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EPC news - February / March 2005

The monthly update on EU media issues

EPC presents 2005 wish list essential for a healthy, competitive, innovative and independent European media market

EPC issues high on Commission and Presidency agendas

Advertising

Self regulation

Threat to country of origin principle undermines Internal Market Services Directive

EPC presents 2005 wish list essential for a healthy, competitive, innovative and independent European media market

Over the coming months, the EPC is briefing the President and European Commissioners with the following specific requests on their approach to issues affecting the media sector:

Advertising:

• Oppose Commissioner Kyprianou’s proposal to ban advertising of junk food to children.
• Only ever base statutory intervention on the principles of country of origin control to reduce the regulatory burden on businesses.
• Review current advertising bans or restrictions on certain categories to bring Europe in line with US and Asian competitors.
• Use the current review of the TV Without Frontiers Directive to promote the most liberal regime for European media to improve their competitiveness.

Copyright:

• Bring European content producers into line with US counterparts and new media such as Internet Service Providers, by introducing statutory employment-related copyright in the EU.

Media Concentration:

• Dismiss any proposals to introduce EU-wide media concentration or ownership criteria that would constrain and restrict the development of European media. Use existing competition rules at national and EU level to manage abuse of dominant positions.
• Leave pluralism a matter for individual Member States.

VAT:

• Don’t tax reading and literacy: Oppose any attempt to force EU level harmonisation of VAT rates on the press, other than zero rates.
• In the context of the current review of the sixth VAT directive, recommend harmonisation of VAT at zero rate across the board for press, magazines and books along with a reduced rate for online equivalents.

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EPC issues high on Commission and Presidency agendas

The next five years promised to be extremely busy for the European Publishers Council with both Commission President Barroso and UK and Luxembourg Presidencies including many EPC priority issues in their work plans.

President Barroso included the following as part of his strategic objectives presented to the European Parliament in January:

• eAccessibility
• Television Without Frontiers
• Unfair Commercial Practices
• Services Directive
• Sales Promotion

Meanwhile the UK and Luxembourg Presidencies are planning progress on copyright, a commitment to the development of a genuine internal market and named the modernisation of VAT as one of their objectives.

Presidency objectives relevant to the EPC:

• Copyright
• Internal Market
• VAT
• Safer Internet
• New generation Media Programmes
• Protection of Minors

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Advertising

Pharmaceuticals and food face possible regulatory changes

It’s up and down in the advertising debate with Commissioner Kyprianou considering banning food advertising targeted at children on the one hand whilst Commissioner Verheugen is supporting the proposal to repeal the ban on pharmaceutical advertising to make all information about medicines and pharmaceutical products more easily available to the public.

The European food and drink industry is already working with the Commission to generate a new proposal for more stringent advertising and labelling rules in response to concerns about the increase in childhood obesity in the EU. Whilst it takes the problem very seriously, the advertising industry argues, however, that a ban on advertising will not cure the problem of obesityThe full Commission is yet to discuss the issue.

The possible repeal of the pharmaceutical ad ban will be welcomed by the Irish apparently. In a recent opinion poll carried out by the Dublin-based Freedom Institute, the majority of Irish citizens believe that all information on medicines should be made available to the public.

In the meantime, alcohol advertising is as usual under the spotlight: the UK’s Royal College of Physicians is calling for a 21h00 watershed for alcohol advertising on television.

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Self regulation

New code of ethics for agency sector

In its continued commitment to promote and preserve self-regulation, the advertising industry has launched a new and binding code of ethics for the agency sector across the EU.

Meanwhile, the European Advertising Standards Authority has been asked to collate statistics to demonstrate the benefits to consumers of self-regulation over statutory regulation both in terms of speed of redress and cost (the self-regulatory complaints procedures are free to consumers).

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Threat to country of origin principle undermines Internal Market Services Directive

Directive held up by country of origin debate

The country of origin debate continues in the context of the Services Directive – a directive designed to facilitate cross-border trade, facilitate the establishment of businesses cross-border; facilitate the provision of services, temporarily or occasionally; facilitate the movement of temporary workers around the EU; and simplify administrative and bureaucratic requirements that currently pose an obstacle to the proper functioning of the single market.

The country of origin principle would allow service providers who operate legally in one Member State to operate temporarily or occasionally in another without being subject to a whole new set of regulations. Debate has so far been largely against country of origin although Commissioner McCreevy is apparently as yet undecided. Meanwhile French President Chirac has openly criticised the Directive and demanded a re-draft.

Surprisingly, German Chancellor Schroeder, despite his original support for the liberalisation of Services, is now joining France in his call for the European Commission to rethink the opening of services to cross-border competition. The German industry association has expressed disappointment about his U-turn which now supports German trade unions.

In the light of the Services debate, a Commission-backed report concludes that liberalisation of the EU’s services industry would create up to 600,000 jobs, raise productivity and reduce prices to consumers. The report also finds that it is the Member States with the larger but highly-regulated services sectors that stand to benefit the most. These include the UK, Belgium, the Netherlands, Finland, Austria and Italy. All Member States, however, stand to benefit from increased employment. This study was based on 275,000 companies in Europe.

The directive will go to the European Parliament for its First Reading in June or July.

Unfair Commercial Practices: Council won’t back down on Country of Origin

As with the Services Directive, the Unfair Commercial Practices directive is designed to improve an apparent lack of consumer confidence in cross-border trading in goods and services by stamping out rogue trading and unfair practices including misleading advertising. The latest text, which cannot now be changed outside the formal Treaty-based revision, forbids the use of advertising as a direct means of inciting children to buy a product or persuade their parents that it should be bought. As with the Unfair Commercial Practices directive, the Council has made it clear that it will not re-introduce the country of origin principle.

Disagreement over Country of Origin is also responsible for the current state mate on the regulation on Sales Promotion.

The Directive was adopted in plenary by the European Parliament this week and is expected to be formally adopted by the Council of Ministers in the coming weeks. However, the Council stated that it could not accept some of the MEPs' resubmitted proposals. In particular, with regard to the 'common market' clause, the Council refused to reintroduce the 'country of origin' principle. This point serves to link this directive on unfair commercial practices to the services directive and the text regulating sales promotions (currently blocked in Council over the 'country of origin' principle).

The directive also outlaws adverts that "encourage children to use 'pester-power' to make adults buy a product and adverts that directly tell children they must buy a product."

In addition, the law lays down general principles, which can be used to assess whether other types of practices should be prohibited as unfair.

For more information click here.

The deputy coordinator in the Committee on Internal Market and Consumer Protection, Joachim Wuermeling (EPP-ED/CSU) spoke of "the right step for the protection of consumer interests." Unfair commercial practices targeted include adverts asking children to put demands on their parents with false offers, advertising in the guise of the provision of information, fake sales, and snow ball systems.

He emphasized that the directive would strike a balance between the need to protect consumers' interests and different trading practices and consumer preferences in Europe. European consumers have to rely on certain minimum standards due to the growing trade between EU Member States, Wuermeling said. This would not mean a forced harmonisation of all consumer practices from Finland to Sicily or Poland to Portugal, he claimed. On Wuermeling’s initiative the European Parliament wants to make sure that the background of every individual case is judged in detail.

For consumers, Wuermeling expects "better legal certainty". While German law, for example, until now only includes a few general clauses, it would in future be complemented by a clear and precise list of outlawed practices. According to Wuermeling, the directive offers the necessary flexibility for innovative business methods. Furthermore, the harmonisation would enable Europe-wide marketing strategies, which used to fail because of 25 different legal orders. Now these will be possible due to the reciprocal recognition of national decisions, Wuermeling said.

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