§ 5.43 p.m.
§ Viscount TRENCHARD rose to move, That this House takes note of the Thirty-eighth Report of last session of the European Communities Committee on Misleading Advertising (R/511/78) (H.L. 230, 1977–78). The noble Viscount said: My Lords, in moving that the House take note of this report I must refer to the many things that have happened since July when that report was put to bed. There has been a conference in Brussels on consumer policy called by Commissioner Burke, statements by officers of the Commission which bear on this subject at that conference and elsewhere; draft committee reports for the European Parliament; a very important report from the Director of Fair Trading on a review carried out by the Fair Trading Office on the self-regulatory element of British advertising control; and an important debate in the other place on 16th November.
§ There have also been a number of public Ministerial pronouncements in this country and a number of statements by Commissioner Burke quite recently. I think noble Lords from Sub-Committees B, D and E of the Select Committee who contributed to our report would still want me, in spite of all those statements, to say that our report stands. I hope members of those sub-committees will feel that the remarks I make on some of the up-to-date statements are in accordance with the feelings they have on the subject.
§ The original timing of this proposal was that the Directive should be operative by the end of this year. The technical position is that it awaits the report of the Social 1190 and Economic Committee and of the European Parliament. I say "technical position" because in fact Commissioner Burke—I certainly welcome the statement—has declared his readiness for the Commission to look at this proposal again. Perhaps it should be on the record at this stage in the debate in very brief terms what the Britsh position is on the control of misleading advertising. In our report we have suggested that the other subject, of advertising unfair as between one trader and another, should not be the subject of a consumer policy directive.
§ The British control system on everything except television and radio comes under the Advertising Standards Authority, of which the noble Lord, Lord Thomson of Monifieth, who will be speaking in this debate, is chairman, and two-thirds of its members are independent of the profession. The body which does a great deal of the work under the Advertising Standards Authority and which is staffed by the industry in the main is the Code of Advertising Practice Committee working on or with the British Code of Advertising Practice which has been built up over a number of years. The industry finances all of this, and the publicity to go with it, to the tune of some £600,000 a year. Outside that, the control of television and radio is under the Independent Broadcasting Authority, but they work on a very similar code which has drawn heavily from the experience of the self-regulatory system and they utilise the organisations in that area to do much of the work for them.
Behind both of those two systems lie the Misrepresentation Act, the Trade Description Act, the Fair Trading Act and many other Acts of Parliament which bear on these questions. I will leave till later a few comments on how it works, but let me quickly say that in the view of the Select Committee it does work as well or better than the control systems of other countries, and this opinion has recently been borne out by the report I mentioned from the Fair Trading Office on the survey they carried out in which, in one summary, the Director said:
I hope this survey will help to put matters in perspective. Our research has produced no evidence to suggest that the public are being mislead or confused by advertising on a wide scale. Indeed, it suggests strongly that with a
general tightening up and the limited statutory backing proposed, the self-regulatory system should provide adequate protection for consumers".
Also in the survey is the statement:
The results indicate that the vast majority (93 per cent. of advertisements) in newspapers and magazines conform to the Code".
The Select Committee feel that this draft Directive needs a major rethink, and they do not think the delay that might be caused by that is very important. That is because there was no evidence advanced to us that the differing standards of control of misleading advertising in any way affects the functioning of the Common Market. At the time the Department of Prices and Consumer Protection gave evidence to us, they had no evidence either.
§ Perhaps this is a moment for me to declare not a present but a past interest in advertising. Until the beginning of last year I was an executive director of Unilever and its Dutch sister who, between them, advertise on a very much bigger scale in the countries of the Nine than probably anyone else. I took the opportunity of my connections to ask whether they had any evidence that the differing standards in this area were holding up the functioning of the Common Market and trade across boundaries and that kind of thing. Not only did they say, No, for the reasons which others gave to us when we took evidence—namely, that the differences of language and ethnic differences arc very much greater than differences of advertising control—but also because, in so far as there could be a marginally more sympathetic situation in, say, Northern France than Southern Belgium, whether one is a Belgian advertiser or a French advertiser, one is at equal liberty to use the magazines in Northern France.
It therefore surprised the Scrutiny Committee that this Directive was put forward under Article 100 of the Treaty of Rome, because this article in envisaging Directives under it, says,
as directly affect the establishment or functioning of the common market".
At the conference in Brussels, which I have mentioned, a suggestion was made by the Commission that it could equally well have been put forward under Article 235. This is the miscellaneous article
which allows the Commission to put forward anything that it feels is in the interest of the Common Market which is not covered by the other articles in the Treaty of Rome. It is rather like the old Army charge "prejudicial to good order and military discipline" which is used when one cannot think of anything else. It was not put forward to the Council of Ministers, nor to member countries, on that basis; and if it had been put forward on that basis, perhaps the reactions would have been quite different. The real authority for—
§ Lord DRUMALBYN
My Lords, I hope that my noble friend will forgive me for intervening. I wonder whether he really is right in saying that had it been put forward under Article 235 the reactions might have been quite different. Article 235 is quite specific, in that any action taken must bein the course of the operation of the common market, one of the objectives of the Community and this Treaty has not provided the necessary powers …".The point is that this must be in the course of the operation of the Common Market.
§ Viscount TRENCHARD
I think, my Lords, that I should have said that the reaction would certainly not have been more favourable. That was really what I meant. The real authority for the draft Directive comes from the Council meeting of April 1975, and Commissioner Burke has recently suggested that the Commission has worked only at the invitation of the Council expressed at that meeting in 1975. I wonder whether "the invitation of the Council" is a fair phrase. I would suggest that perhaps the Council agreed in general to a recommendation which was put before them. I have here the document of April, and what in fact the Council of Ministers agreed is quoted in the following terms:approves the principle of a consumer protection and information policy, and the principles, objectives and general description of action to be taken at Community level as set out in the preliminary programme annexed hereto".The programme covers many aspects of consumer policy in what is described as a preliminary form, and only one small section of it deals with advertising.
