Editorial content: paid for? - AG Szpunar in Peek & Cloppenburg (C-371/20)

Let us look at another, more recent, case concerning activities of newspapers. On June 24 AG Szpunar delivered an opinion in the case Peek & Cloppenburg (C-371/20), which looked into practices of Grazia magazine and a possibility of an unfair commercial practice, as defined in Point 11 of Annex I to the Unfair Commercial Practices Directive (UCPD). 

Point 11 of Annex I to UCPD specifically prohibits the use of editorial content in the media to promote products, when a trader paid for the promotion without clarifying this fact in the content/images/sounds. A consumer should be able to easily identify any paid for/advertorial content.

Peek & Cloppenburg Düsseldorf (P&C Düsseldorf) company arranged with the Grazia fashion magazine to publish a double-page article inviting Grazia's readers to an exclusive shopping event called 'GRAZIA StyleNight by Peek & Cloppenburg'. This has been published under the title 'reader offer'. Their competitors - Peek & Cloppenburg Hamburg - claimed that there was an infringement of the prohibition resulting from Point 11 of Annex I UCPD (and as we all know, as long as consumers' interests are exposed to harm alongside the interests of the trader's competitors, UCPD framework may be used by competitors, too - para 33).

In preliminary remarks AG Szpunar first considers the character of the above-described commercial practice. He decides that it qualifies as a commercial practice as the trader - P&C Düsseldorf - initiated the practice and used it to promote its sales (para 22). The fact that they cooperated in organising this activity with the magazine and that magazine could benefit from the activity, as well, does not impact that assessment (para 23). AG Szpunar mentions further that it could be possible for the claim to be raised against both operators, as well as Grazia magazine would qualify as a trader, as well (para 24).

Question 1 - nature of payment

First, AG Szpunar considers whether the payment made by a trader for a promotional editorial content could be non-monetary. As literal interpretation does not provide a clear answer (para 45), AG Szpunar looks at systematic, teleological and historical interpretation next. From the point of protecting consumers against deceptive commercial practices (unidentified advertorial content), it should not matter in what form a trader paid for the editorial content. The possibility of consumer's harm is not influenced by the form of the payment (paras 49-50). Further, if it were possible to pay with non-monetary assets, it would be easy to circumvent the protection of the UCPD framework (para 60) and the scope of the prohibition in Point 11 of Annex I UCPD would be significantly restricted (para 58). The preparatory version of the Annex actually referred to payments or 'other reciprocal arrangement' (para 62) and AG Szpunar does not consider its removal from the final text as opposing a broad interpretation of payment (paras 64-66).

Question 2 - is a non-monetary payment consideration for the advertorial?

In the case at hand P&C Düsseldorf made available to Grazia magazine the rights to use images of its stores in the promotional content, which is what AG Szpunar perceives as the non-monetary payment that qualifies as consideration in the case (paras 73-74). It does not matter here, what was the percentage of the costs of publishing the editorial content that was paid for by a trader vs by a media operator as Annex I UCPD does not require any equivalence (para 75).

AG Szpunar then proceeds to consider whether a definite link between a benefit and promotion that needs to be found needs to be direct or could be indirect. It seems that there is some scope for flexibility in this assessment (para 78). Interestingly, AG Szpunar draws attention to the fact that the notion of 'editorial content' has not yet been interpreted by the CJEU (para 84), which is something for the national court to keep in mind.

One of the interesting elements of this opinion is that it promotes a broad understanding of the notion of 'payment' in the interpretation of yet another provision of European consumer law. Moreover, we should remember current debates on the misleading character of many promotional online activities, where the promotional/advertorial character thereof is not clearly identified (e.g. think of practices of digital influencers). Despite the possibly narrow scope of Point 11 Annex I UCPD (which scope will depend on the interpretation of the notion of 'editorial content'), this opinion and the forthcoming judgment may play a significant role in shaping the response to other promotional practices that could harm consumers.

