The last six months of 2012 have been incredibly rich in introductions of new laws and regulations on advertising activities. The most arguable ones were, undoubtedly, the amendments in the law “On Advertizing” – the major legal act that directly regulates the procedure and the conditions of advertizing goods, works and services – for the purposes of protection of children from the information harmful to their health and development as well as the purpose of limiting the consumption of spirits. This was followed by another equally important event: 8th October 2012 the Plenum of the Supreme Court of Arbitration of the Russian Federation adopted the Resolution containing an official position on the matters of judicial interpretation of the law “On Advertizing”. Finally, by the year end the Government of the Russian Federation ratified the Resolution on governmental supervision in advertizing, having defined the powers of the Federal Antimonopoly Department for carrying out this governmental authority.
What are the advantages and the risks in store for the members of the advertizing business due to the new legislation that avalanched the market in 2012?
Advertizing and Children
The amendments that came in force in July and September 2012 were aimed at limiting the access of children to information that is not intended for them for some reason. These changes are directed to completely free schooling material and teaching aids on majour primary and high (secondary) schooling programmes from advertizing as well as to accomplish the task of protecting the children from information harmful to their health and abusing their development.
1. There was an extension of the list of schooling materials and teaching aids that cannot contain advertizing: apart from study books, school note books and school record books, the prohibition is extended to the teaching aids and any other study materials.
On the other hand, while the previous version of the law prohibited advertizing in the materials for children’s schooling in all primary and high (secondary) schooling, now the list includes only the basic schooling programmes defined in accordance with the national educational standards. It should be noted, however, that the Federal Antimonopoly Department – being authorized to control the advertizing activities – does not recognize the difference between these two notions and therefore, provided a company does not intent to go into the court proceedings with this dispute against the said national authority the difference should not be taken into consideration.
2. For the purposes of protection of children from advertizing harmful to their health and development, the law “On Advertizing” established new requirements for advertizing of information products.
As early as in the end of 2010 the lawmakers eventually managed to finalize the notion of information of pornographic character, but only on 1st September 2012 the prohibition on the use of such information for advertizing purposes was enforced. From now on advertizing materials must not contain naturalistic images or description of human genitals and (or) a sexual intercourse or any other act of a sexual character similar to the sexual intercourse, including such action against an animal.
Information products of such kind as production of mass media, printed and audio and visual products, computer and database software, as well as information spread by means of shows, public events, information and telecommunication networks and networks of mobile communication, must be classified by age groups of recipients of such information depending the its genre, topic, contents, artistic presentation, peculiarities of its perception by children and possible harm to their health and development. Advertizing of information products classified by the above types must include the notice of the category it belongs to.
It is this requirement that, probably, received the loudest feedback from the business people who, in fear of penalties for the breach from the respective authorities, classify and mark with category notifications advertizing of goods, works and services which, even indirectly, have nothing to do with the information products. Thus, notifications "0+", "6+", "12+", "16+" and "18+" have been placed in the advertizing of cars, banking products, foods, schooling, medical and athletic establishments, although the advertisers of such products, works and services are not legally forced to comply with the new law at all.
These are the main facts that would prove the advertiser or advertizing distributor right in case of he claims while carrying out control and observation:
- according to Article of the Federal Law “On Advertizing”, the requirement to notify of the category of the advertized product is referred to information products only;
- the information products, according to the literal reading of the provision of Article 2 of the Federal Law “On protection of children from information harmful to their health and development”, is understood to be products of mass media, printed products, audio and visual products, computer and database software, information spread by means of shows, public events, information and telecommunication networks and networks of mobile communicate, intended for the turnover on the territory of the Russian Federation;
- part 2 Article 1 of the Federal Law “On protection of children from information harmful to their health and development” excludes advertizing from the sphere of legal power of the law, which means that it is impossible to apply the requirements it establishes to the cases not covered by the law “On Advertizing”.
The latter of the above points results in another essential conclusion: in process of advertizing of those information products that are marked with notifications, thus, limiting the access to it of persons under certain age, compliance with these rules is not mandatory. For instance, a commercial marked "18+" shown before a movie that twenty-year-olds plus are allowed to watch, does not breach the law “On Advertizing”.
Moreover, it is necessary to take into consideration other new amendments, including the prohibition to do advertizing that contains information prohibited for sharing to children in the following education and child-related establishments: schooling establishments, medical organizations, rehabilitation and spa centres, athletic and sports organizations, cultural, recreation and entertainment centres, and similar children’s facilities. The prohibition covers the distance of one hundred metres from the borders around such above places. . In other words, firstly, this prohibition does not mean a complete ban on advertizing of information products not allowed to be shares to children in the said places, and secondly, it obliges the advertiser, when advertizing in the above places, to exclude from the textual, audio and visual and other type of information used in the advertizing that may be harmful for the health and development of children. This can be made in the following manner: advertizing materials that are advertized in the children’s establishment will contain images which are not harmful for their health and development. The consumer at the same time is informed of the age limits imposed on the advertized product.
