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REPORT     
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24 June 1997
PE 222.182/fin. A4-0219/97
on the Commission Green Paper on Commercial Communications in the Internal Market (COM(96)0192 - C4-0365/96)
Draftsmen of opinion: ("Hughes" Procedure)
Mr Klaus-Heiner Lehne, Committee on the Environment, Public Health and Consumer Protection
Mr Aldo Arroni, Committee on Culture, Youth, Education and the Media
Mr Julio Añoveros Trías de Bes, Committee on Legal Affairs and Citizen's Rights
Committee on Economic and Monetary Affairs and Industrial Policy
Rapporteur: Mrs Jessica Larive
By letter of 13 May 1996 the Commission forwarded its Green Paper on Commercial Communications in the Internal Market (COM(96)0192 - C4-0365/96) to Parliament.
 A MOTION FOR A RESOLUTION
 B EXPLANATORY STATEMENT
 OPINION
 OPINION
 OPINION

 By letter of 13 May 1996 the Commission forwarded its Green Paper on Commercial Communications in the Internal Market (COM(96)0192 - C4-0365/96) to Parliament.

At the sitting of 19 July 1997 the President of Parliament announced that he had referred the document to the Committee on Economic and Monetary Affairs and Industrial Policy as the committee responsible, and to the Committee on the Environment, Public Health and Consumer Protection, the Committee on Culture, Youth, Education and the Media and the Committee on Legal Affairs and Citizen's Rights for their opinions.

At its meeting of 9 September 1996 the Committee on Economic and Monetary Affairs and Industrial Policy appointed Mrs Jessica Larive rapporteur.

The report was drawn up in accordance with the Hughes Procedure between the Committee on Economic and Monetary Affairs and Industrial Policy and the committees asked for their opinion.

The Committee on Economic and Monetary Affairs and Industrial Policy considered the Commission Green Paper on Commercial Communications in the Internal Market and the draft report at its meetings of 10 October 1996, 20 November 1996, 17 December 1996, 4 February 1997, 21 April and 9 June 1997.

At the last meeting it adopted the draft legislative resolution by 45 votes to 1, with 1 abstention.

The following took part in the vote: von Wogau, chairman; Katiforis and Secchi, vice-chairmen; Larive, rapporteur; Berès, Billingham, Boogerd-Quaak (for Kestelijn-Sierens), de Brémond d'Ars, Carlsson, Caudron, Christodoulou, Cox, de Rose, Donnelly, Ettl (for Fayot), Ewing, Fourçans, Funk (for Friedrich), García-Margallo, Gasoliba i Böhm, Harrison, Hendrick, Herman, Hoppenstedt, Ilaskivi, Konrad, Kuckelkorn, Kuhne (for Glante), Langen, Lindqvist (for Watson).Lulling, Mather, Murphy, Peijs, Pérez Royo, Porto (for Areitio Toledo), Randzio-Plath, Rapkay, Read, Riis-Jørgensen, Stevens (for Rübig), Thyssen, Torres Marques, Whitehead (for Miller pursuant to Rule138(2)), Wibe, Willockx (for Metten) and Wolf (forHautala).

The opinions of the Committee on the Environment, Public Health and Consumer Protection, the Committee on Culture, Youth, Education and the Media and the Committee on Legal Affairs and Citizen's Rightsare attached.

The report was tabled on 24 June 1997.

The deadline for tabling amendments will be indicated in the draft agenda for the relevant part-session.


 A MOTION FOR A RESOLUTION

Resolution on the Commission Green Paper on Commercial Communications in the Internal Market (COM(96)0192 - C4-0365/96)

The European Parliament,

- having regard to the Commission Green Paper on Commercial Communications in the Internal Market (COM(96)0192 - C4-0365/96),

- having regard to articles 59, 56, 30 and 36 of the EC Treaty,

- having regard to articles 128 (culture), 129 (public health) and 129A (consumer protection), 130 (industrial policy) and 85 (competition policy) of the EC Treaty,

- having regard to the 8 cases dealt with by the Court of Justice since 1973 in the field of commercial communications,

- having regard to the Television without Frontiers Directive 89/552/EEC and its articles 10-21 (television and sponsorship) and more specifically advertising of tobacco (article 13), pharmaceuticals (article 14), alcohol (article 15), children"s advertising (article 16) and protection of minors (article 22)(1),

- having regard to the Misleading Advertising Directive 84/450/EEC(2); the Directive on Advertising for medicinal products for human use 92/28/EEC(3); the Data Protection Directive 95/46/EEC(4); the Directive on Labelling, Presentation and Advertising for Foodstuffs for sale to the ultimate consumer 79/112/EEC(5); the Directive on co-ordination of laws, regulations and administrative provisions relating to direct life insurance 92/96/EEC(6); the Commission recommendation on codes of practice for the protection of consumers in respect of contracts negotiated at a distance (distance selling) 92/295/EEC(7),

- having regard to its resolution of 20 February 1997 on the Commission Communication on Priorities for Consumer Policy 1996-1998(8), in particular recitals 5 (distance selling and comparative advertising); 6, 8 and 9 (implementation of European law); 10 (redress); 11 (time-frame); 22 (information); 23 (transparency),

- having regard to the Commission Green Paper on the Protection of Minors and human dignity in audio-visual and information services (COM(96)0483),

- having regard to its resolution of 24 April 1997 on the Commission Communication on illegal and harmful content on the Internet(9),

- having regard to the extensive consultation performed by the Commission in preparation of this Green Paper and the underlying studies,

- having regard to the possibility of every European citizen to use the services of the ombudsman and the Committee on Petitions of the European Parliament to seek redress,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy and the opinions of the Committee on the Environment, Public Health and Consumer Protection, the Committee on Culture, Youth, Education and the Media and the Committee on Legal Affairs and Citizens" Rights (A4-0219/97),

A. Whereas it is essential that the European Commission should be required to apply its right of initiative to fulfil the obligation of the Treaty as laid down in article 63,

B. Whereas the persons and businesses providing commercial communications services should benefit from Article 59 of the Treaty since such services are remunerated and may be provided across frontiers, while taking due account of cultural differences,

C. Whereas the Internal Market for commercial communications is not presently functioning in a satisfactory manner, as 99% of those consulted providing commercial communication services identified potential trade barriers linked to disparity in national regulations and cultural differences,

D. Whereas commercial communications should not be regarded merely as a sector of economic activity. Clear and transparent guidelines at European level would make a significant contribution to making the internal market a reality,

E. Whereas there is a need to promote the development of cross-border commercial communication services; as these are coupled to the free circulation of goods, the job creation potential is enormous and the fundamental role that these services will play in the on-going development of electronic commerce,

F. Whereas Articles F and K2 of the EU Treaty refer explicitly to the European Convention for the Protection of Human Rights and Fundamental Freedoms; the tenth article (1 and 2) stipulates that "everyone has the right to freedom of expression",

G. Whereas the principle of subsidiarity should also apply in this sphere of activity, which means that measures may be enforced by self-regulation, but Community-wide regulation is sometimes necessary,

H. Whereas application of the principle of proportionality is essential to ensure that Community law is applied effectively,

I. Whereas the Commission rightly states that restrictions imposed at a national or European level need to be justified in terms of their proportionality and in view of the general interest objectives recognised in the Treaty protecting consumers, culture, health and other public interests,

J. Whereas in the area of commercial communications some liberal professions deserve to be subject to a special regulation governed by their own ethical code, whilst complying strictly with the provisions of the Treaty, in view of their participation in duties of public interest, the particular relationship they maintain with their clients or the fact they are unable to guarantee the results desired,

K. Whereas the infringement procedure under Article 169 in the area of commercial communications, as in other areas, does not currently work in an efficient and satisfactory way, although it could be an efficient and effective instrument for enforcing the harmonization of law,

L. Whereas significant benefits to consumers are already apparent in terms of choice and quality of goods and services now available in Member States from all over the European Union, although the single market still has a long way to go before completion,

