Article published in European Business Forum
Commercial Communications in the Single Market – A Remaining ‘Non-Europe’ by Bernhard Adriaensens
Ten years on from ‘project 1992’, at a time when most industry sectors and European citizens have long reaped the benefits of a true single market, one sector is still faced with the costs of ‘non-Europe’: the commercial communications industry.
Advertisers still have to deal with 15 different regulatory environments, making it difficult, if not impossible, to talk to customers with a globally consistent message. This is an anomaly and – given that pan-European retail chains are being consolidated and media platforms and services are increasingly converging – unsustainable from a commercial point of view.
There have been attempts to remove the remaining barriers, but so far with limited success. The Commission’s 1996 Green Paper on Commercial Communications recognised that it was nearly impossible to run a pan-European advertising or promotional campaign. In 1998, an EU commercial communications policy was put in place, and with it a Member State Expert Group on Commercial Communications. Hopes were high that, by applying the principals of country of origin, mutual recognition and – where necessary – targeted harmonisation, these national delegates would finally succeed in overcoming existing barriers to the cross-border provision of commercial communications. A ‘proportionality test’ was introduced to avoid national restrictions being maintained for purely protectionist reasons, namely on ‘public policy’ and ‘public interest’ grounds.
But has it worked? The first topic chosen by the national experts was sales promotions, an area that has also seen numerous infringement complaints and procedures at EU level. The cost of ‘non-Europe’ to businesses and consumers is striking and is well documented in the Commission proposal for a Regulation on Sales Promotions, presented after two years of expert talks:
- Freedom of establishment is hindered by Member States restricting certain forms of business models that rely on establishing an economic activity in each Member State
- Companies in a country where a ‘two for the price of one’ offer is prohibited cannot compete on an equal footing in another Member State where such discounts are allowed; and therefore not all consumers can benefit from such promotional offers.
- The communication of a sales promotion is often banned on the grounds of ‘excessive incitements to buy’. How is a Belgian company, if subjected to Italian law when trading in Italy, supposed to interpret whether its coupon offer constitutes an ‘incentive to buy’? How would a French company offering a free gift in Germany determine, if subjected to German law, whether its method of presentation would give rise to an ‘exaggerated’ attraction of potential customers?
- A number of Member States ban premiums on unfair competition grounds
- Member States place limits on the levels of discounts and on the value of free gifts and premiums, as well as on the value of prizes to be won in promotional contests and games of chance. Germany is a well-known culprit.
This legislative proposal is now being adopted under the co-decision procedure. One of the key provisions is that Member States and national regulatory authorities will be prohibited from imposing a requirement for prior authorisation for running a sales promotion. In return, advertisers accept a limited type of harmonised information that has to be included in a sales promotion.
Another example of ‘non-Europe’ is the French government’s prohibition on retailers wishing to advertise on television. The French government wants to beef up the national newspaper market with badly needed revenue from advertising, hence this recourse to protectionist measures. Hopefully the Commission will challenge this law with an infringement procedure.
How do companies cope with such diverging national laws ? Our members tell us that one option is to hire expensive lawyers. Alternatively, if pan-European commercial communication campaigns are difficult to run, they try to supplant a cross-border message into the content of an advertisement instead of pursuing marketing and promotional activities that would force them to comply with national rules in each and every market. A third strategy is to rely solely on brand recognition as opposed to drafting language statements that may fall foul of national laws. Brands are internationally recognisable and often ‘trustmarks’ in their own right.
The Expert Group will look next at sponsorship. Currently only broadcast sponsorship is regulated at European level (via the Broadcasting Directive). All other forms of non-TV sponsorship are also subject to widely diverging national rules. The main areas of contention in the Expert Group are alcohol, children, tobacco, health, liberal professions, pharmaceuticals and product placement.
We understand that the UK, Netherlands, Luxembourg and Ireland are prepared to apply mutual recognition in most sectors. The UK would like to exclude tobacco and firearms. A third group of Member States, led by Germany, is reluctant to apply mutual recognition at all and would like sponsorship rules to be harmonised in the context of an EU Framework Directive on Consumer Protection. The arguments brought forward by the latter group are the same as in the case of sales promotions: namely, that domestic rules on unfair competition will put a Member State at a competitive disadvantage if mutual recognition is applied.
What can be expected of these negotiations ? In the light of these divergences of opinion, the Commission deems it unrealistic for the Expert Group to issue its definitive Opinion in January 2003, as planned. Instead it has published a consultation document setting out differences and commonalities among Member States and seeking comments on the way forward. It is to be hoped that the opening up of markets for sponsorship does not get delayed for purely protectionist reasons.
Politically, it is often the national Ministers in charge of consumer protection who argue that they are better at protecting consumers than their colleagues in the 14 other Member States. However, advertisers in Europe hope that this slow piecemeal approach in the Expert Group can be speeded up for the other categories of commercial communications and that it will not take another 20-30 years to complete the single market.
Services are the key drivers of the new economy. Within the services sector, we are still waiting for cross-border commercial communications to be freed up to yield efficiency and welfare gains for both companies and citizens. Whether we refer to Lisbon Council employment targets or the EU’s aspiration to become the world’s leading knowledge-driven economy, national rules that are designed purely for protectionist reasons and deny consumers and companies a choice of options should be consigned to the dustbin of history.
Bernhard Adriaensens is a Professor in Marketing at the Solvay Business School of the University of Brussels and Managing Director of the World Federation of Advertisers, an organization dedicated to defending and preparing the future of the communication actions of companies. The Federation includes thousand of companies in 46 National Advertiser Associations as well as 30 multinationals from the Top 50 world advertisers.
Article complet à télécharger : European Business Forum (12-1992) : Communicating across Europe
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©-1992 BAA-Consulting – http://www.baa-consulting.com
Bernhard Adriaensens – Consultant et Conférencier International en Marketing et Management