The extension of the list of bans and limits due to protection of the children’s psychic also covered the official number of situations where it is not allowed to show underage children in advertizing and for the purposes thereof. Based on the new amendments, the following situations when it is not allowed to show underage children are the ones urging people to do actions which threaten their life or health, including damages to their own health . The Federal Antimonopoly Department explains, however, that such situations are possibly not the only dangerous ones and therefore, if underage children are participate in advertizing with other dangerous situations, such advertizing shall be considered in breach of Clause 6 Article 6 of the law “On Advertizing” .
New terms and conditions for advertizing of spirits
The procedure and the terms and conditions for advertizing of spirits have been growing more complicated for the last few years.
The Russians got used to the prohibition to use images of children and animals in advertizing of spirits. Recently it was added by the prohibition on the images created via cartoons (animation).
As from 1st January 2013 there came in force a complete ban of placing a spirits advertizing in periodic publications irrespective of the place in this issue (previously it was prohibited to place spirits advertizing on the first and the last pages of newspapers and the first and the last pages and the covers of magazines) . Considering the fact that earlier in July 2012 the law has put a prohibition on advertizing of spirits in the Internet , one can surely say that the lawmakers are proceeding with a gradual war against advertizing of spirits in all mass media that had started with the law “On Advertizing”.
The lawmakers have put special emphasis for the last few years on limiting strong spirits. In July 2012 there has been the enforcement of the requirements according to which advertizing of spirits containing 5% and over of ethyl alcohol is permitted only on permanent commercial objects trading retail in spirits including the tasting rooms of such commercial objects . Thus, strong spirits can only be advertized in places which bear the following features:
- the premises used for advertizing of spirits containing 5% and over of ethyl alcohol must be located in the building or its part that is solidly linked with the plot it is located on via its foundation, i.e. is considered immovable;
- the building the premises are located in must be connected to the network of technical supplies;
- the premises must be used the trading purposes;
- trading arrangements in the premises must be made in the area of retail trading in spirits.
Substantial limitations also covered stimulating events intended to increase the retail sales of spirits. Advertizing events where samples are handed out to public is permitted only in the premises fit the features of permanent commercial objects , that is spirit tasting events outside such premises is breach of law on advertizing.
The Supreme Court of Arbitration explains...
On 8th October 2012 the Plenum of the Supreme Court of Arbitration of the Russian Federation adopted a resolution interpreting some issues of application practice by the courts of arbitration of the Federal Law “On Advertizing”.
In the first place the Plenum pointed out that the contents of advertizing information and clearly set out what information, although being able to carry out the advertizing function, is not considered as advertizing. The Plenum has declared that such information is as follows:
1. Information on spirits including the name of a spirit, the name and the registered office of the producer, the country of origin, the expiry date, the price, the volume in the package, the proportion of ethyl alcohol, the details of certification or declaration of compliance, on government standards the requirements of which must be complied with by the spirits, on main ingredients that influence the flavor and the taste, on contents of harmful ingredients as compared with the mandatory requirements of government standards and contraindication to application, as well as on harm to health spirits do.
2. Information subject to indication on the signs where products, works and services are sold, on labels, tags or insert leaves packed inside the packaging of foods in accordance with the laws on the protection of consumer rights (details of the producer and the seller (the executor), on sold goods, works and services) , as well as in accordance with the laws on quality and safety of foods.
3. Details that must be provided by the organizers and operators of state and municipal lotteries via annual reports , as well as details of the results on drawings.
4. Information subject to submission by a joint-stock company in order to comply with the disclosure provisions.
5. Details provided as the output data in mass media.
6. Information on the name (business name) of the company in its place of origin, and other information for consumers directly in the place of trading in this product, provision of services (e.g. information on the working hours, on the traded products).
7. Details published as a custom of business turnover.
8. Information published on road signs and billboards upon confirmation of the State Committee of Road Safety and Traffic Regulations of the Ministry of Internal Affairs of Russia published in accordance with the state standards on road signs.