I cannot really feel that the Council of Ministers, in agreeing in general terms 1193 the principles of consumer policy, were consciously agreeing to the harmonisation of the methods of the control of misleading advertising. In this connection one must welcome the recent statement by the President of the Commission that the Commission are not seeking harmonisation for harmonisation's sake.
At this stage I should refer to the debate in the other place on 16th November, as recorded at column 758 of Hansard, which ended, after support from all sides, with the following agreement:'that in its present form it—"it "is the Directive—is not acceptable to the United Kingdom, as it seriously undermines the existing system of self-regulation".Many other reasons were mentioned in the debate. I should have liked to have had the time to have commented on many articles in the Directive, but there is not the time. However, I believe the Committee felt that Articles 2 and 3, which are not long—the whole Directive is short—are couched in such wide and general terms that one would never get the same standards of control of misleading advertising after interpretation of this short Directive in the courts, the very different courts, of the Nine. So, even if the object were harmonisation in its own right, I think it is extremely doubtful whether one would in fact get harmonisation—certainly not of method.
I must comment on Article 5 because it deals with the methods by which each country shall control misleading advertising. Before returning to a few of the points that it makes, I would draw your Lordships' attention to the fact that in our report, we quoted from Article 189 of the Treaty of Rome, as follows:A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods".I believe that any reading of Article 5 is not in conformity with Article 189 of the Treaty. Article 5 requires that laws shall be used to do specific things. Corrective statements as penalties, injunctions without proof of fault, and money sanctions are all mentioned. If there is to be action at an EEC level, let us be judged on how well we prevent misleading advertising. The Commission will be aware of the debate taking place in the United Kingdom 1194 on whether our system can be improved—and of course it can. I expect that they will have noted various ministerial Statements of puzzlement expressed publicly and in discussion documents.
I wish to try to summarise very quickly what I believe the Committee felt. They felt that the British system does, in the main, work. They felt that there was a strong self-interest by all interested in the advertising world to keep standards up. They noted that sanctions were applied, that advertisements were stopped, and that publicity was given to offenders. They noted that the code of practice and self-regulatory system had the following advantages over a legal system. First, it was final; there was no court of appeal from the ASA. Secondly, it was easy to alter, and build on, a code of practice, and to change it more easily than it would be to alter the law.
Thirdly, the code of practice and the self-regulatory system could go much wider than the law on matters of taste and on whether, in that sense, advertisements were good or bad. Fourthly—and I say this notwithstanding the report of the Office of Fair Trading—the speed was likely to be faster than any legal system that the Committee could contemplate. Clearly the Director of Fair Trading has suggested that in some cases the self-regulatory system could perhaps be quickened.
May I ask your Lordships, in a moment of light relief, to contemplate whether the law or a code of practice and a self-regulatory system would deal with the problems created by some of the following statements. A certain beer refreshes the parts that other beers cannot reach. I do not think it does unless you spill it. Another beer is advertised for strength, and houses can be carried in the palm of your hand. A petrol not only puts a tiger in your tank but means happy motoring. You are invited to "Fly the Tube". That is the underground to Heathrow. You are invited to take a non-stop trip to paradise. I have to give the name of the company advertising that, otherwise it does not mean anything. It is Air Jamaica. Things happen after a certain bath salts bath. I shall not go on: there is sunshine in every packet; one pill works faster than anything, and so on. I suggest that things of this kind 1195 are most easily dealt with by the self-regulatory system backed up by the experts in the profession itself.
I think we have to be very careful of the suggestion that we should keep the self-regulatory system and bring in some statutory back-up. If that statutory backup were in any way an appeal court, it would delay the speed of the present control system. Even the carefully thought-out suggestions of the Director of Fair Trading on how to back up the self-regulatory system, using his own office so to do, could produce an appeal court situation, because there are at the moment disagreements—genuine disagreements—between advertisers and the ASA and its bodies, and it might encourage people to pay less attention to the ASA on the grounds that they knew that the Director of Fair Trading had a power to come in, and only on a narrower and legal basis, not on a wide basis of taste. My Lords, there are loopholes in any system in this area. Our belief, I think, was that the profession was more likely to catch the fly-by-night or once-only law-breaker than the law.
Returning finally to the EEC Directive, bearing in mind what the President has said about not wishing harmonisation for harmonisation's sake, if we need it at all at EEC level it cannot be put forward under Article 100. I think also that the Commission must realise that they will not get an absolutely standard procedure and standard enforcement through the legal systems of the countries of the Nine based on a short document couched in wide, general and at times not very specific terms. I beg to move.
§ Moved, That this House takes note of the Thirty-eighth Report of last session of the European Communities Committee on Misleading Advertising (R/511/78) (H.L. 230, 1977–78).—(Viscount Trenchard.)
§ 6.4 p.m.
§ Lord HAMPTON
My Lords, I am sure we are all grateful to the noble Viscount, Lord Trenchard, for opening this debate with such distinction and clarity. For the most part, with all his knowledge, I must wholeheartedly go along with him, and I hope other speakers will support the idea that self-regulation has proved itself a satisfactory method 1196 of controlling advertising in this country. Perhaps I may also refer to the words of the Minister of State, Mr. John Fraser, in opening the debate in another place on misleading advertising in the European Community. He said this:Self-regulation, a code which is agreed by the industry, an obligation to follow the spirit as well as the letter of the matter, seems to me much more satisfactory".—[Official Report (Commons), 16/11/78; col. 708.]Much more satisfactory, he was saying, than the idea behind the Commission Directive that stronger statutory control is desirable.
