A NEW SUPER REGULATOR IN ADLAND

In the furore over changes to media ownership rules in the recent draft Communications Bill, proposed fundamental alterations to the system of broadcast advertising regulation have gone largely unnoticed. That is perhaps surprising, given that without advertising over 50% of TV and radio would disappear, with television advertising providing over £4.6 billion in revenue to the TV broadcasting sector and £595 million to radio. From the end of 2003, the Office of Communications ('OFCOM') is due to take over the regulatory functions of the Independent Television Commission and the Radio Authority, the present regulators of television and radio advertising. How exactly this is going to happen, however, is by no means clear. There is also significant uncertainty over the best way to achieve 'joined-up' regulation in the light of rapid media convergence.

Under the Bill, OFCOM must carry out its functions to further the interests of consumers, promote competition and safeguard the public from offensive and harmful material in television and radio services. OCFOM is responsible for setting standard objectives, including the prevention of unsuitable advertising and sponsorship on television and radio. The separation of advertising and programming, and preservation of the integrity of programmes from commercial influence, remain central considerations. Compliance with these standards shall remain a condition of a broadcasting licence, with breaches resulting in possible financial penalties. At the same time, OFCOM must ensure that its rules do not involve the imposition or maintenance of unnecessary burdens, so-called 'light touch' regulation. OFCOM will be able to call upon a new Consumer Panel to address content issues, particularly those having a high consumer dimension such as rules on misleading advertising. The industry has expressed its "grave concern" over this proposal, fearing that the Panel will represent the views of consumer groups rather than "real consumers".

The existing prohibitions under the Broadcasting Act 1990 against any advertisements by or on behalf of a body whose objects are wholly or mainly of a political nature, directed towards any political end, or with any connection to an industrial dispute, are re-enacted in the draft Bill. Whether such a wide ranging ban is permissible is open to doubt given the decision last year of the European Court of Human Rights in the case of VGT Verein Gegen Tierfabriken v. Switzerland ([2002] 34 EHRR 4) in which it was held that the refusal by a commercial television company to broadcast an animal rights commercial on the ground that it was political in nature was in violation of the freedom of expression provisions set out in Article 10 of the European Convention. The disputed commercial was in response to commercials produced by the meat industry, and was aimed at encouraging members of the public not to eat meat. Although a prohibition on political advertising was not necessarily incompatible with Article 10, as the domestic authorities had failed to show that the grounds advanced for the interference were relevant or sufficient, the restriction was unlawful. The recent successful judicial review brought by the Prolife Alliance against the BBC over its refusal to transmit a party election broadcast which included "graphic" and "disturbing" scenes of what was involved in abortion processes is also important. The Court of Appeal stated that given the pressing imperative of free political expression, the ban was a breach of Prolife's right to freedom of expression ([2002] 2 All ER 756).

As for the structure of the new regulator, the Policy document accompanying the Bill promotes the possibility of increased "co-regulation" of advertising, based on the development of industry practices that conform to and contribute to the advertising standards laid down by OFCOM. Under co-regulation, OFCOM would set the regulatory framework in accordance with its statutory duties. It would then leave it up to the advertising industry to draft detailed rules within that framework and to take responsibility for implementation and enforcement. The Government is of the view that OFCOM must retain strong back-up powers in case the industry-based approach did not develop or operate effectively. These proposals have left the industry rather confused. The industry's preference would be for a system of self-regulation, like the ASA, with the industry being given complete independence in the setting and enforcing of advertising codes. The only regulator involvement would be the use of its legal powers to stop recalcitrant advertisers, in the same way that the ASA can refer advertisers to the OFT under the Control of Misleading Advertisement Regulations 1988 (as amended). Despite the Government saying that it is keen to build on the ASA's success, it has rejected an entirely self-regulatory approach for broadcast advertising. Critics point to the undesirability of 'regulatory double-jeopardy' - a complaint to the self-regulatory body being followed by one to OFCOM. They also argue that a self-regulatory system for all advertising would ensure flexibility in a rapidly changing media environment.

The issue of convergence between broadcast and non-broadcast media is not adequately tackled in the Bill. The Government has made clear that it does not intend OFCOM's regulation of content to extend to the Internet. The ASA currently regulates Internet advertising in paid-for space (i.e. banners and pop-up ads, and in commercial e-mails and sales promotions, but not for other claims on advertisers' own web sites), and it seems as though it will retain this power, despite the Government acknowledging that there is an "overlap" with the ambit of OFCOM. The Government expects OFCOM to establish suitable links with non-statutory regulatory groups like the ASA, to consider with them the need for joint approaches in areas such as the Internet. In its response to the proposals, the ASA rightly points out that digital convergence is already blurring the distinctions between broadcast and non-broadcast media. Advertising on digital platforms not licensed by either the ITC or RA is currently recognised as non-broadcast, including text advertising on mobile phones and ambient video advertising, both of which fall within the ASA's remit. But who will regulate advertising on streamed videos to mobile phones, or on television services received over the Internet, or on what the ASA describes as the "debatable land" of interactive television? The ASA says that convergence strengthens the case for a single regime of self-regulation for all advertising, although this could also be used as an argument in favour of the ASA's functions being subsumed within OFCOM.

The Government stresses that it wants OFCOM to be as "open and transparent as possible". The Bill places a duty on OFCOM to establish procedures for the handling and resolution of complaints about the observance of advertising and sponsorship standards. No specific provision is made in the draft Bill for appeals against decisions of OFCOM in the advertising arena, although the Policy document states that the Government intends to include provisions for a statutory appeal equivalent to judicial review when the Bill is introduced. Article 6 of the European Convention is of relevance, guaranteeing everyone (including advertisers) a "fair and public hearing" by a "fair and impartial tribunal established by law" in the determination of their civil rights.

So the future is, unfortunately, not quite as bright as advertisers might have hoped. Whatever happens, never underestimate the power of regulators!

Giles Crown
Senior Communications Lawyer
Lewis Silkin