M. Whereas it is of importance that consumers" access to justice and redress is ensured in cross-border communications; whereas there is still considerable work to be done to ensure that consumers have not only access to justice across borders, but access to proper, effective cross-border complaints procedures both nationally and throughout the European Union,

N. Whereas Treaty objectives as set out, inter alia, in Articles 100A and 129A require that the EU attains a high level of consumer protection, and that consumers and/or their representatives should be consulted and fully involved in all steps towards achieving the objectives of the Treaty; both the Commission directorate responsible for consumer protection and consumer organisations should play an integral role in the overall appraisal of policy-making in the commercial communications field,

O. Whereas the encouragement of cultural diversity is both essential and an aim of the Treaty, differences between national rules and regulations in commercial communication should not be allowed to persist as obstacles to the single market; however, where those differences are deep-rooted in national tradition, the Treaty provides the means for ensuring that they are both genuine and proportionate,

1. Welcomes the Green Paper, but considers that the Commission"s proposals must be reinforced in order to reach the intended goal;

2. Calls for effective application of the rules laid down by the Treaty and derived law in the field of the internal market, so as to ensure that public interests are protected;

3. Calls for more effective application of the principle of country of origin, to ensure that frontiers and barriers between the Member States are abolished and that the national authorities" protection of public interests is not confined entirely within their frontiers;

4. Believes that there is a need to delimit the scope of what is understood by commercial communications and the concept of service provider;

5. Asks the Commission to publish in its announced follow-up communication the definition of a proportionality assessment methodology, which includes strict time limits for decisions, is based on existing jurisprudence and explains how it is applicable to existing legislation at national and Community level, self-regulatory codes and new legislative proposals;

6. Supports the approach proposed in the Green Paper, of assessing whether the restrictive measures are proportionate to their intended purpose, as this will make it possible to ensure that the area without frontiers operates effectively and provide better protection for objectives of public interest, such as consumer protection, public health protection, the protection of intellectual and commercial property and the protection of privacy;

7. Calls for the establishment of a tripartite committee consisting equally of Member States' representatives, industry representatives and consumer organisations and asks to be consulted on its rules of procedure;

8. Requests the Commission to ensure that the proceedings of the Committee on the proposed proportionality assessment be fully transparent and further to ensure that the Committee consults thoroughly with the complaining parties, meets regularly, operates according to strict time limits, publishes its results and considers all complaints lodged with the Commission; the Committee shall report to the European Parliament;

9. Believes that the proportionality assessment procedure should under no circumstances entail an extension of the normal deadline by which the Commission takes its decisions;

10. Calls on the commercial communications sector to ensure that its national and European selfregulatory procedures are publicly available, published and transparent, and that individual consumers can complain easily, without cost to themselves and in expectation of a prompt and satisfactory response; encourages the industries involved to include in the self-regulatory codes the principle of country of origin, mutual recognition, proportionality and to introduce minimum standards of consumer protection;

11. Considers that international codes such as those laid down by the International Chamber of Commerce should be studied by the Commission when, having applied the proportionality principle, there is a clear need for a harmonizing proposal; and that the ICC should finalize its Guidelines on Interactive Marketing Communications;

12. Calls on the Commission, consumer organizations and industry to consider strengthening already existing self-regulatory complaints procedures, such as that of EASA;

14. Calls on consumer organisations to make full use of all enforcement mechanisms to protect the interests of consumers in the single market, including the infringement procedure, the forthcoming committee on proportionality and all national bodies responsible for overseeing commercial communication;

15. Calls on the Commission to present in the follow-up Communication a full inventory of existing barriers to free circulation of the commercial communications services;

16. Asks the Commission to undertake a comprehensive study of the economic relevance of the commercial communications sector to the single market;

17. Stresses the need for a data bank with Community and national legislation in the area of commercial communications and for the immediate creation of a single European contact point which should be established in the context of a clearly defined framework of information and policy-making that incorporates all of the interests involved; the contact point should, as a first proirity, supply the European Parliament with a full overview and analysis of existing self-regulatory codes in the Member States; in order to ensure a high level of consumer protection that respects cultural diversity this framework should be developed at an interservice level;

18. Calls on the Commission to consider a SLIM analysis (Simpler Legislation in the Internal Market) of the sector;

19. Calls on the Commission to study the obstacles to multi-level marketing, brand diversification, packaging and sponsoring in the European Union and to assess the need for legislation to guarantee the single market in these growing forms of commercial communication;

20. Approves the Commission's proposal that sponsorship should be considered one of the priority areas in the analysis of the sectors referred to in the Green Paper and requests the Commission to reflect in particular (1) on the differing regulations applying to sponsorship of an event and the televising thereof, (2) the fiscal implications (for example differences in deductibility of the costs of patronage), (3) a strategy for encouraging and recognising patronage and sponsorship for projects on a European scale and (4) ways to improve information on the financing options that enable cultural initiatives to be developed in the Member States;

21. Underlines the need to safeguard the development of Internet, electronic commerce and related new media services, to create consumer confidence in the new services and to consider similar utilization of the commercial communication legal and self-regulatory instruments;

22. Calls on the Commission to come forward with a more detailed assessment of the effects of commercial communications on children, on the impact of privacy and on the mechanisms through which consumer cross-border complaints should be addressed; and furthermore calls on the Commission to bring forward specific measures to protect children in relation to all types of commercial communications, in particular with regard to the new technologies; national legislation on the protection of children should not be weakened;

23. Is of the opinion that the Commission is not making full use of its existing powers; insists that articles 63 and 169 are applied systematically;

24. Is of the opinion that the Council should consider expanding the application of the proposed Directive on Regulatory Transparency Mechanism on new services to cover also Commercial Communications;

25. Requests that the Commission reports back to the European Parliament on possible initiatives to improve the Treaty infringement procedures to ensure that these are transparent, operate to strict time limits and offer proper provision for appeal with equal access to all interest parties;

26. Asks for the introduction of a Council decision to enable possible infringement proceedings to be heard in the Court of First Instance(10);

27. Believes that, when drawing up its communication on commercial communications, the Commission should examine the principles deriving from secondary legislation in this sector and also take into account the following points:

(a) Any future rules governing the commercial communications sector must take into account the legal aspects of the use of various types of communications in the Union by firms from third countries and the use of commercial communications by Union firms in third countries, as these aspects are of enormous importance in the information society;

(b) Future Community legislation on commercial communications must take account of the legal and administrative solutions which have already been used to regulate this sector;

28. Calls on the Consumer Affairs Council to hold a discussion on the consumer issues arising out of this Green Paper;

29. Calls on the Commission to consider the question of restrictions on commercial communications of food products in its Green Paper on the general principles of food law in the EU (COM(97)0176);

30. Deems necessary that allocations are made in the budget to implement the proportionality methodology and to ensure effective application of the infringement procedure; adequate resources must be accorded in terms of funding and manpower;

31. Instructs its President to forward this resolution to the Council and to the Commission, as well as the industries and consumer organisations concerned.

(1) OJ L 298, 17.10.1989, p.23.
(2)OJ L 250, 19.9.1984, p.17.
(3)OJ L 113, 30.4.1992, p.13.
(4)OJ L 281, 23.11.1995, p.31.
(5)OJ L 33, 8.2.1979, p.1.
(6)OJ L 360, 9.12.1992, p.1.
(7)OJ L 156, 10.6.1992, p.21.
(8)OJ C 85, 17.3.97, p.101-133.
(9)see minutes of 24 April 1997, A4-0098/97
(10)This is in line with Parliament's Resolution on the role of the Court of Justice, see OJ C 268, 4.10.1993, p. 156


 B EXPLANATORY STATEMENT

1. Introduction

In November 1992 the Commission decided to review its policy in the field of Commercial Communications, the first stage of which is the publication of its findings in the form of a Green Paper. The Green Paper sets out proposals as to the way forward and seeks the views of the European Parliament (EP), the Member States (MS) and interested parties on the proposals. The objective of the proposals is two-fold: first, to ensure that any future initiative undertaken at Community level is coherent with other Community policies and actions and, second, to develop an approach which will help the Commission to evaluate possible problems of compatibility of national measures with Community law.