The point of view that I shall be arguing is that the standard of advertising is as high in this country as it is anywhere in the European Community, if not in the world, but that it is not entirely free from what I shall call tactical weaknesses and that I believe it may need a very real and searching consideration of its strategy. The Opposition in this House, whichever of the two largest political Parties that may be, is apt to say that too much legislation is being enacted. I hope we can all agree that no major statutory measure would be beneficial in the present case. It has been said that you cannot make people better just by passing a law, and also that:there will certainly be no better Britain until there are better Britons".What a remarkable change of atmosphere would come about if, say, at the next Budget the general public felt encouraged to follow the spirit as well as the letter of the matter, instead of running off to arrange tax-avoidance with their accountants, particularly if the taxes were seen to be reasonable and fair. But, anyway, the advertising industry in this country does, I feel, largely follow the spirit rather than the letter of the law, and I suspect that an attempt at statutory enforcement might, psychologically, produce the opposite of the desired effect. What is needed is a continued mood of co-operation with an alert and intelligent public.
Generally speaking, I have little doubt that advertising in this country is "legal, decent, honest and truthful". Travelling by underground, as I do quite frequently, I find the advertisements entertaining and cheerful, and parts of stations which have no posters are dull and gloomy by comparison. Press advertisements are 1197 often both humourous and informative, and television adverts often show an intriguing skill if one is not too irritated at the interruption of a gripping programme. I believe that the industry is capable of sorting out most problems of "unfair" advertising between one advertiser and another, but the general public must accept its duty to attack what is definitely misleading—and I mention here what I consider to be tactical errors of this sort. First, in the other place my honourable friend Mr. Richard Wainwright has drawn attention to the Electricity Council's claims with regard to their new off-peak electricity tariff known as Economy 7. There is, for example, a television advertisement in which a couple tell how they run their all-electric home on £3 a week. This is technically correct, but the advertisers carefully avoid mentioning that the couple concerned had previously paid out some £650 in insulating their home, and had not as yet recouped their costs. I might add that I am also sceptical, from personal experience, of the value of heating rooms during the night, even at reduced cost, when they are not in use.
Secondly, I would mention advertisements such as the recent poster for premium bonds. The suggestion here was (I do not know whether it still is: I have not seen it recently) that, while there is a very good chance of winning handsome prize money in one of the monthly draws, anyway one cannot lose as, pound for pound, one's money is always there for withdrawal on demand. I do not think the fact that anyone of reasonable intelligence could see that this is largely nonsense is any justification for its use. For, in the first place, the whole operation is a tremendous gamble in which most will win nothing so that a few, including the Government, can win high prizes. That is fair enough, but they should say so. In the second place, one's deposited money will, in times of inflation, be losing value all the time, and fairly fast.
Thirdly, I would mention a series of advertisements by Shell, a little time back, using magnificent photographs of beautiful towns and villages with few, if any, cars pictured, the message being that one should use one's car (fuelled, of course, by Shell) to visit such places. What is not pointed out here is that in such circum- 1198 stances every car is a nuisance except, of course, one's own.
Lastly, I would mention my conviction that the word "only" in relation to prices is seriously abused. The public should much more often be left to make up its own mind as to whether a price really is a bargain. I repeat that from what I have read or personally experienced, I join those who believe in making the self-regulatory system work to the best advantage for all rather than extending statutory control. I have just listed examples of what I have called tactical errors which the public should jump on as hard as they can. I should like now, briefly, to raise points on which I believe the industry may have to think again on strategic grounds for the common good in respect of a different form of misleading advertisements.
I quote first from my right honourable friend the Leader of the Liberal Party writing in The Times last June. He says:The knowledge that we live in a world of finite resources has percolated well beyond the confines of a few environmental enthusiasts. There is a constraint on unlimited growth and, what is important, there is known to be a constraint".This clearly sounds the warning that people cannot expect year by year to have more and more; and advertising campaigns that tempt people so to want are doing a grave disservice to the community. I also quote from the Conservation News of last July which says:Inflation is often the product of a scramble for shares of the cake aggravated by scarcity. A major factor is artificial want creation, especially advertising".Unfortunately, I believe this also to be true and that television advertising in particular induces a tremendous urge to buy more and more. Incidentally, I distrust broadcasts aimed at children behind, as it were, their parents' backs. If they are honest, neither this Labour Government nor the Conservative one before have come anywhere near achieving the stability we so urgently need. We are once again moving into a situation where virtually every section of the community is at least considering fighting for a larger pay packet. And, quite frankly, I do not think that too much persuasive advertising, as opposed to the more strictly informative, helps.
I should like to end by quoting from that deeply sincere book Enough is Enough by the right reverend Prelate the 1199 Bishop of Winchester. It points the need for a most serious consideration of man's future in this world of ours. It runs:It is not surprising that an enormous number of people of all ages and in many different countries have come to the conclusion that unless we can discover a radically new style of living, and can get it put into practice, the balance of life on this planet will be irretrievably deranged and we shall be plunged into chaos".These are strong words which I do not believe that we can just brush aside. I am certainly no puritan. I enjoy worldly goods and like to see other people enjoying them, too. But I accept that many of our resources are finite and nonrenewable and that we owe it to future generations not to squander them without concern. What I believe we need to concentrate on is finding, for all, a life higher in human satisfaction but which may possibly mean accepting a lower so-called standard of living in purely cash terms. I was brought up with a family bread board that had carved on it the words, "Waste not, want not!" I believe it is a lesson that many people are having to learn again and, not least, the many honest and honourable people of the advertising profession to which I was happy to belong a number of years ago.
