Committee Reports > List of Committees > Joint > 1978 > Committee on the Secondary Legislation of the European Communities > Report No. 16 - Misleading and Unfair advertising

REPORT

Introduction

1. The Joint Committee has considered the Commission’s proposal for a Council Directive concerning misleading and unfair advertising [R/511/78 (CONSOM 6)]

2. The proposal is based on Article 100 of the EEC Treaty dealing with the approximation of national laws and aims at eliminating discrepancies in the national laws which deal with unfair and misleading advertising. In as much as such advertising is an improper way of influencing the market process the functioning of the common market is considered to be affected. Moreover, the Preliminary Programme for a Consumer Protection and Information policy which was adopted by the Council on 14th April, 1975 provides that appropriate measures be taken against false or misleading advertising.

Bodies Consulted

3. The Joint Committee has consulted the Institute of Advertising Practitioners in Ireland, the Confederation of Irish Industry, the Consumers Association of Ireland and the Irish Housewives Association in regard to the proposed Directive and wishes to acknowledge the considerable assistance it received from them in examining the proposal.

Contents of Proposal

4. Under the Directive “Advertising” means the making of any pronouncement in the course of a trade, business or profession for the purpose of promoting the supply of goods or services. The proposal is directed against advertising which is either (a) misleading or (b) unfair as defined in the draft Directive.

5. “Misleading advertising” means any advertising which is entirely or partially false or which, having regard to its total effect, including its presentation, misleads or is likely to mislead persons addressed or reached thereby, unless it could not reasonably be foreseen that these persons would be reached thereby.

6. “Unfair advertising” mainly includes any advertising which (a) casts discredit on another person by improper reference to his nationality, origin private life or good name; (b) injures or is likely to injure the commercial reputation of another person by false statements or defamatory comments concerning his firm, goods or services; or (c) exploits the trust, credulity or lack of experience of a consumer, or influences or is likely to influence a consumer or the public in general in any other improper manner.

7. Since pronouncements must be made “in the course of carrying on a trade, business or profession for the purpose of promoting the supply of goods and services” neither political advertising nor advertising by private individuals falls within the scope of the Directive. Comparative advertising by independent organisations will be allowed since they do not have the task of promoting the sale of goods or services. Editorial matter in the media will not usually be covered by the Directive either, not being designed to promote the sale of goods or services.

8. The Directive would impose an obligation on Member States to make “quick, effective and inexpensive” facilities for making legal proceedings available to persons affected by misleading or unfair advertising as well as to associations with a legitimate interest in the matter.

9. Where a Member State permits the operation of controls by self-regulatory bodies for the purpose of counteracting misleading or unfair advertising, or recognises such controls, persons or associations having a right to take legal proceedings under the Directive shall also have the right to refer to such bodies.

10. The draft Directive would require Member States to ensure that their courts are empowered to take certain specified actions including the prohibition or cessation of misleading or unfair advertising, the publication of corrective statements and ensuring that the sanctions for infringing the Directive are a sufficient deterrent.

11. The draft Directive would not preclude Member States from taking or maintaining more exacting measures apart from those specified therein if such conform with the EEC Treaty.

Position in Ireland

12. The recently enacted Consumer Information Act, 1978 makes it an offence to apply a false trade description or misleading trade description to goods, or to sell goods to which a false or misleading trade description is applied; it provides that advertisements in newspapers, periodicals or on film, sound or television broadcasts are trade descriptions in respect of which the Act provides penalties if these are false or misleading and extends these provisions to the supply of services in the course of business. The Act provides powers to require compulsory disclosure in advertisements and notices of important facts which might be suppressed or concealed. It has provisions which will help to ensure that “sales” and reduced price offers are genuine. It makes provision for the granting of Court Orders prohibiting the publication of misleading advertisements. The Act also establishes the Office of Director of Consumer Affairs and provides for his functions which include keeping under general review practices or proposed practices in relation to the advertising of and the provision to members of the public of information in relation to, and description of, goods, services, accommodation and facilities, carrying out examinations of any such practice, requesting persons engaging in any such practices likely to be misleading to members of the public to discontinue them, and to institute proceedings in the High Court for Orders requiring persons engaging in any such practices as are likely to be misleading or are misleading, to refrain from such practices.

13. There is, also, in operation a voluntary Code of Advertising Standards for the guidance of advertisers, distributors, advertising agencies, those controlling advertising media and for the suppliers of various advertising media. The Code requires that all advertising should be legal, decent, honest and truthful. Infringements against the Code are dealt with by way of sanctions imposed by the Code of Standarads Committee. The proposed Directive would appear to require the State to ensure that individuals affected and associations with a legitimate interest would have access to this Committee.

Views of the Joint Committee

14. The proposed Directive would oblige Member States to provide persons affected by misleading or unfair advertisements, as defined therein, as well as associations with a legitimate interest with “quick, effective and inexpensive facilities for initiating legal proceedings”. In the Joint Committee’s view this proposal carries with it a number of important implications for Ireland of which the most striking are—

(a)The obligation to ensure that legal proceedings are “inexpensive” as well as “quick” and “effective” would seem to call for a review of the jurisidction and constitution of the Courts.

(b)The proposed control of advertisements by civil actions could hardly exist side by side with the system introduced by the Consumer Information Act, 1978 which envisages the prevention of false or misleading advertisements by persuasion, court orders or criminal prosecutions.

(c)The proposal would give new causes of action to the individual against an advertiser for invasion of privacy (“improper reference to his … private life”) or for exploiting his “trust, credulity or lack of experience” or influencing him “in any other improper manner”.

(d)The inclusion in the definition of “unfair advertising” of improper references to a person’s good name, false statements injuring his commercial reputation and defamatory comments concerning his firm, goods or services should entail an examination of the effect of the proposed Directive on the present law of defamation, slander of goods and injurious or malicious falsehood.

(e)The right of action to be given to “associations with a legitimate interest” could lead to representative actions against advertisers for inter alia promoting social discrimination or influencing the public in any “improper manner”.

15. Whether changes in the law of this kind are desirable should, in the Joint Committee’s view, be decided only by the Houses of the Oireachtas after a full examination of all the implications. The Committee seriously questions whether any of the matters referred to can have an effect one way or the other on the functioning of the common market and consequently it doubts if they are within the competence of the Council to regulate by a Directive made under Article 100 of the EEC Treaty.

16. In the Joint Committee’s view it is far too soon to be contemplating major changes in the system initiated by the Consumer Information Act, 1978. The system should be given a fair trial and the Committee recommends that every effort be made to secure amendment of the proposed Directive so as to ensure that any changes required in that system are kept to a minimum.

(Signed) EOIN RYAN,

Vice-Chairman of the Joint Committee.

28th June, 1978.