2. Definition of 'commercial communications' in the Green Paper

Commercial communications are 'all forms of communication seeking to promote the products, services or image of a company or organisation to final consumers and/or distributors'. The term includes all forms of advertising, direct marketing, sales promotion, public relations and sponsorship. It also covers the use of commercial communication services by all goods and service industries as well as public and semipublic bodies, charities and political organisations.

3. Principal conclusions and proposals in the Green Paper

The analyses and surveys preceding the drafting of the Green Paper led the Commission to draw five principal conclusions: (i)Cross-border commercial communication services in the internal market (IM) are growing; (ii)Differing national regulations can create barriers for companies wanting to offer cross border goods and services, and prevent the establishment of a single market in commercial communications;(iii)These divergences could give rise to barriers in the future as more and new commercial communications services circulate more frequently across borders;(iv)This risk is accentuated with the development of new services associated with the information society;(iv)Finally, the availability of information on regulatory measures and market development is becoming increasingly important at national and Community level. To solve these problems, the Commission proposes the following: (1)Recourse to a method of evaluating the proportionality of current and future regulatory action; (2)The establishment of a committee for co-ordination and information at European level to consider the activities that fall within the scope of commercial communications.

4. Consumers

The Treaty objectives set out, inter alia, in Art.129a and 100a require that the EU attains a high level of consumer protection, and that consumers should be fully involved in all steps towards achieving it. The increasing volume of trans-border transactions between the final consumer and commercial businesses means that a correct balance should be sought between the free flow of information and consumer protection. A coherent approach to policy-making is in the interests of consumers who require an appropriate blend of legislation and self-regulation which reflects the cultural differences of the MS. Your rapporteur is concerned that the Green Paper fails to adequately deal with important issues of concern to consumers and would urge the Commission to come forward with a more detailed assessment of the effects of commercial communications on consumers. Although it correctly identifies the key role played by users, suppliers and carriers, it ignores the role of consumers and other target groups in the information chain. Your rapporteur would urge all those responsible to expedite the adoption, in particular, of the proposed Directive on injunctions for the protection of consumers interests and to secure mechanisms through which consumer cross-border complaints could be addressed.

5. Legal Considerations

The Treaty's provisions concerning the IM require that the principles of freedom to provide services and of the free circulation of goods also apply to commercial communication services and the goods they promote. The Commission should therefore apply without delay the requirements of Art.63 which states that the Commission shall present a proposal to draw up a general programme for the abolition of existing restrictions on freedom to provide services within the Community. The programme shall set out general conditions and stages by which each type of service is to be liberalised. Commercial communication is currently governed by an enormous variety of regulations at both national and European level. Without claiming to be exhaustive, there are the Treaty, secondary legislation, case law and jurisprudence (formal sources) and self-regulation (the informal source). Furthermore, national legislation must be considered.

6. The Treaty

The Treaty sets out as a key objective "free movement of goods, persons, services and capital" (Art.3c). The Treaty basis therefore of any proposal intended to regulate commercial communications is Art.100a of the Treaty, with due regard to Art.59, 56, 30 and 36. This means that, in accordance with the proportionality principle used to assess the compatibility with the Treaty of a potential measure of equivalent effect, an individualised study of the rules and the application thereof has to be carried out. This task is currently the responsibility of the European Court of Justice (ECJ). In certain circumstances, commercial communication activities could benefit from the application of Art. 30 of the EC Treaty relating to the free movement of goods. Other policy objectives established by the Treaty can influence commercial communications, i.e. culture (Art.128), public health (Art.129), consumer protection (Art.129a), industrial policy (Art.130) and competition policy (Art.85).

7. Case Law

In case law, the following principles may be deduced: (a)that commercial communications affect the free movement of goods; obstacles to that movement can only be accepted if they affect all the agents operating within the market of a given Member State and if they apply to the commercial communications of national products and products from other MS on an equal basis, both in legal texts and in actual practice; (b)that commercial communications is a service and therefore the principle of monitoring by the Member State of origin applies. The principle of the freedom to provide services means that a Member State cannot restrict services from another Member State unless the restrictions fulfil certain specific conditions. Otherwise, the services fall under the legislation of the Member State in which the service provider is established: the "country-of-origin" principle. The ECJ specified conditions under which authorities can depart from this principle, describing two kinds of measures: (1)Discriminatory measures, based on nationality, are compatible with Community law only if they can be brought within the scope of the exemptions contained in Art.56, namely: public policy, public security or public health, and if they comply with the principle of proportionality; (2)Non-discriminatory measures arise where a host country imposes additional rules on service providers established in another MS, and whose services satisfy the legal requirements of that state. These restrictions can be justified under Art.59 only by overriding reasons relating to the public interest and if the requirements embodied in the restrictive measure are not already satisfied by the rules imposed by the Member State of origin, the so-called principle of "mutual recognition". The measures must also be proportionate to the pursued objectives. The ECJ has specified: "it is settled case law that requirements imposed on the providers of services must be appropriate to ensure achievement of the intended aim and must not go beyond that which is necessary in order to achieve that objective".

8. Secondary Legislation

The principles derived from secondary legislation may inspire the Commission. Your rapporteur has mentioned a number of these in the resolution, but the list is by no means complete. This bewilders and confuses consumers and commercial communication providers. However, all these existing Community legislative regulations and new initiatives on the table, should provide useful building blocks towards the creation of a consolidate commercial communications sector.

9. Self-regulatory codes

Every MS has a self-regulatory system, involving codes of practice developed by national industry, often in consultation with other interested parties (e.g. consumers). All codes in all MS comply with the International Chamber of Commerce (ICC) Code on Advertising Practice. The EP has recognised these benefits of self regulation in e.g. Directive 91/321/EEC on infant formulae and follow-on formulae in which the International Code on the marketing of such products is mentioned. In some countries the system needs more industry support, general promotion and increased transparency to consumers. The European Advertising Standards Alliance (EASA) which co-ordinates national self-regulatory bodies across Europe was created in 1992. Issues affecting advertising in the IM are dealt with through co-operation rather than detailed legislation, by applying effective self-regulation, promoting high standards, co-ordinating the handling of cross-border complaints, providing information and safeguarding consumer interests. Any consumer can complain to a self-regulatory body by sending a letter/fax stating where and when the consumer saw an advertisement and the nature of the complaint. It is forwarded to the competent EASA member in the country of origin in which the advertisement appeared. It is adjudicated according to the rules and the principles of the competent EASA member and the consumer is then informed of the outcome. The system respects the national cultural, economic, legal and social context as well as the principle of subsidiarity. The handling of complaints by consumers is free of charge. In cross-border cases it may be necessary to issue a Euro Ad Alert. This alerts interested parties to advertisers' activities. It is sent to EASA members, the advertising profession, consumer organisations and the European Commission.

10. Jurisprudence

The Court of Justice has so far ruled on only eight relevant cases. While these cases are clearly important, it is equally clear that the barriers do not arise from the need for further clarifying legislation. The barriers to the IM can more clearly be found in the preparatory phase of Art. 169 and the total lack of time limits and political involvement which can be detected.

11. National legislation

The Commission carried out a comparative review of MS' legislation. It outlines in the Green Paper a number of potential barriers to the IM. The evidence suggests that different regulatory traditions and the different types and level of restriction are the reason for these barriers. This situation is likely to deteriorate with the development of the Information Society. The vast majority of these potential barriers appear to stem from non-discriminatory restrictions and need to be assessed in terms of their proportionality with their underlying objectives. An example of an area where the existing legislation differs vastly is price advertising (discounts, undercutting, etc.). In Germany, cash discounts to "end" consumers are limited to 3%, and the advertising of special offers is also restricted. Austria, Belgium and Italy also have relatively strict regimes, while France has limited restrictions. The Scandinavian countries, with a tradition linked to consumer protection, tend to encourage such advertising as does the UK. Many respondents to the Commission's survey felt that the measures were so disparate that they effectively prevent any form of trans-border campaign using this technique. Other such areas are telephone/mail advertising, promotional gifts and price competitions. The European Union should require compulsory prior notification for all national draft legislation.