§ 6.13 p.m.
§ Lord NEWALL
My Lords, I, too, should like to thank my noble friend Lord Trenchard for explaining the situation so clearly and for introducing this debate. The prime objective of this proposed Directive is indisputable; it is to ensure that consumers are protected against misleading advertising. It would be as hard to oppose that objective as to stand here and declare myself against motherhood or in favour of sin. But beneath the acceptability of the objective lies a host of unacceptable means by which the EEC proposes to achieve those ends. First, it requires the adoption of new laws and details some of the procedures whereby they are to be put into effect. I am not a lawyer, nor do I need to be to oppose such fundamental changes to our British system of justice in the name of harmonisation. I believe that it is far better to press for member States to develop means appropriate to their own existing legal traditions and their own control system.
1200 Secondly, it is vital in this context to ensure that there is real consumer benefit in adopting additional consumer protection measures. I find no evidence to the Scrutiny Committee of any significant benefit to consumers from the proposed Directive. The National Consumers' Council said that any benefit would be "relatively little". The National Council of Women, which, in addition to its direct members, has representatives of about 100 affiliated societies, said that itbelieves that there are a number of aspects of the proposal which could seriously affect [the control system's] effective operation and could rebound on the consumer".The Department of Prices and Consumer Protection is reported as stating categorically that it would be of no benefit to consumers and many other organisations have suggested that it could diminish the protection that consumers presently enjoy.
The existing controls over misleading advertising are, as we have heard, a balance between statutory requirements and vigorous self-regulation. I stress "self-regulation" as we have heard this described as "voluntary control"; but self-regulation of advertising is not voluntary. Members of the advertising industry cannot choose to opt out of the system, which is one important reason why the present balance between the law and self-regulation works so well. And we have evidence that it works. We are fortunate enough to have the benefit of the Office of Fair Trading's thorough and painstaking review of the United Kingdom self-regulatory system of advertising control, published on November 15th. They establish that 93 per cent. of the 2,993 advertisements that they investigated complied fully with the Code of Advertising Practice.
The assessors used by the Office of Fair Trading were not experts in either the intentions or the interpretation of the code and they believe that about 7 per cent. of the advertisements they examined breach it in some way. In some cases, perhaps, their interpretation of the rules was mistaken. In many cases, as the Office of Fair Trading has recorded, the breaches were "technical" or of an extremely trivial nature. There were very few gross deceptions likely to cause consumers significant harm.
1201 At the Press conference given by the Office of Fair Trading to launch the report, the example given of such a breach concerned an advertisement for a garden shed. The illustration of the shed was marked, "No planning permission required"—which was not true of the whole range of home extensions which were offered by the advertisement. I am not belittling this example. What I home to underline is the smallness of the nut which the EEC proposes to crack not so much with a sledgehammer as a bulldozer. The nature and scale of the problem simply do not warrant the dramatic changes proposed and the consequent upheaval of the present equilibrium between law and self-regulation.
I do not claim that the present system is perfect; I believe that the advertising industry itself would welcome back-up powers vested in the Director-General of Fair Trading to deal with the tiny "pirate fringe" outside the reach of the code and the current legal constraints. But J doubt very much whether any other member of the European Community has evidence that 93 per cent. of its advertisements meet every detail of its national law, let alone that they would meet the infinitely greater demands of the British Code of Advertising Practice. Nor do I imagine that all the aspects of all British statutes and Statutory Instruments enforced by our trading standards officers would prove to be observed scrupulously in 93 per cent. of cases.
Our current control system and, particularly, the self-regulation within it is of very real benefit to consumers. The proposed Directive requires the new statutory measures to be cheap and quick for consumers to use. That is a contradiction of terms. Any statutory measure would inevitably cost more than the price of a postage stamp—which is all it costs a consumer to complain to the Advertising Standards Authority and set an investigation in motion. I am told that the simplest kind of civil procedure for getting an interim injunction would cost some £500 compared with 7p for a second-class stamp: so that is an increase of 714,286 per cent. Is that in the consumer interest? The Advertising Standards Authority does not reveal complainants' names without their express permission. Such a procedure must encourage far more consumers 1202 than court action, which cannot be anonymous.
The present code of advertising practice is far wider in scope than the law, and administered in the spirit as well as the letter, as the noble Lord, Lord Hampton, has already said. The proposed legal system would give consumers less protection at more cost, and actively discourage them from complaining against advertisements which they considered misleading. It could not be anywhere near as quick or as cheap. Were such a system, dependent on close co-operation in the consumer interest, to be replaced by the proposed adversary procedure, no one could expect advertisers, agencies and media to continue to spend their own time and money on ensuring vigorous enforcement. Such enforcement would be considerably diminished, if it did not disappear altogether, at the expense of the very consumers the proposed Directive is supposed to protect.
This now seems to be sinking in to the EEC's communal consciousness. The Minister for Prices and Consumer Protection told the House of Commons on 16th November that the proposed Directive failed to appreciate the strengths of the system of advertising controls that we already have. The very next day, on Friday, 17th November, Commissioner Burke addressed an Advertising Association luncheon. He said that the European Commission never had it in mind to undermine or supplant the self-regulatory system and that Article 7 gives it express—if to some people rather grudging—recognition. He said:I am perfectly prepared to consider whether at this stage greater prominence should be given to the EEC proposal to the self-regulatory system".But "greater" is very unlikely to be adequate.