New Digital Markets Unit in the UK - putting (some/few) platforms on notice

Another interesting piece of news from the past few days is the UK government announcing the setting up of the Digital Markets Unit ('New competition regime for tech giants to give consumers more choice and control over their data, and ensure businesses are fairly treated') within the Competition and Markets Authority (CMA). The Unit's main task will be to introduce and enforce 'a new code to govern the behaviour of platforms that currently dominate the market'. Is the UK attempting to follow the example of the German Federal Cartel Office (Bundeskartellamt) that has been cracking the whip against the potential abuses of the dominant position on the market of such digital service providers like Facebook (see The Facebook Decision: First Thoughts by Podszun)?

Perhaps, the government's announcement draws attention to the risks associated with the concentration of power in the tech sector, bluntly giving notice to the dominant players on the digital marketplace that they will be under enhanced surveillance in the foreseeable future. They will be expected to follow the new rules for behaviour set out in the code, which will likely require more transparency (as to the use of consumer data?), opt-in options for personalised advertising (the issue that was at play in the German Facebook case), facilitating users' swapping to use any rival platforms.

The DMU is to start their work in April and is supposed to be able to 'suspend, block and reverse decision of tech giants, order them to take certain actions to achieve compliance with the code, and impose financial penalties for non-compliance'. What is of interest to us, of course, is to what extent this new unit will be able to benefit consumer protection in the UK? This is uncertain at the moment, but it seems that any consumer protection benefits may be coincidental rather than intentional here. First, the Guardian reported that the new unit will have oversight only over platforms funded by digital advertising and having 'strategic market status' (Digital Market Unit: what powers will new UK tech regulator have?). This would limit the unit's purview, possibly even only to Facebook's and Google's activities. Second, the DMU will focus on preventing damage to news media... which suggests that the interests of UK news outlets may play out more centrally, over consumers' interests.

A lot will depend on the new code of conduct set by/for the DMU. We will then definitely let our readers know when the new code for the behaviour of these digital platforms is adopted!

Online 'free' newspapers also subject to national libel and defamation rules - CJEU in Papasavvas and Others (C-291/13)

11 September 2014: CJEU judgment in case Papasavvas and Others (C-291/13)

Over a week ago the CJEU issued an important judgment in this case concerning interpretation of the e-Commerce Directive (2000/31/EC). While e-Commerce Directive is not per se a consumer protection measure, its provisions regulating the legal aspects of electronic commerce have a significant impact on European consumers, as well.

In this case from Cyprus Mr Papasavvas claimed damages against a newspaper company for what he considered to be defamation through articles published in the daily newspaper, which were published online on two websites. One of the questions raised was whether the e-Commerce Directive should apply at all in this case, since the websites of the newspaper were free for Mr Papasavvas to access and peruse and they only generated income from the advertisements placed on them. The question was whether the Directive should only apply to such 'information society services' that have been provided against a remuneration from the recipient? The positive answer to this question would significantly lower the level of protection granted online to internet users since many websites nowadays earn their money through advertisements rather than through financial contributors of their readers. The CJEU confirms that the 'service' does not need to be paid by the person for whom it is performed (Par. 28-30) to fall under the scope of the e-Commerce Directive, even if the definition refers to a service 'normally provided for remuneration' (Par. 27). It is sufficient that this remuneration is being paid by someone else than the recipient.

This broader scope of application could allow the online newspaper to rely on Articles 12 and 14 of the Directive in order to escape liability for the posted content (incl. defamation) if it could prove that it was 'merely' a 'conduit'. In this case the online newspaper could not be qualified as such. For these articles to apply the service provider would have to have no knowledge or control over the information that was transmitted or stored, which was not the case here. (Par. 40) (this and following articles refer also to the Google France case)

The e-Commerce Directive allows for the Member States to keep on applying their rules on civil liability (incl. for defamation) to information society service providers, as long as this does not restrict the freedom to provide them from another MS. (Par. 33-34) Since in the given case the services originated in Cyprus, the rules on civil liability for defamation could be applicable.