12. Simpler Legislation in the Internal Market

One of the main objectives of the Green Paper is to ensure that any further initiatives undertaken at Community level are coherent with other Community policies and actions. Given the mass of regulatory instruments which currently operate in the same market, it is easy to see why consumers and user of commercial communication services are bewildered. There is a whole range of Treaty references, case law, secondary legislation, jurisprudence and national self-regulatory codes. This cultural diversity is admirable as long as it does not hamper consumers and users need for transparent and minimum standards. A SLIM analysis would therefore be appropriate to obtain an applicable overview of the different instruments in use and to identify areas for legislative and self-regulatory simplification.

13. The infringement procedure

The Green Paper confirms that intervention at Community level should rely on the efficient application of existing Community law. Despite the 1992 programme, the IM is not yet complete. MS and national authorities, often through unfamiliarity, do not automatically apply Community legislation and mutual recognition, and are creating barriers to the IM through non-discriminatory measures. The compatibility of these measures with IM law depends principally on the nature of the objectives they pursue and on the proportionality of the restrictions. Proportionality can currently be checked through the infringement procedure of the Treaty (Art.169). However, there are significant problems with this procedure. The system is overloaded: for a complainant (whether consumer, trade unionist, business or environmentalist) it is a very long process (1-2 years for the Commission to issue a reasoned opinion, and then 2-3 years for a case to come to the ECJ). The system is secret: most of the process is behind closed doors and the complainants do not have the right to know what is being said or decided by whom. There is no appeal; a decision made either by the Commission or by the ECJ is final. Moreover, it is deeply susceptible to political interference. This is no way to run an enforcement procedure. However, under the Commission's proposals, the Art. 169 infringement procedure remains the key legal enforcement mechanism. In its forthcoming Communication, the Commission should bind itself to delivering its assessment within 3 months of receiving a complaint; ensuring transparency of all proceedings; finding means of equal access to appeal for all interested parties.

14. Further measures

1. To speed up subsequent proceedings, the Council should adopt a Council decision to enable possible infringement proceedings to be heard in the Court of First Instance. This is in line with the EP's Resolution on the role of the ECJ, which says "the Court of First Instance should have jurisdiction in all actions to establish a Member State's failure to fulfil its obligations under the Treaty". The jurisdiction of the Court of First Instance has already been extended several times using the procedure set out in Art.168a.

2. The proposed Transparency Directive will amend Directive 83/189 which requires MS to notify proposed amendments or new technical regulations and standards. It requires a three month "stand-still" period to allow all to consider the new measures. The proposed Directive would require the same advance notice and "stand still" provision for proposed national legislation affecting services provided "at a distance, by electronic means, and on the individual requests of the service receiver" (new information services). This proposal's scope should be extended to include all commercial communications measures.

3. The Commission and the Council should also consider the possibilities of amendments to Art. 169 under which it issues "reasoned Opinions". If it were allowed to issue "reasoned Decisions", as it can in competition cases, a Decision would be "binding in its entirety upon those to whom it is addressed" (Art.189). This would avoid the necessity for the Commission to bring enforcement proceedings against MS in the ECJ, and the burden of proof would fall on the Member State which could of course appeal the Decision to the ECJ under Art. 173. The amendment of Art. 169 would (a)have to ensure that the Commission Decision was addressed both to the complainant and to the Member State in question, and (b)impose an obligation on the Commission to deliver a Decision within a fixed time period. In this way, an action for failure to act could be brought under Art. 170 against the Commission and complainants would be able to appeal directly as opposed to the circuitous, costly and time consuming route under Art. 173. It would dramatically cut the time taken for an action and provide access to appeal for all affected parties. Hence, such a change would lead to the more efficient application of the IM law and thus would benefit European citizens, consumers and businesses. Such powers should only be given to the Commission on condition that it sets out clearly its proposed methodology for assessing proportionality for commercial communications. This should then serve as a model for a generally applied proportionality assessment methodology.

15. The methodology for assessing proportionality

It is of vital importance that an agreed evaluation of proportionality is established. The five criteria proposed in the Green Paper assessment methodology seem appropriate. Two general interest criteria should be added: the protection of public health and furthermore commercial communications should not contain any incitement to hatred on grounds of sex, religion and nationality. It is essential for all interested parties and the credibility of the methodology that it works to strict time limits, the assessment is based on existing jurisprudence and explains how it is applicable to existing legislation at national and Community level, self-regulatory codes and new legislative proposals and that it is applied on a case by case basis. In order to make the methodology work, and to establish the Committee as well as its rules of procedure, the Commission must prepare a Communication where these issues are clearly outlined. The proportionality methodology should be used in two different procedures. The first one concerns cases within the infringement procedure (Art. 169-procedure) upon an official complaint to the Commission. In that case, the time limit for the Commission to deliver its assessment should be 3 months, counting from the arrival of the complaint to the Commission. The second procedure where the methodology should be used, is upon informal complaints to the Commission made outside the infringement procedure. The Commission can identify a problem area, not necessarily a particular case, company or consumer, and should commit itself to seeking the view of the proposed Committee on the proportionality of the relevant national or European regulations. This methodology should be made mandatory.

16. A Tripartite Committee

Your rapporteur is in favour of setting up a Committee to deal with these issues. The Committee should consist equally of representatives from each Member State, industry representatives and consumer organisations. Your rapporteur is not in favour of the Commission's proposal, since it would simply become another comitology issue, or worse an ad-hoc committee over which Parliament has no control and interested parties have no access. After extensive consultation with all parties involved, your rapporteur sees no need for several committees to deal with different representatives, be they MS, the commercial communication sector or consumer organisations. Therefore, there must be one Committee: a tripartite. The Commission should commit itself in the forthcoming Communication to using the Committee to assess the proportionality of measures after a complaint has been delivered to the Commission outside the infringement procedure. Your rapporteur requests that the Commission proposes rules of procedure for this Committee and that these rules are put to the Parliament. The proceedings of this Committee shall be fully transparent, the names of the members available, the minutes published, strict time limits should apply to the work and the conclusions made public within 1 week. The Committee should be required to consult fully all interested parties. In all, from the day the Commission receives the complaint until the conclusions are made public, the time limit should be set at 6 months. The Committee shall report to the EP and give an assessment of the Committee's work and its recommendations. In it"s conclusions, it will be noted if a majority of MS agree with the Commission's assessment statement. In this way the aim of the Commission's Green Paper, namely to make the IM for commercial communications work, should be attained.

17. Additional Research

The Commission should be required to make a comprehensive study of the economic relevance of commercial communications in order to secure the necessary knowledge upon which to base its initiatives.

18. A contact point and a data bank

The Commission recognises the need for a central contact point to help inquirers identify the responsible Directorate General for specific enquiries, maintain an overview of developments and assist the Commission to formulate and assess new initiatives. The contact point could rely on an on-line contact network which should be supplemented by a data bank of Community and national legislation. This would be open to all interested parties.

19. The new media sector

Since the new media sector generates considerable job opportunities, in particular for SME's, it is of vital importance that the development of Internet, electronic commerce and other related new media services be safeguarded. Hence, in commercial communications, the same legal and self-regulatory principles should apply. This sector is developing at an unprecedented pace and by nature requires a global approach. The key dilemma for the new media sector is the difficulty of establishing the responsibility for accessible material, as this is not always obvious on the Internet. However, if a commercial transaction is being solicited, the identity of those responsible will be clear. Hidden communications are only favoured by those who wish to break the existing law. We should keep in mind that what is illegal off-line, is also illegal online.

20. Definitions and additions

A number of forms of commercial communications have not been included in the definition used by the Commission. This should be rectified to ensure a coherent overall approach. The Commission should also study the obstacles in sponsorship, multi-level marketing, brand diversification and packaging and should apply the proportionality assessment methodology to regulations in these areas.