It has been said—and I have found no evidence to disprove the statement—that we have in Britain the most effective and most vigorously enforced system of advertising control in Europe. If the Directive proposed that member States harmonised with the balanced system we operate in the United Kingdom, there would be a good probability of real and universal consumer benefit. Such a course is not, however, practical. Other 1203 member States do not have the benefit of an Advertising Association which embraces in one body the interests of advertisers, advertising agencies and the media. Nor have they spent over 50 years developing enviably high standards. Nor do they have the mechanism provided through the Advertising Standards Authority to react quickly to changing trade practices, social needs, new product fields, to introduce new controls or amend existing ones quickly, and with the guaranteed co-operation of all sides of the advertising industry.
The Office of Fair Trading's review is extremely timely in dispelling some of the myths and guesswork and giving us some hard facts about the effectiveness of advertising control in the United Kingdom. It seems clear that the proposed Directive is designed to deal with the myth, not the reality—the reality being the results of a continuous raising of standards over a period of half a century. So, this 50 year old baby, still developing well, will undeniable be thrown out with the bath water if the proposed EEC Directive on unfair and misleading advertising is adopted, and those who will suffer are the very consumers it is designed to protect.
§ 6.23 p.m.
§ Lord KENNET
My Lords, the noble Viscount, Lord Trenchard, is to be thanked very much for introducing this debate in such an extremely lucid and informative manner. He is an expert on the subject and a highly valid spokesman of the committee to which we both belong. Later in the debate we shall be hearing my noble friend Lord Thomson of Monifieth, who is doubly an expert in the subject, first having been a European Commissioner and now chairman of the Advertising Standards Authority.
I am a complete amateur in the subject. Until the other day, I was the original ignoramus in advertising in that I did my level best never to look at any. Of course, that did not quite succeed: I did sometimes see some. I used to feel that what persuaded me was anything that was clever, funny or charming. It never occurred to me to wonder whether it was true or not. I took for granted it was not; why should it be? We have been given an instance of the beer which reaches the parts which other beers 1204 cannot reach. That is not true but it is clever, funny and charming. Another example is a singer who has latched on to that and bills herself as a singer who reaches the parts the others cannot reach. This is even cleverer, funnier and more charming. And so on down the line.
Advertisements for a certain vermouth which we see in the cinemas are extraordinarily charming, beautiful and cunning. I think to myself: "Maybe if there is someone at that firm who knows a good advertisement when he sees it—namely, one which is clever, funny and charming—perhaps he can make a good vermouth; so let us buy it". That is what makes me buy; not the claim of any factual nature that it is better than anything else or better for you, but simply evidence of intelligence in that commercial enterprise.
The other day, by chance, I was pitchforked into one of the hot seats on this matter. This House was kind enough to send me as one of its members to the European Parliament. In the European Parliament there is a rapporteur system which is extremely complicated. There is a system called pondération—which is the French for "weighting". Like so many other French words, it is now coming into English and we call it "the ponderation". Whenever a proposal from the Commission comes before the Parliament and a rapporteur has to be found to go into it and make a proposal to the Parliament for what the Parliament should think on it, pondération swings into effect. First of all they ponderate: Is it an important proposal? Is it really important? Will it affect people? Then they ponderate: Is it politically glamorous? Even if it is unimportant but still politically glamorous a lot of people will want it. Then they ponderate: Which political group last had a report and of how much importance and glamour?
When all this has been stirred up and put into the computer at the end of the day a report goes to a certain political group. There follows a mini-political pondération about which of our individual members, and from which country, last had a report which had been adjudged to be of such political importance and such glamour, and the Party machine comes into effect. One thing that this marvellous system does not take account 1205 of is whether the victim at the end of the day happens to be someone who knows anything about the subject, cares anything about the subject or has even heard of the subject.
So much for telling the House how I have become rapporteur on this draft Directive to the European Parliament. I should report to this House this is simply a matter of climate and opinion. It is very obvious to us in the British Parliament in the British legal system and Whitehall that Articles 100 and 235 of the Treaty of Rome mean what they say. They say that if something is impeding the smooth creation of the Common Market and if it is distorting competition, then the Commission may introduce a Directive to stop that happening and, subject to the approval of the Council of Ministers, may require member countries to adopt harmonised measures or standardised measures.
It is obvious to us that if there is no evidence of a distortion of competition across frontiers, they should not be introducing Directives under Article 100. But I have to report as a returned traveller that this is not obvious to the other member States of the European Community, the European Commission or the European Parliament. There if we point that out, we are simply told: "You are being British again; you are obstructing things". They produce very full and valid precedents for tens or even hundreds of occasions when measures have gone through without any real evidence on the distortion of competition, which they were designed to avoid, ever having existed. It is taken for granted among the other countries that if a measure looks like a good idea one does it under Article 100 with or without proof of the distortion of competition. I am still reporting a situation which is objectively the case. It annoys the other countries very much when we get up and claim that this ought not to happen. They say they were doing it for 15 years before we joined and they do not propose to stop doing it now.
This is a factual report to this House. I do not have any opinion on the matter: I am precluded by my position as rapporteur from having an opinion on this matter. I would simply tell the House, and anybody outside the House who can hear, that it is a very strong opinion held 1206 by the others and they are very fed up with us for taking the opposite opinion. In time maybe we shall come to a general resting-place, but for the moment this Directive is a quite striking and dramatic case of that normal difference of opinion between the rest and us.
The noble Lord, Lord Newall, has given us a number of striking figures in defence of the thesis that everything is for the best in the best of all possible Britains. He says that only 7 per cent. of our advertisements appear to be against the code: I believe that was quoted from the latest publication of the Director-General of Fair Trading. I hope that the noble Lord, Lord Thomson, when he comes to speak will be able to put a fuller gloss on what I am about to say.
There are 25 million advertisements a year in this country, and 7 per cent. of that figure is somewhere between 1½ million and 2 million. We can hardly stand up to opinion in the rest of the Community and say that we refuse to change our system because it is so perfect that we only have 1½ million advertisements which contravene our own rules every year. That would hardly be a realistic position and I think that statistic should be seen in proportion from both sides.