However, if the Cyprus did not implement the provisions of the Directive in time its provisions may not be directly invoked by the parties. The Directive does not have a direct horizontal effect, which means that the national service providers could only rely on the national provisions implementing it and not on the rights granted to them by the Directive itself. Failing the timely interpretation, the national court is obliged to the consistent interpretation of the national law with the EU law. (Par. 54-56)

Sponsored publications NOT to be seen as commercial practices - CJEU in RLvS (C-391/12)

17 October 2013: CJEU judgment in case RLvS (C-391/12)

Today the CJEU decided not to follow the AG's opinion in the RLvS case which examines the character of sponsored publications in a newspaper with regards to their potential misleading effect on consumers (for facts of this case see our earlier post: Sponsored publications as unfair commercial practices...)

The CJEU agrees with the AG Wathelet that German law may not prohibit or more severely restrict commercial practices than what the Unfair Commercial Practices Directive requires, even if such restrictions could be justified as an attempt to protect pluralism of the press. (Par. 33) At the same time, however, the judges do not share the AG's conviction that a publication of editorial content by a newspaper publisher could be perceived as a commercial practice. This would mean that it would not fall under the scope of the Directive and could be separately regulated by national laws. (Par. 34-35) 

It is the Court's opinion that a commercial practice must originate from a trader and be directly connected with the promotion, sale or supply of his products, and the 'trader' is defined broadly, which means that the Directive applies also when a trader's practice is put to use by another undertaking and benefits that undertaking. (Par. 37-38) The editorial content that was the subject of the judicial proceedings was not promoting the publisher's product (free newspaper) but rather it promoted products and services of other undertakings, and as such could fall under the definition of a commercial practice due to the broad definition of a 'trader' in the Directive, satisfying the first requirement. (Par. 39-40) However, the Court believes that any promotion through the editorial content of a newspaper was 'indirect' and was not liable to significantly influence the consumers' economic behaviour with regards to acquiring the newspaper. Therefore, this practice could not fall under the scope of the Directive as a commercial one. (Par. 41)

Interestingly, both the AG and the CJEU support their argumentation by referring to the same provision in the Directive - point 11 on the black list that determines as unfair such use of advertorials that does not clearly inform consumers that the editorial content was paid for by a trader. According to the AG that provision signifies that national laws may not demand more strict requirements to be met with respect to editorial content's publication. The Court stated, in turn, that this provision:

"(...) is not intended as such to require newspaper publishers to prevent possible unfair commercial practices by advertisers for which a direct connection could thereby be potentially established with the promotion, sale or supply to consumers of the products or services of those advertisers." (Par. 44)

I have to admit, though, that it's hard to see for me what this provision was intended for if not for that? The Court seems to point out that this prohibition would apply only to advertisers and that they should be the ones who make sure that the editorial content is clearly labelled as sponsored. This seems to get the newspaper publishers off the hook rather easily.

More convincing are arguments referring to a potential conflict of this provision with requirements set out by Directive 2010/13 and Directive 89/552. (Par. 45-46) Lastly, the CJEU underlines that the European Commission has not yet directly legislated the area of publishers' obligations with regard to third-party sponsored content of their publications, as far as written press is concerned, which means that Member States are free to regulate it. (Par. 49)

Less TV ads in the consumers' interest - CJEU in Sky Italia (C-234/12)

18 July 2013: CJEU in case Sky Italia (C-234/12)

One of the goals of the Audiovisual Media Services Directive (2010/13/EU) is to protect consumers as television viewers from excessive television advertising. Therefore, the Member States are allowed to set their own rules and also differentiate in broadcasting rights granted to TV broadcasters under their jurisdiction. (Recital 83 Directive, Par. 17 judgment) In Italy, pay-TV broadcasters were given shorter hourly advertising limits than those of free-to-air broadcasters. (Par. 6) In the case in front of the CJEU the Italian court asked whether such a distinction was compatible with the principle of equality, rules of free movement of services and the principle of pluralism in media. (Par. 10)