Multi-level network marketing is a fast growing form of commercial communications. It depends primarily upon direct communication between distributors and consumers and provides a flexible response to the employment problems. It is being hampered from operating across borders by discrepancies in national laws and regulations. Multi-level marketing can be defined as the person to person sales of products or services through independent distributors who form a co-ordinated commercial organisation in which each distributor obtains remuneration from his or her own sales to end-consumers.

Brand diversification is the use of a brand name, trade mark, emblem or other distinctive feature, well established for a certain product or service, for another, totally unrelated product or service category with the aim of business or product diversification. It is the commercial exploitation of the unique goodwill and asset value of an established brand name for business diversification purposes. Examples of successful brand diversification are e.g. Virgin (records, air travel, computers, etc.) and Harley Davidson (motorcycles, fashion clothing, footwear and toiletries). Controls or restrictions on the marketing of a particular product (e.g. tobacco, alcohol, medicines) should apply only to that product, not to the brand name. Applying the same restrictions to totally unrelated products which carry the same brand would contravene the principle of proportionality.

Packaging increasingly contains commercial communication. It is part of the marketing mix for companies. Therefore, packaging can no longer simply be regarded as part of the in-house manufacturing process. It is in interest of both consumers and companies that packaging is also subject to commercial communications regulations.

At least four factors justify particular attention to sponsorship: it has become one of the main sources of financing events at local and international level associated with sport, the arts, the environment, humanitarian aid, scientific projects and education; cultural, social, sporting and youth sponsor activities are recognised as an integral part of companies' strategies; it enables the business community to demonstrate its involvement in and for society; sport and its positive effects on young people already benefit from sponsorship; sponsorship of cultural events are not yet so advanced, growth would obviously benefit the cultural world. To stimulate the development of sponsorship, a clear and accurate definition of the distinction between patronage, sponsorship and philanthropy is essential.

21. Budget and personnel

In order to run the Committee, the contact point and data base, the Commission and Council should make the necessary allocations to ensure proper implementation of the proportionality methodology and the infringement procedure. Without according adequate resources, both in terms of funding and manpower, the Commission services responsible will not be able to function.

4 March 1997


 OPINION

(Rule 147)

for the Committee on Economic and Monetary Affairs and Industrial Policy

on the Green Paper on Commercial Communications in the Internal Market report

(COM(96)0192 - C4-0365/96) (report by Mrs Larive)

Committee on the Environment, Public Health and Consumer Protection

Draftsman: Mr Lehne

PROCEDURE

At its meeting of 17 October 1996 the Committee on the Environment, Public Health and Consumer Protection appointed Mr Lehne draftsman.

It considered the draft opinion at its meeting of 26 February 1997.

At the latter meeting it adopted the following conclusions unanimously.

The following were present for the vote: Collins, chairman ; Dybkjaer, vice-chairman ; De Coene (deputizing for Mrs van Putten), Lehne, draftsman; Baldi (deputizing for Mr d'Aboville), Blokland, Bowe, Eisma, Florenz, Garosci (deputizing for Mr Viceconte), Hardstaff (deputizing for Mr Needle), Hulthén, Kestelijn-Sierens (deputizing for Mr Olsson), Jensen K., Kuhn, Marinucci, Pollack, Roth-Behrendt, Tamino and White.

GENERAL COMMENTS

1. First of all the title of the Green Paper is misleading: 'Commercial Communications in the Internal Market' gives the impression that the document is concerned primarily with economic matters, which is not in fact the case. The main purpose of the Green Paper is to harmonize or liberalize advertising law - a major part of competition law - in the individual Member States . This naturally affects consumer protection in particular. The Commission is therefore urged to consider whether it can give the Green Paper a more appropriate title as soon as possible when follow-up measures are taken.

2. The Green Paper fails to deal with issues of concern to consumers, such as the effects of commercial communications on children.

There is insufficient attention paid in the Green Paper to the importance of regulation for the protection of consumers' interests.

It is regrettable that the Green Paper does not frame a coherent approach to commercial communications, particularly those which do not respect established national standards.

The central analysis in the Green Paper should be reviewed, based on the need to combined market opening objectives with the maintenance and improvement of standards, and on the need to achieve a balance between home country and host country control.

The central analysis in the Green Paper should be reviewed, based on the need to combine market opening objectives with the maintenance and improvement of standards, and on the need to achieve a balance between home country and host country control.

3. Apart from this, the Committee specifically welcomes the Commission's intention in this Green Paper to pave the way for a consistent policy in the field of advertising law in future. This initiative stands in stark contrast to the piecemeal measures taken by the Commission so far which have not been informed by any coherent underlying approach, but have merely harmonised individual aspects of competition law, for instance: the directive on misleading advertising, the directive on foodstuffs intended for the final consumer and advertising for these foodstuffs, the directive on comparative advertising and a series of other directives which merely addressed individual aspects.

4. The increasing volume of transborder transactions between the final consumer and commercial businesses means that a correct balance should be sought between the free flow of information on the one hand and consumer protection on the other hand. Within Europe consumers should be confronted with a maximum degree of harmonization in the field of advertising. It is not reasonable that a product should be banned in one place within the internal borders, but not in another. In this connection the attempt to liberalize advertising law standards that are prejudicial to consumers should also be welcomed, such as the ban on discounts or the ban on free gifts.

However, in harmonizing advertising law great care must be taken to ensure that the subsidiarity principle is not infringed. In particular, national provisions that protect consumers, establish their rights or promote their interests must not be challenged as barriers to the Single Market. This also means that only advertising provisions that regularly affect the consumer in the internal market should be harmonized. Excluded would be, for example, special rules governing the professions whose effect on consumers in particular is local and which are subject to the particular privileges, rights and duties derived from their professional status. A liberalization and harmonization in this context would be contrary to consumer protection. This is also in line with the position so far adopted by the European Parliament which decided at the second reading on the directive on comparative advertising to exclude the professions from the scope of the provisions.

CONCLUSIONS

1. The Committee calls on the Commission to bring forward specific measures on children and commercial communications (especially in view of the new technologies), to establish a coherent framework to regulate unfair marketing practices on-line, to concentrate its efforts on effective enforcement of legislation, particularly in cross-border cases, and to encourage effective cross-border complaints systems.

2. The Committee is concerned that the Green Paper fails to deal with important issues of concern to consumers; in particular, the need to protect the most vulnerable, such as children, has increased significantly over the last few years and continues to grow unrestricted at a rapid pace, also as a result of the growth of new technologies. The Committee therefore calls on the Commission to bring forward as a matter of urgency a proposal for framework legislation to protect children in relation to all types of commercial communications covering all products and all methods of communication.

3. The Committee calls on the Commission to come forward with a more detailed assessment of the effects of commercial communications on children, on the impact of privacy and on the mechanisms through which consumer cross-border complaints could be addressed.

4. The Committee on the Environment, Public Health and Consumer Protection notes that the emphasis in the Green Paper is more on removing barriers to the suppliers of commercial communications than on the interests of the recipients of information, the consumers.

5. The Committee considers that the method proposed by the Commission to assess the proportionality of measures is limited in scope. Although it correctly identifies the key role played by users, suppliers and carriers it omits the role of consumers and other target groups in the information chain. As consumers play such a central role in the 'commercial communications chain' which links the user to the final receiver or consumer of the commercial communication, this omission is a cause for concern. The Committee therefore calls on the Commission to reconsider its assessments methodology so that, at the very least, it incorporates an analysis of the consumer impact of a proposed measure.

6. Given that Article 100a of the Treaty clearly states that internal market measures must 'take as a base a high level of protection' for consumers, the Committee considers that both the Commission directorate responsible for consumer protection and consumer organizations should play an integral role in the overall appraisal of policy-making in the commercial communications field.

7. The Committee recognizes that a coherent approach to policy-making is in the interests of consumers. It would therefore welcome better coordination of information at European level. However, it is concerned that action arising out of the Green Paper on Commercial Communications should fit into a broader framework of action relating to the information society. The Committee therefore calls on the Commission to set out a clear framework for policy-making in the information society field clearly establishing this Green Paper's role in it.