Let me touch for just a moment on an issue which has not been raised in this debate so far, though it was raised at great length during the debate in another place a week or two ago: that is the question of fear. It would be against the draft Directive to base advertising on "sentiments of fear"—to make an appeal to fear. The objection has been raised in this country: "But what about Government advertising against smoking, for instance?" That is based on fear, and rightly so; and there is a good deal of advertising to the effect: "Don't do something or other because if you do it will have bad effects". It would obviously be wrong to seek to circumscribe such warnings, since they are true, and it is right that people should be told they are true.
The draft Directive as it now stands would not catch that kind of advertising because, in its terms, that kind of advertising is not advertising. In its terms, advertising is simply a statement made in the course of a trade or business, promoting 1207 the sale of goods or services. A Government insert in a newspaper saying "Don't smoke" is not advertising within the terms of this Directive, and therefore it seems probably all right to accept that there should be a Community Directive at the end of the day which makes reliance on fear improper.
What we are talking about in this dispute between us and the rest is this—and perhaps I could fill this in a little: it is not a dispute between Britain and the rest tout court. There are others who do not like it and one country where it is not much liked, although the objections are not nearly as strong as they are in this country. That country is Denmark, where their existing ombudsman system is in conflict with what is proposed in the draft Directive as it now stands. The conflict is not so sharp and will not be so difficult to resolve as is the case in our country between the ASA system and the proposed legal system of court jurisdiction. It is only a question of the relationship between a jurisdictional system and a voluntary system. The draft Directive as it stands makes it perfectly OK for the splendid Authority of the noble Lord, Lord Thomson, to continue exactly as now, but what it wants to do is to make it also a criminal offence to engage in this kind of advertising. Let us get this straight, because it has not yet been made clear—the fear among those who object to the draft Directive is that the Advertising Standards Authority would wither away if a legally enforceable regime were set up over its head, simply because the parties to disputes would not be prepared to lay before the noble Lord, Lord Thomson, all the arguments which they would later have to display in court. I think that is the essence of the defence of the present system and the essence of the objection to the new proposed system.
Nevertheless, we have the fact that my right honourable friend Mr. Hattersley, who is the Secretary of State responsible for this, has recently called for a statutory back-up system. He has rejected the draft Directive in its present form and has endorsed the opinion of those who maintain that the ASA must continue, but has called for a statutory back-up system for the Authority. I hope it may be accepted in due course that something can be made out of all this which will in effect be a 1208 statutory back-up system for the ASA but which will not carry any risk of causing that Authority to wither away, and indeed will have the effect of strengthening it. I do not want to poach on the territory of the noble Lord, Lord Thomson, because he will tell us a lot more about this much better than I can, but there are people who are getting away scot-free at present by simply cocking a snook at the ASA. They are expelled from the association; they are pariahs and so on; but they are not criminals and if they think it is worth their while they can go on cocking a snook and defying all the standards.
If we can devise something which would allow such cases as that at the end of the day to be brought into court, that would be a reconciliation between all the interests. It is not too difficult to do so. It might be done in one of two ways: either the ASA could be empowered to take them to court or the Director-General of Fair Trading could be empowered to do so, which would make him very much like the Danish ombudsman. But—and I think there is no point in ignoring this fact—there is a very strong feeling—
§ Lord MACKIE of BENSHIE
My Lords, would the noble Lord give way for a moment? Could he tell us in what way they are cocking a snook at the ASA? I understood they had the power to stop them advertising: in other words, the newspapers would stop taking their advertisements.
§ Lord KENNET
My Lords, I think I ought to leave the authoritative answer to the noble Lord, Lord Thomson. I believe it is the case that if an advertiser inserted an advertisement which was against his standards and was then expelled from the association—assuming that he was ever a member—and that if the association then told the newspaper which had carried the advertisement that he was expelled from the association because he was a villain, the newspaper could also cock a snook and continue to carry it. I believe that is the case, but the noble Lord, Lord Thomson, will correct me if I am wrong. We do have this figure of 1½ million a year of advertisers who break the standards. It is not negligible.
1209 To come to the question of how this might be handled, I think the sticking point between the objecting countries, Britain and perhaps Denmark, and the others—and therefore the Commission, because the Commission does reflect the opinion in the other Continental countries with the exception of Denmark—at the end of the day is likely to be: should the citizen or the consumer group, as an individual or as a class, have the right to go to court and complain about an advertisement? If the ASA has not done so, should he have the power? If the Director-General of Fair Trading has not done so, should he have the power? The Commission of the European Communities is very likely to maintain its proposal that he should. It would then be a question of saying in Britain: "No, we cannot accept that: the private citizen may not have access to the courts on this matter. "If we say that to the Council then the Directive could be killed, because that is the way things go. However, I think we should all be thinking about whether we want to fetch up in a position where we alone, possibly with one other country, appear to be denying access to our courts to single citizens and classes of citizens who in all other Community countries have access to the courts.
Having said that, I think the chances of coming to some kind of draft which will meet with the agreement of the majority of the European Parliament and of all the Ministers, when it comes to the Council of Ministers, are not very high. Equally, they are not very low: in my view it is about 50:50. Speaking personally again, if I may, I would say that if we do not succeed it is not the end of the world for the prosperity, happiness and morality of the European Community peoples.
§ 6.40 p.m.
§ Lord DIPLOCK
My Lords, like the noble Lord, Lord Kennet, and perhaps more plausibly, I disclaim any knowledge of advertising. But I hope that I may be permitted to say a little about two of the Articles in this Directive which deal with the legal procedure which, if the Directive goes through, will be compulsory, because this raises an important question of principle affecting the ad-minstration of civil and criminal justice in the United Kingdom, and the extent 1210 to which our having joined the Common Market will compel us to alter a system which has lasted so long and, I venture to think, worked comparatively well.