The CJEU notices that the Directive is of a minimum harmonisation character and where it requires the Member States to set the limit of broadcasted advertisements to 20% of a given clock hour (Art. 23(1) Directive), this limit could be lowered on national levels in the interest of consumers as television viewers, as long as the EU principles are observed. (Par. 14) The interests of pay-TV broadcasters and free-to-air broadcasters are not seen as comparable by the CJEU which means that the infringement of the principle of equal treatment cannot be invoked: "Whilst the former generate revenue from subscriptions taken out by viewers, the latter do not benefit from such a direct source of financing, and must finance themselves either by generating income from television advertising, or by other sources of financing." (Par. 20) This difference could justify other rules for hourly broadcasting limits on television advertising. (Par. 23) While the provision of services by pay-TV broadcasters could be limited by such a special treatment, the need for the protection of consumers' interests could take precedence here, as long as the adopted rules were seen as proportional, which is for the national courts to determine. (Par. 25) There was not enough material submitted to the CJEU to determine whether such a national rule could distort competition on the media market. (Par. 32)

Sponsored publications as unfair commercial practices - AG Wathelet in C-391/12 (RLvS)

11 July 2013: opinion Advocate General Wathelet in case C-391/12 (RLvS)

RLvS publishes daily various advertisements in a journal called GOOD NEWS. In June 2009 it published two sponsored articles. Both these articles made a distinction between the 'news' part and the 'advertisement' part thereof. In the 'news' part it was mentioned that the articles were sponsored and the 'advertisement' part was marked with the word 'advertisement'. However, German press law has more strict requirements that need to be fulfilled in case the publication is sponsored (Art. 10 LPresseG). Namely, any sponsored publication is prohibited regardless its aim, as long as it is not clearly marked as an 'advertisement', unless the position and the form of the publication leave no doubt as to its advertising purpose. The purpose of this provision is to protect consumers from misleading commercial practices and to protect independent press. The competitor of RLvS, a German newspublisher - Stuttgarter Wochenblatt - claimed that RLvS infringed provisions of German press law. The Bundesgerichtshof had, however, doubts as to whether the Art. 10 of the German press law is compatible with the Unfair Commercial Practices Directive - by establishing such a general prohibition of sponsored publications - and asked the CJEU for its opinion on this matter.

AG Wathelet advises the CJEU to recognize the incompatibility of Art. 10 LPresseG with the Unfair Commercial Practices Directive. As long as a sponsored publication could be considered to constitute an unfair commercial practice in the meaning of Art. 5 Directive, there cannot be a legal requirement for the publishers to mark clearly such a publication as an 'advertisement', unless the presentation or concept of that publication clearly denotes such an advertising purpose of this publication already.

Par. 11 of the Annex I to the Unfair Commercial Practices Directive clearly blacklists a following commercial practice: "Using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial)." The German press law goes further than these requirements by obliging the publishers to add a word 'advertisement' to the publication. (Par. 39-40) Due to the maximum harmonisation character of the Directive, national legislators were not allowed to make more restrictive provisions than the ones adopted by the EU. (Par. 38) By modifying the provisions of Par. 11 of the Annex I the German legislator changed blacklisted commercial practices in Germany, which it was not allowed to do. (Par. 43)

It needs to be mentioned that while Art. 10 LPresseG regulates any publication, irrespective of its commercial purpose, the Directive regulates only such activities that have a commercial purpose. (Par. 27, Par. 35) For this reason the Directive may not be applicable to many cases regulated by Art. 10 LPresseG where the purpose of the publication won't be to convince consumers to conclude a particular commercial transaction, but, e.g., it would be a publication sponsored by a political party. (Par. 37) The evaluation whether a given publication has a commercial purpose should be conducted on a case-by-case basis by a national court.