8. As regards the proposal to set up a central contact point to coordinate information, the committee considers that this idea is a valuable one. However, it calls on the Commission to ensure that the contact point is established in the context of a clearly defined framework of information and policymaking in the information society field that incorporates all of the interests involved. In order to ensure a high level of consumer protection that respects cultural diversity this framework should be developed at an interservice level bringing together all of the interests involved.

9. The Committee on the Environment, Public Health and Consumer Protection supports the Commission's efforts to achieve coherence in commercial communications on the internal market, but believes that the basic principle should be to retain protective rules based on national cultural differences.

10. In the interests of cultural diversity and in recognition of the different regulatory/self-regulatory mix in the Member States, the Committee considers that the Commission should not seek to undermine the level of protection offered in any Member State in particular as regards:

- commercial communications to children,

- restrictions on commercial communications for reasons related to societal values,

- commercial communications for pharmaceuticals,

- commercial communications for financial services,

- commercial communications for alcoholic beverages,

- commercial communications for tobacco products.

The Committee also believes that Articles 59 and 169 of the Treaty already provide adequate channels for dealing with national regulations which pose serious barriers to trade.

11. As the Commission's own research demonstrates, the main obstacles to a single European market in commercial communications flow from cultural differences rather than differences in regulatory structures.

The Committee calls on the Commission to assess due proportionality with an approach based on:

(a) the need to combine market opening objectives with the maintenance and improvement of standards;

(b) the need to achieve a balance between home country and host country control;

(c) the need for an appropriate blend of legislation and self-regulation which reflects the cultural differences of the Member States.

12. Calls on the Commission to consider the question of restrictions on commercial communications of food products in its forthcoming Green Paper on food policy.

13. Advocates restrictive advertising legislation at Community level on the use of products such as tobacco which have the same adverse effect on public health in all Member States regardless of national traditions; hopes, therefore, for speedy adoption by the Council of the proposal for a directive concerning a ban on advertising for tobacco products;

14. Calls on the Commission to consider the inclusion of packaging in the future definition of commercial communications.

15. The Committee calls on the Commission to develop an overall framework for regulating unfair marketing practices.

16. Considers, as regards the consultative committee proposed in the Green Paper, that such a committee could provide a valuable role in facilitating information exchange.

If there is to be a committee it should consist not only of Member States' representatives, accompanied by self-regulatory bodies, but should include consumer representation. The committee, if established, should be transparent in structure, publish minutes and agendas of its meetings and report on a regular basis to the European Parliament.

17. The Committee calls on the Consumer Affairs Council to hold a discussion on the consumer issues arising out of this Green Paper.

19. Finally, the Committee believes that any future work should not undermine existing standards or their development in the Member States.

3 March 1997


 OPINION

(Rule 147)

for the Committee on Economic and Monetary Affairs and Industrial Policy

on commercial communications in the internal market - Green Paper from the Commission (COM(96)0192

- C4-0365/96) (report by Mrs Larive)

Committee on Culture, Youth, Education and the Media

Draftsman: Mr Aldo Arroni

PROCEDURE

At its meeting of 9 October 1996 the Committee on Culture, Youth, Education and the Media appointed Mr Aldo Arroni draftsman.

It considered the draft opinion at its meetings of 28 October 1996, 5 February 1997 and 26 and 27 February 1997.

At the last meeting it adopted the following conclusions by 15 votes to 12.

The following were present for the vote: Pex, chairman; Ahlqvist and Hawliceck, vice-chairmen; Arroni, rapporteur; Añoveros Trias de Bes, Augias, Barzanti (for De Coene), Evans, Ewing (for Leperre-Verrier), Florio, (for Poisson pursuant to Rules 138(2)), Kokkola (for Kerr), Kuhne, Galeote Quecedo (for Banotti), Gröner, Guinebertière, Günther (for Escudero), Heinisch, Larive (for Bossi), Manisco, Monfils, Mouskouri, Pack, Perry, Ryynänen, Santini (for Ligabue pursuant to Rule 138(2)), Sanz Fernandez, Stenzel (for Banotti) and Tongue.

I. INTRODUCTION

Commission Green Paper on commercial communications in the internal market

(a) Objective:

In November 1992 the Commission decided to review its future policy approach in the field of commercial communications and to publish the findings of this review in the form of a Green Paper. The aim of this Green Paper is to seek the views of the European Parliament, the Member States and interested circles on proposals which seek, first, to ensure that any future initiative taken at Community level is coherent with other Community policies or actions and, second, to develop an approach which will help the Commission to evaluate possible problems of the compatibility of certain national measures with Community law.

(b) Principal conclusions and proposals in the Green Paper

The analyses and surveys preceding the drafting of the Green Paper led the Commission to draw the following principal conclusions:

(i) Given the growth of cross-border communication services in the internal market, differing national regulations could create obstacles and prevent the establishment of a single market in commercial communications.

(ii) Furthermore, the risk of such regulatory differences giving rise to barriers may be accentuated with the advent of new services associated with the information society.

(iii) Finally, the availability of information on regulatory measures and market developments is becoming increasingly important at national and Community level.

To solve these problems, the Commission therefore proposes the following:

(i) Recourse to a method of evaluating the proportionality of any future regulatory action.

(ii) The establishment of a committee for coordination and information at European level to consider the activities that fall within the scope of commercial communications.

(c) Definition of 'commercial communications' in the Green Paper:

Commercial communications can be defined as 'all forms of communication seeking to promote the products, services or image of a company or organization to final consumers and/or distributors'. The term includes all forms of advertising, direct marketing, sales promotion, public relations and sponsorship.

II. MOTIVES

Of all the various commercial communication activities, particular attention should be paid to the role of sponsorship in its widest sense. At least four factors justify this claim:

* Sponsorship has become one of the main sources of financing events at local and international level associated with sport, the arts, the environment, humanitarian and scientific projects and education.

* The sponsorship of cultural, social, sporting and youth activities is recognized as an integral part of companies' commercial communication strategies.

* Sponsorship also enables the business community to demonstrate its involvement in and for society.

* Sport and its positive effects on young people already benefit from sponsorship; in contrast, sponsorship of cultural activities is not yet so advanced: it could grow far more, with obvious benefits for the cultural world, especially at this time of declining public investment in this sector.

To enable the Community to take appropriate action to stimulate the development of sponsorship, particularly of culture and sport, a clear and more accurate definition of the distinction between patronage, sponsorship and philanthropy is essential.

- Patronage:

'Financial, material or moral assistance provided by an organization or an individual for an undertaking, principally in the cultural, social or scientific field. The assistance provided is of no direct benefit to the patron's activities, but adds to his reputation and honour through the resulting fame' (Source: Dictionnaire méthodologique du marketing by Guy Serraf, Editions d'Organisations, Paris, 1994). The second part of this definition may also be applied to activities of a philanthropic nature. They differ from patronage, however, in that they do not give rise to communication and do not therefore come under the heading of commercial communications.

- Sponsorship:

'Any communication by virtue of which a sponsor undertakes contractually, to the mutual benefit of himself and the recipient, to give support, financial or otherwise, with a view to his image, identity, brands, products or services being associated in a favourable light with the event, activity, organization or individual he assists' (Source: Code de la Chambre de Commerce Internationale sur le Parrainage, 1992).

However, these definitions are rather academic, since the differences between these forms of assistance essentially lie in the sponsor's objectives and motives, which are based on the aim of communication and the target to be achieved by the company.

In other words, sponsorship is, in general terms, any kind of support given by a company to an activity that is independent or not directly associated with its activities. A sponsor's or patron's activities differ from philanthropic activities in that the company naturally has a vested interest in undertaking them: it lends its support with a view to gaining some advantage or something in return.

Expenditure in Europe on sponsorship/patronage rights in sport and culture totalled ECU 200 m in 1980 and gradually increased to ECU 820 m in 1985, ECU 2 bn in 1990 and ECU 3.3 bn in 1994.

