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EPC news - November 2001

The monthly update on EU media issues

Market abuse hearing

Financial services journalists beware!

The current draft of the EU directive on Insider Trading and Market Manipulation would criminalise journalists where they (a) inadvertently report misleading information (e.g. by quoting a company CEO) or (b) make an innocent mistake (e.g. by misattributing a quotation that moves markets, even where a correction is immediately published). The Commission is steadfastly refusing to introduce an exemption for journalists into the text.

The European Publishers Council (EPC) shares the view of journalists' associations that journalists should indeed continue to be subject to legislation where they knowingly disseminate information with the purpose of misleading markets. However, the EPC would like to see wording added to the text to ensure that journalists are only subject to this law if it can be proven that they knowingly misled or misinformed.

EPC Chairman Francesco Balsemao said: "Transparency of markets will suffer as a result of this legislation. Criminalising innocent mistakes would slow the speed and quality of information flow from news providers to markets, as journalists might be compelled to exclude information rather than risk criminal sanctions. "We are calling on the Commission to introduce a "purpose test" element into the section of the Directive covering information dissemination to avoid the negative impact of the current draft is to. An example of such a test exists in the UK Financial Service's Authority's new Code of Market Conduct whereby a person would only be subject to market abuse sanctions for disseminating misleading information when (a) he knows, or could reasonably be expected to know, that the information disseminated is false or misleading; and (b) he disseminates the information in order to create a false or misleading impression. This is a key defence to protect the legitimate activities of journalists carrying out their professional duties that should be replicated in the EU legislation.

German journalists win exemption

In Germany the Ministry of trade and commerce tabled a proposal on market abuse similar to the one now proposed by the European Commission but the article referring to journalists was deleted due to fierce lobbying by journalists' organisations and in particular by the press council.

Electronic commerce

How the cookies are crumbling

MEPS are set to vote at the November Plenary on whether or not to outlaw "cookies": the technical device used on the internet to speed up and simplify use for the consumer and to monitor success by advertisers.

Dutch MEP Mr van Velzen has labelled "cookies" a spy device and therefore wants to restrict if not ban them from the internet.

The media industry is arguing hard that the impact on both consumers and on ecommerce would be dramatic.

All you ever wanted to know about cookies

Online advertisers use cookies for the following purposes:

to estimate the reach and frequency of online ads. Reach and frequency are the fundamental measurements of all advertising which are used for selling e.g. TV and print media ads. These measurements are becoming increasingly important in making the Internet a more widely accepted part of conventional media planning and buying. Without these all you have is impressions with no idea how many people have seen them and whether they are being seen by 1 per user or 20 per user.
to identify the source of an online lead or sale. If a person clicks on an ad and hits the advertiser's page, a cookie can track them there and make a record. The data is not personalised and goes no further than that, but its fundamental to measuring the success of a campaign. Without it, advertisers cannot answer the basic question 'how many sales resulted from this ad' in the way that they can e.g. with newspaper coupon reply.
to cap ads. Flash ads, pop-ups and other formats have the potential to annoy users. For this reason good advertisers and publishers prefer to 'cap' these ads so that they appear only once for every user. This can only be done using a "cookie". Capping is also commercially valuable for some advertisers because it prevents wasting ad media on users who have already displayed disinterest by shutting down a previous instance of the ad.
the most widely talked about use of "cookies" by ad servers is for targeting ads. In fact this is much rarer than many people suppose. Here technical solutions are provided by the web designers for some sites which use their software and are subscriber-based (users give their target criteria when they login). Sites are not allowed by the designers to share targeting information. Designers use this as a marketing tool: "buy our software because we respect user and site privacy".

However, the key point with targeting is that the commercial logic for targeting is weak and so it not widespread.

to protect users and ensure they are genuine visitors to a site and not somebody else using their password
to authenticate and speed up a user's identification and ecommerce transactions
to recognise preferences for all types of website and search engine: for example remembering user names and passwords

Internet regulation

Rome II leaked draft appears

A new draft of the regulation on applicable law otherwise known as Rome II has now surfaced. This version states that country of origin rules in existing community law will remain in place but all other areas should be governed by the basic principle of country of damage. This means that electronic publications would be subject to the law of where that publication is registered but this would not apply to off-line publications.

The directive also states defamation cases would relate to the country of damage. The draft seems to be unclear and it is at present subject to a battle between those countries who see it as an ideal way to reverse the eCommerce directive and those who wish to cement it. It is still hoped the Parliament will hold a hearing for interested parties before the draft is released.

Advertising

Draft green paper on Consumer Protection (duty to trade fairly)

The DG SANCO draft 'Green Paper on Consumer Protection' (previously known as 'General Duty to Trade Fairly') was adopted on 2 October. The purpose of the Green Paper is to launch an extensive public consultation on the direction of EU consumer protection. The EPC fears that the current draft directive, which would effect the majority of advertising, marketing and after sales contractual relationships, would undermine existing systems of self-regulation.

The Commission currently favours the "general duty" option but intends to organise a hearing for interested parties and consultation of national authorities. It is feared that this option would be open to 15 different definitions of what is and what is not fair trading practice.

For more information on any of the following issues, contact Heidi Lambert Communications Tel: +44 1245 476 265.

Internet regulation
Market abuse
Tobacco advertising
Children's advertising
Jurisdiction and applicable law
Duty to trade fairly
Sales promotion

Contacts

Angela Mills, Director of EPC: Tel: +32 2 231 1299 (Brussels) or +44 1865 310 732 (UK) angela.mills@epceurope.org.

Heidi Lambert Communications: Tel: +44 1245 476 265 heidilambert@hlcltd.demon.co.uk.