There is a basic difference between the system of administration of justice in the common law countries and in those with the Romano-Germanic systems which are those of the original six member States. I do not say that our system is necessarily better, but what I do say is that it is very different both as regards the roles which judges and advocates play in the administration of justice, and as regards the underlying concepts as to methods by which truth can best be ascertained and justice done.
As I say, our method would not necessarily be better, but it is the only method that we are used to. It is suited to this country by its history, by our national temperament and by our particular sense of fairness. One thing that I have learned from a considerable experience of comparing systems of legal procedure in different countries is that you cannot successfully graft, for a particular purpose, some organ from a different system into a wholly different body of procedural law. Under Article 5 of the Treaty, we have a general duty. It reads:Member States shall take all appropriate measures … to ensure fulfilment of all the obligations resulting from action taken by the institutions of the Community",and this applies to the obligation to give effect to Directives.
The noble Viscount, Lord Trenchard, has quoted Article 189 of the Treaty, which states what the objectives are. They are to,be binding as to the result to be achieved: but shall leave to the national authorities choice of form and methods".In this Directive, Article 1 defines the results to be achieved in very simple terms,To protect consumers, persons carrying on a trade, business or profession, and the interests of the public in general against unfair and misleading advertising".I wish to say nothing about the definitions of "misleading advertising "or" unfair advertising"; they have already been dealt with. But what I do want to say something about is Article 5.
1211 It provides in its first paragraph:Member States shall adopt adequate and effective laws against misleading and unfair advertising".That, in the light of Article 5 of the Treaty, is unnecessary, but it is perfectly harmless. It presents no difficulty, because our existing laws, which include the common law and not merely statutory law, provide a very adequate machinery for achieving the objects which I have just read out. But Article 5 then gets down to the form which these laws are to take, and the methods by which they are to be enforced. The details are apparently based largely upon French law, which is familiar with the mixed criminal/civil action; an action partly criminal and partly civil, which does not form part of our jurisprudence.
The first paragraph provides that there must be provision for civil action by persons suffering loss or damage. Again, that presents no difficulty. The common law itself already provides for it here. It then goes on to say that these remedies shall also be open to associations. That would either involve, if you imported it into English law, the admission of the part action, which is unknown to English law and which, where it has been adopted in the United States, has led to great difficulties which, if it had to be dealt with in the English system of procedure, would fill me with horror as a member of the Judiciary of this country; or, alternatively, would provide for a new form of locus standi hitherto unknown to English or to Scots law.
Then, the next paragraph goes on to provide for injunctions and it appears to contemplate two kinds of injunction, one of them at the behest of a public authority. That I do not mind. There is already provision of that kind in the Fair Trading Act. It provides the statutory back-up, of which the noble Lord, Lord Kennet, spoke, and that is something which is simply developing our own system. It is perfectly possible to put it into English law without the dislocation that the Directive would require.
The same paragraph goes on to deal with injunctions to be granted in civil actions without proof of fault or actual prejudice. That conflicts with the general law relating to the grant of injunctions in civil proceedings; and do not forget, my 1212 Lords, that injunctions involve perhaps the most serious kind of what are, in effect, criminal sanctions, because disobedience of injunctions is contempt of court, for which imprisonment, or whatever punishment the law thinks fit, can be imposed. To bring this new concept of cases where it is appropriate to grant injunctions into English law would—I ask your Lordships to forgive the expression, because it is a tiresome one—stick up like a sore thumb in English procedure.
Then there are provisions for the court ordering the publication of corrective statements, or of a court's own decision. This is unknown in English law. The courts are ill adapted to it and there is no means whatever of insisting upon the appropriate medium for publishing the statement. Here again is something which is unnecessary, something which interferes with our ordinary system of administration of justice.
Finally, let me come to the last paragraph about deterrents and penalties. In English and Scots law, that would be characterised or classified as criminal law. It is true that in the old days we used to have what were known as common informer actions whereby a private individual could bring an action for penalties as a way of enforcing the law. That was finally abolished as an anachronism some 10 years ago. I hope that we are not going to find that anachronism reintroduced into English jurisprudence. So what would be involved is a criminal prosecution. I do not mind criminal prosecutions. There are already some for statutory offences in relation to advertising.
I turn to Article 6, which deals with the burden of proof in both civil and criminal proceedings, for which we are required to provide in Article 5. That places the burden of proof of the truth of everything said in his advertisement upon the advertiser. That conflicts with what is perhaps the most fundamental principle in English and Scots criminal law: that the onus of proof of all the ingredients in the offence lies upon the prosecution. That is the protection which we have built up over centuries for those accused of offences before our courts. It is a protection which I should be very loth to see abolished in this particular case, for no good reason that I can see.
1213 The effect of these detailed provisions in Articles 5 and 6 means that we should be compelled to engraft onto English and Scots law a hotchpotch of civil and criminal proceedings lifted out of a Romano-Germanic system of procedure conflicting with our own and unsuitable in form for inclusion in our system for the administration of justice. If that is permitted in this the first Directive where there has been an attempt to do it, it will set a precedent which, frankly, fills me with horror. If it is followed, it will destroy the coherence of the system of administration of justice in this country. Whatever may be said about the rest of the Directive, I do urge upon this House and upon Her Majesty's Government that Articles 5 and 6, at any rate, should be resisted.
§ Lord KENNET
My Lords, perhaps I may be allowed to clarify one point about class actions. The noble and learned Lord said that this would introduce a new form of locus standi unknown to English or Scottish law. Of course that is so in the case of the courts, but may I ask the noble and learned Lord what the position is with regard to that form of locus standi at statutory inquiries which are held under planning law?