While total sponsorship/patronage of cultural activities has also risen, it currently amounts to only about ECU 500 m. Over 35% of the total goes to musical events, 25% to supporting museums and the plastic arts and the remainder to the theatre (10%) and the preservation of the cultural heritage.

Support for the activities of humanitarian organizations (philanthropy), such as the International Red Cross, Médecins Sans Frontières and the Restaurants du Coeur, in the form of financial or material assistance provided by private companies is largely anonymous.

It should be emphasized that the advantages to sponsors and patrons are joined by:

* advantages to the public:

At a time when public funds are shrinking, sponsorship and patronage make it possible to finance the organization of events or the broadcasting of TV programmes of which the public would be deprived if this form of support did not exist. It is also interesting to note that total revenue from sponsorship/patronage and the sale of television rights to the industrialized countries' television companies enables some of the more important cultural and sports events (including the Olympic Games) to be broadcast to the rest of the world more cheaply.

* advantages to the organizers of events:

The organizers of events, such as sports and cultural organizations, including sports clubs or federations, museums and theatres, are quite obviously in greater need of sponsorship/patronage than ever, since they cannot do without it if they are to survive, develop their activities, organize events or make their activities financially accessible to the widest potential public. This last factor is of the utmost importance if young people are to have access to a range of activities in their free time.

The Olympic Games are a good example of the advantages gained from sponsorship/patronage: they could not take place in their present form without the financial contribution from sponsorship. The organization and accommodation costs of delegations from poor countries are, for example, paid by the Olympic Committee out of sponsorship revenue.

In the cultural field, sponsorship/patronage is often indispensable if events (exhibitions, music festivals) are to be held, especially in the regions and smaller towns.

* advantages to third parties:

Sponsored events (especially if televised or covered by the press) have a major influence on employment and incomes in quite a number of occupations or activities, including those of commentators, technicians, journalists, printers, hoteliers, restaurant owners, tradesmen, travel organizers, etc. These advantages or consequences for employment and incomes are of considerable importance for the occupations concerned and should not therefore be underestimated or ignored, as is often the case.

* advantages to young people:

Sponsorship/patronage is particularly important for the organization of activities for young people: thanks to contributions from sponsors or patrons, many communities, particularly the less privileged, are able to help integrate their young people by channelling their energies and developing their interest in cultural and sporting activities. Sponsorship is essential, for example, in the establishment and continued existence of football clubs, thus contributing not only to the integration of young people but also to the creation and availability of various kinds of employment.

III. CONCLUSIONS

The Committee on Culture, Youth, Education and the Media calls on the Committee on Economic and Monetary Affairs and Industrial Policy, as the committee responsible, to incorporate the following amendments in its motion for a resolution:

(Amendment 1)

New paragraph

Shares the Commission's view that regulatory differences among the Member States may result in the emergence of new barriers following the growth of cross-border commercial communication services and the development of the information society;

endorses the Commission's approach with regard to the method of evaluating proportionality and emphasizes the need to accelerate the Community procedures for taking action where the free movement of services and thus of commercial communications is obstructed and to make these procedures more independent.

(Amendment 2)

New paragraph

Asks the Commission to ensure that any initiative designed to promote the establishment of a single market in the commercial communications field takes account of the need to protect consumers, especially minors;

(Amendment 3)

New paragraph

Approves the Commission's proposal that sponsorship should be considered one of the priority areas in the analysis of the sectors referred to in the Green Paper; this must of course be in the areas authorized under the television-without-frontiers directive; proposes that the Commission should also take account in its analysis of patronage, which represents a form of commercial communication.

(Amendment 4)

New paragraph

Proposes that the Commission should carry out a more detailed study of sponsorship and patronage in close cooperation with cultural, sports and philanthropic organizations in order to analyse the impact of such activities within the European Union; considers that the importance of such a study resides in the prospect of more resources, whether they be public, private or a combination of both, eventually becoming available to help finance cultural, sporting, philanthropic and charitable activities;

(Amendment 5)

New paragraph

Endorses the view that the complementary role of sponsorship should on no account be neglected, but emphasizes that basic responsibility with respect to culture and its financing rests with the Member States' authorities;

(Amendment 6)

New paragraph

Emphasizes the need to improve information on the financing options that enable cultural initiatives to be developed in the Member States; the usefulness of promoting exchanges of information by developing innovative initiatives that seek to enable optimum use to be made of resources for cultural activities (structural, economic and human) in the Member States; the usefulness of promoting meetings of representatives of the cultural sector and sponsors/patrons with a view to developing coherent initiatives, therefore proposes that the Commission devise a strategy for encouraging and recognizing patronage and sponsorship for projects on a European scale.

(Amendment 7)

New paragraph

Emphasizes that the differences of approach among the Member States with regard to sponsorship/patronage relate not only to different regulations but also to fiscal implications (for example deductibility of the costs of patronage, which is currently possible under various measures in the Member States);

(Amendment 8)

New paragraph

Emphasizes the importance of sponsorship in the development of cultural networks and synergies between museums and other artistic activities in order, among other things, to promote the enrichment of collections and the loan or exchange of major works for exhibitions; invites the Commission to put forward specific proposals in this sector and requests the Commission to take account of this aspect.

(Amendment 9)

New paragraph

Emphasizes the positive role of sponsorship in improving public access to the cultural heritage and to other cultural activities, thanks notably to the development of advanced information and communications technologies.

(Amendment 10)

New paragraph

Emphasizes the complementary relationship which exists between sponsorship of an event and sponsorship of the televising thereof; for this reason, requests the Commission to reflect on the differing regulations which currently govern these two sets of activities.

23 January 1997


 OPINION

(Rule 147)

for the Committee on Economic and Monetary Affairs and Industrial Policy

on the Commission Green Paper on commercial communications in the internal market (COM(96)0192 - C4-0365/96) (report by Mrs Larive)

Committee on Legal Affairs and Citizens' Rights

Draftsman: Julio Añoveros Trías de Bes

PROCEDURE

At its meeting of 23 July 1996 the Committee on Legal Affairs and Citizens' Rights appointed Mr Julio Añoveros Trías de Bes draftsman.

It considered the draft opinion at its meetings of 19 November 1996 and 22 January 1997.

At the latter meeting it adopted the conclusions as a whole by 8 votes to 1, with 0 abstention.

The following were present for the vote: De Clercq, chairman; Añoveros Trías de Bes, draftsman; Alber, Berger, Cox, Gebhardt, Habsburg-Lothringen (for Malangré), Oddy, Thors and Zimmerman (for Cot).

I. INTRODUCTION

In November 1992 the Commission decided to review its policy in the field of commercial communications. The purpose of this review - the first stage of which is the Green Paper - is two-fold: to ensure that any future initiatives undertaken in this area are consistent and to develop an approach which will help the Commission to evaluate the compatibility of certain national measures with Community law.

The Commission believes that commercial communications may be affected by national laws which, on occasion, hinder the establishment of a single market and the protection of consumers.

I.1. The definition of commercial communications and service providers

Although the Green Paper is a general document we wish to emphasize that, when regulating commercial communications, we need to take into account the fact that, amongst those who may be described as service providers, there may be certain liberal professions which, because of their involvement in tasks which serve the public interest, because of the special relationship which they maintain with their clients or because they are unable to guarantee the desired result, merit specific rules which, in many cases, will be determined by their own professional code of ethics.

II. PRELIMINARY CONSIDERATIONS

We should like to draw attention to the following:

The legal basis of any proposal intended to regulate commercial communications is Article 100a of the Treaty, with due regard to Articles 30 and 36. This means that, in accordance with the proportionality principle used to assess the compatibility with the Treaty of a potential measure of equivalent effect, an individualized study of the rules and the application thereof has to be carried out. This task is the responsibility of the Court of Justice.

