Turin, 11 February 2008; Court
of Bologna, 1 March 2008)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Courts’ view on Unfair Commercial Practices
1.Legal Framework
2.Case Law
3.Conclusions
“The use of a packaging similar to the one
used by a competitor determines a case
of unfair commercial practice as it is
aimed to obtain and undue advantage
from the notoriety of trademarks of
competitors” (Court of Bologna, 18 May
2005)
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
①
1.Legal Framework
②
2.Case Law
3.Conclusions
③
④
The Consumer Protection System countering Unfair
Commercial Practices represents a good way for EU
Member States to promote competition and enhance
the smooth functioning of the market.
The enforcement of the new Unfair Commercial
Practices rules entails a widening of the national
competition authorities’ powers that may allow
consumers and businesses to receive more effective
protection.
Companies might take advantage of the new
provisions by using the black-lists of specifically
prohibited practices as benchmark to self-assess their
day-to-day commercial conduct.
There are important elements of convergence
between the enforcement of competition rules and
consumer protection, due to the fact that commercial
practices are an important COMPETITION TOOL.
Combating Illegal Publicity/Propaganda Behaviour of
Businesses
Thank you
Guido Foglia
[email protected]
OUR VITAL STATISTICS
“The outfit’s
strengths lie in
the lawyers’
accuracy and
attention to detail
and the fact that
a partner always
follows the case
closely”
Chambers
Europe
Independent Italian law firm
More than 300 professionals of
which 43 Partners, 49 Salary
Partners, 13 Of Counsel
Five offices in Italy and abroad
Practice in all main areas of law