The Resolution reflects settlement or separate disputes related to enforcement of civil and administrative legal liability for legal breach of law in the area of advertizing. The most crucial ones are as follows:
1. On the matter of establishment of the objective side of breach of contract for sponsored advertising the Plenum explained that a material misstatement of the sponsor’s name, except for incorrect identification of the legal type, must be regarded as improper fulfillment of the advertiser’s obligations and cause the respective legal consequences. Mistakes in the indication of the sponsor’s legal type, in case of a legal entity, are considered as a material misstatement of the name only in case it prevents consumers of the advertizing from identifying the person acting as a sponsor.
2. The procedure for setting the statute of limitations for cases on administrative breached in advertizing has been defined. The courts received the explanation that the beginning of the statute of limitations period shall not be the moment when the antimonopoly department took a decision on the breach of the law on advertizing but the moment when the actual breach was committed. In its turn in case an advertizing is placed in mass media the moment of actual breach should be defined as the last day of advertizing. If a mass media where the disputed advertizing had been placed was issued in a number of copies this date shall be the day when the issue started to be circulated.
3. The conditions for the advertiser’s responsibilities of public disclaimer of incorrect advertizing have been defined. Such disclaimer must be made irrespective of whether enough proof was provided that the incorrect advertizing had breached the rights and legal interests of third parties because anti-advertizing in itself is a threat of a breach of rights and legal interests.
4. The grounds for differentiation of corpus delicti of administrative offences, such as breach of laws on advertizing and unfair competition, as well as certain issues on the procedure of bringing to justice of the persons carrying out advertizing activities.
Since the size of the penalty as a means of administrative liability depends on qualification of the offence it is advisable to use the grounds presented in the Resolution while appealing the decisions of the antimonopoly officials. If advertizing contains false, inaccurate or corrupted data that satisfy the features of unfair competition, the penalty for administrative offence should be established for the breach of laws on advertizing. In case information qualified as unfair competition is distributed not only via advertizing but through other means (e.g. on labels of goods, in correspondence on agreements with counteragents) the person must be brought to justice for unfair competition that may cause much bigger penalties.
As far as the persons subject to administrative liability are concerned, the Plenum declared that according to the current legislation it is impossible to bring up several administrative proceedings for a single offence by a person that produces, carries out and distributes advertizing. Such persons can be brought to justice only once at a time.
The matter of liability of the persons distributing advertisements attracted attention of the Plenum. An advertizing distributor can be returned guilty in breach of laws on advertizing only in case he failed to request the advertiser to provide the details on the accuracy of the details of advertizing or in case he did not receive the details and he did not discontinue advertizing. Besides, an advertizing distributor can be brought to justice in case while checking the provided details (e.g. whether the product certificate corresponds to the advertized object; and whether the details of state registration correspond to the person who has submitted such details) he fails to show due diligence and care.
5. The judicial practice developed the position on the procedure for the use of comparison of the advertized products, works and services with other products, works and services while advertizing. As indicated by the Plenum the advertiser bears responsibility for the reliability of information related to its own activities (goods) which are the objects of advertizing as well as information related to the activities (goods) of his competitors which is not the object of advertizing. The criteria used in advertizing should be adequate and sufficient for comprehensive comparison. Both criteria and factual data for comparison should be accurate.
6. Probably, one of the most interesting conclusions made by the Plenum was the elaboration of an official position on advertizing via the telecommunication network. The court has defined that a user’s consent for receipt of information of the reference character from contact person, for example, the weather forecast, exchange rates, cannot be considered as consent for receipt of advertizing from such person.
Apart from the above mentioned issues the Plenum of the Supreme Court of Arbitration pointed out the peculiar features of proving and bringing to court for breach of rules on putting advertizing on advertizing constructions, problems related to food supplements, banking, insurance and financial services.
The Federal Antimonopoly Department attacks!
On 3rd January 2012 the Provision on state supervision in advertizing came into force. It defined the purposes, the tasks, the functions and the powers of the Federal Antimonopoly Department and its local bodies . Currently one can expect the antimonopoly authorities to carry out regulating and supervisory measures in the following way:
- Inspections on legal entities and sole traders;
- Measures of control independent from cooperation with government authorities, local authorities, legal entities or sole traders;
- Measure provided for by the legislation of the Russian Federation for constraint and (or) removal of consequences of the breach that has been found;
- Regular supervision, analysis and forecasting.
It is only now, that the Russian legal system welcomes a relatively complete legislative and law-enforcement basis for advertizing. The largest part of the enacted amendments and additions has already been implemented in practice in the last six months of 2012 while other amendments remain to be accustomed to be the advertisers. Due to the fact that the supervisory committee in the advertizing industry has been defined the strict limits and the powers and new objectives have been set, the advertisers will have to work under the close supervision of the antimonopoly department.