III. ACTION TO BE TAKEN

III. I. The need for a general, comprehensive approach

1. Instrument

We believe that an interpretative communication from the Commission on this subject may clarify the existing rules and help to prevent future obstacles to free movement. By means of such a document the Commission could explain the principles applicable to the sector in question and develop the procedures which the Member States would be required upon to apply or to incorporate into their national laws at a later stage.

2. Structure of the communication

We propose that such a communication should consist of three parts: the first part would define the scope of what 'commercial communication' and 'service provider' are understood to mean in accordance with the method described in the December 1993 Commission interpretative communication concerning the free movement of services across frontiers (OJ C 334, p.3).

The second part would define the general, subsidiary arrangements applicable to service providers who are not covered by specific arrangements. These would be based on case law and on specific prescriptive texts. The third part could consider ways of preventing the emergence of obstacles to free movement as a result of advertising regulations.

3. Considerations regarding the substance

Without claiming to be exhaustive we may say that there are two main formal sources (case law and secondary legislation) which may be drawn upon, for the purpose of determining the general principles of commercial communications and one informal source (self-regulation).

3.1. Case law. The following principles may be deduced: (a) if we take the view that advertising affects the free movement of goods, obstacles to that movement can only be accepted if they affect all the agents operating within the market of a given Member State and if they apply to the marketing of national products and products from other Member States on an equal basis, both in legal texts and in actual practice; (b) if we regard advertising as a service we come up against the principle of monitoring by the Member State of origin. Restrictions on the free movement of services are of two types: discriminatory measures which will always be analyzed from the point of view of Article 56 of the EC Treaty and non-discriminatory measures which will only be acceptable if they are based on essential considerations relating to the public interest or if the requirements contained in the restrictive measures have not yet been satisfied by the rules imposed on service providers in the Member State of origin. The concept of public interest includes the protection of workers, consumers, intellectual property and competition, heritage conservation, dissemination of the artistic heritage, etc.

3.2. Principles derived from secondary legislation. Here we should like to draw attention to the following directives which may inspire the Commission: Directive 84/450/EEC on misleading advertising; Directive 79/112/EEC on the advertising of foodstuffs for sale to the ultimate consumer; Directive 92/96 on life assurance; Directive 89/646/EEC on the coordination of laws relating to the taking up and pursuit of the business of credit institutions, and Directive 92/28 on the advertising of pharmaceutical products for human use.

A basic directive relating to the regulation of commercial communications is Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data. The following points should be taken into consideration: (a) any sectoral regulation of commercial communications should take into account the legal aspects of advertising by third-country companies within the Union and by Union companies in third countries; (b) the above-mentioned directive regulates in reasonable detail the advertising of data processing and the registers which are supplemented by Chapter III on judicial remedies, liability and sanctions, all of which should be included in any future regulations; (c) codes of practice are an effective means both of maintaining a high ethical level within the profession and of ensuring proper protection for consumers. It is for this reason that we are suggesting that the Commission should consider the inclusion of a European code of practice in its future communication. Lastly, the directive deals with supervisory authorities, a principle which could also be applied in the commercial communications sector.

Directive 89/552/EEC on the pursuit of television broadcasting activities regulates television advertising and commercial communications. In view of the fact that many such communications are conveyed through television, the following principles need to be highlighted: the directive allows a wide legislative margin to enable the Member States to regulate the sector by laying down stricter or more detailed rules (thereby observing the subsidiarity principle); it must be possible for all commercial communications to be identified, for which reason sponsorship must be regulated and various restrictions on content must be considered: such communications must not prejudice respect for human dignity, discriminate on the grounds of sex or nationality, be offensive to religious or political beliefs or encourage behaviour which is prejudicial to health, safety or the environment.

As regards the advertising of products such as tobacco, those responsible for drawing up Community legislation are considering a series of principles which may also be applied to general rules on commercial communications. We should like to draw particular attention to, inter alia, the principle whereby brand names are not used indirectly in order to advertise products which may be damaging to health or the principle of authorizing advertising within establishments in which such products are sold.

In Community law there are specific rules relating to labelling, from which the following considerations may be drawn: in Directive 91/321/EEC on infant formulae and follow-on formulae the International Code on the marketing of such products is mentioned. The Commission and the interested sectors in general could promote a similar initiative in respect of the commercial communications sector.

3.3 Procedural and supervisory matters. The proportionality principle, being casuistic, may give rise to a degree of legal uncertainty which the Commission has tried to counter by proposing an evaluation method.This proposal could be incorporated into the interpretative communication, although the method should be used to elaborate various aspects which have still not been clarified in the proposed Green Paper:

(a) A decision will have to be taken on when to apply the proposed method and what the legal implications of this would be. One question to be considered is whether or not the application of the method by the Commission should be regarded as a preliminary step prior to invoking Article 169 of the EC Treaty.

(b) The implementation of this method of analysis should not produce a legal lacuna as regards the monitoring of secondary legislation by the Commission, nor contravene the subsidiarity principle or prevent the development of self-regulation. A question which needs to be addressed is that of deciding whether the Commission (on the basis of Article 155 of the EC Treaty) or the judges of the individual Member States are the competent authority responsible for identifying proportionality.

(c) The proposed system of analysis should be supplemented by coordination and information at European level, one of the essential functions of which should be prevention. Although we believe that a committee could be an excellent means of achieving this end, we need to be more specific as regards the type of committee to be set up. We also consider it essential for representatives of the liberal professions to belong to the committee and for all the members thereof to have convocative powers.

Conclusions

The Committee on Legal Affairs and Citizens' Rights calls on the Committee on Economic and Monetary Affairs and Industrial Policy to incorporate the following conclusions into its report:

1. The legal basis governing commercial communications is Article 100a, which entails the application of Articles 59, 56, 30 and 36 of the Treaty.

2. Considers that commercial communications should not be regarded merely as a sector of economic activity. Clear and transparent guidelines at European level would make a significant contribution to making the internal market a reality.

3. Believes that there is a need to delimit the scope of what is understood by commercial communications and the concept of service provider.

4. Believes that certain liberal professions, because of their involvement in tasks which serve the public interest, because of the special relationship which they maintain with their clients or because they are unable to guarantee the desired result, merit specific rules, determined by their own professional code of ethics, in the area of commercial communications.

5. Believes that the 'country or origin' principle cannot be the general basis for action.

6. Considers that, to avoid the legal uncertainty resulting from the casuistic application of the proportionality principle, secondary legislation might be required to remove some of the identified obstacles pursuant to Articles 30 and 59 of the EC Treaty and to guarantee a high level of protection for consumers, young people and other public interests.

7. Considers that a suitable vehicle for such guidelines could be a communication adopted with a view to the completion of the internal market, which could have a multi-disciplinary approach, since commercial communications affect the Commission's industrial policy, competition policy, public sector policy, audio-visual policy, cultural policy and in particular consumer protection and health. An assessment should be made of the implications of the principle of subsidiarity and the abovementioned areas of action with regard to national legislation.

8. Considers that, although the proposed method for evaluating the proportionality principle is a sound one, the legal scope thereof needs to be determined and it must be combined with an assessment of other policies as well. This method must not serve as an excuse for the Commission not to apply Article 155 of the Treaty effectively and, in the event of an infringement of Community law, not to bring those responsible before the Court of Justice.

9. Believes that, when drawing up its communication on commercial communications, the Commission should examine the principles deriving from secondary legislation in this sector and also take into account the following points:

(a) Any future rules governing the commercial communications sector must take into account the legal aspects of the use of various types of communications in the Union by firms from third countries and the use of commercial communications by Union firms in third countries, as these aspects are of enormous importance in the information society;

(b) Future Community legislation on commercial communications must take account of the legal and administrative solutions which have already been used to regulate this sector;

10. The Commission must establish the legal nature and scope of the committee which it proposes to set up to ensure proper implementation of the proportionality principle. However, we believe it essential for this committee to include representatives of the commercial communications sector, consumers and the European Parliament.

11. Believes that the proportionality assessment procedure should under no circumstances entail an extension of the normal deadline by which the Commission takes its decisions.

Last updated: 20 April 1999Legal notice