§ Lord DIPLOCK
My Lords, under planning law, anybody whom the inspector allows can say what he likes; but, if the noble Lord will forgive my saying so, planning law—at least, inquiries—is not part of the administration of justice.
§ 6.55 p.m.
§ Lord DRUMALBYN
My Lords, already we have had some distinguished speeches, so I feel very reluctant to impose further upon your Lordships' time. I suppose that my justification for doing so is, first, that I was asked to speak, to which one can always say, "No, thank you"; secondly, that for some years I was chairman of the Advertising Standards Authority. However, as the noble Lord, Lord Thomson of Monifieth, who succeeded me is here, that in itself is not a very good reason, either, but for the fact that I may have been in Brussels since last he was there, unless he came back this morning. I came back last night.
§ Lord THOMSON of MONIFIETH
My Lords, I set off for Brussels tomorrow morning, so the noble Lord has an advantage over me. However, he has the best of all reasons for speaking, because not only was he my predecessor as chairman of the Advertising Standards Authority but also he was the founding father of the system of self-regulation, both as a Minister and then as chairman of the Advertising Standards Authority.
§ Lord DRUMALBYN
My Lords, I am very grateful to the noble Lord, although I always call him my noble friend. In that case, he places upon me a very heavy responsibility. I am sorry to see the noble Lord, Lord Kennet, departing at this stage; perhaps it is only to have consultations and, as rapporteur, to start writing his report. However, I should like to comment on one or two things in his speech. First, I think that we can rely upon his report being quite as witty as the wittiest of advertisements, and I think that he may be considerably aided by what is being said today in the House. Also, I think that I am a sufficiently good European to be able to make the point that if there was evidence of abuse of such gravity and magnitude that it was absolutely essential for us to change our system, whether the abuse was in this country or in other countries of Europe, then I should be bound to say, "Well, it's too bad. We have a choice of evils here. We must bring our system into line."
But what I think the noble Lord has to consider, and what I am sure the Government will be considering, is whether that applies in the case of misleading and unfair advertising. Is it really worth while to ask Great Britain to change her system so radically as the Directive will require in order to harmonise? This is a very important point. I understood "harmonise" to mean bringing the existing laws into line. However, if one is adding to the existing laws, as appears to be done in the case of the instant injunction, then that is going rather further than the pure harmo-nisation, the pure approximation of laws. If to add to it were part of harmonisation or approximation, then, to carry the matter to an extreme conclusion, one could harmonise by completely changing the laws of all the countries. I do not believe that to be right or feasible.
1215 The noble Lord called in aid the review of the Office of Fair Trading, which is an excellent document, in which it found that some 7 per cent. of advertisements were in contravention of the code. I am choosing my words carefully here because of course that does not mean that by being in contravention of the code the advertisements were necessarily misleading. There are other ways of being in contravention of the code. However, I should like to point out in passing that that figure is exactly half the figure that was found at the last count which was done by the Bureau of the European Union of Consumers. I think that is the right title, translated from the French. That found that there were 14 per cent. of contraventions at that time. But, just in case one may wonder whether there is any justification for the suggestion that our system does somewhat better than systems abroad, a similar inquiry was conducted in Germany which found four times as many contraventions. I think perhaps it is worth bearing that in mind when we are considering the necessity for har-monisation and how it is to be done.
I should like to congratulate very much indeed my noble friend Lord Trenchard on the splendid start which he gave to this debate. I should like to add one point to what he said; it has not really been stressed quite as much as it might have been. We have in this country a dual system of criminal prosecutions for false and misleading advertisements under the Trade Descriptions Act and the other Acts concerned. Of course, under those Acts it is possible for anybody (except in Scotland) to bring prosecutions. In fact very few individual consumers do. I believe there is a record of one having done so, and I am not certain that it was not the brother of the noble and learned Lord, Lord Diplock.
Then of course it is possible for the fair trading authorities also to bring prosecutions. That is not a class; they are an administrative organ of government although they belong to the local authorities. It follows that we would already be in compliance with a very large part of the Directive as it stands. I do not think I am going too far in saying that a great deal of that Directive derives from the Trade Descriptions Act and also from the British Code of Advertising Practice. 1216 It is the things which are added to that which are open to question.
It has been said, quite correctly, that the present Advertising Standards Authority and the self-regulatory system as a whole is not perfect. I may say that there has been a steady improvement, both in its record and in the effectiveness of the code. But it is not perfect, and the report of the Office of Fair Trading has made some suggestions for its improvement. Personally, I am not sure that all of them would improve it, but that is a matter for further consideration. Also, of course, there are proposals for the strengthening of the Trade Descriptions Act. What is the opinion of the Government on this? Are they of the opinion that if these measures are taken we would be complying with anything that could resonably be demanded of us? Are they of opinion that the new procedures that are being suggested in the Directive are not only unnecessary but might have bad effects, not only on the self-regulatory system but also on the consumer? Are they of opinion that there is any scope for further discussion within the Commission and between the Commission and the various countries concerned?
Reading the minutes attached to the report of the European Committee it seems to me that the Department are of the opinion that the Directive goes much too far in tampering with the form and method of the system that we have at the present time. I think it is worth while at this stage in the debate to repeat what Article 189 says. It deals with the effect of a Directive which the Council has approved, and it says:A Directive shall be binding as to the result to be achieved upon each member State to which it is addressed but shall leave to the national authorities the choice of form and methods".Whatever can be said of this Directive, it certainly does not do that. I do not know what happens at the next stage. We do know that any such Directive, even though it is carried by a majority—it may be only a qualified majority—in the Commission must be approved unanimously by the Council. The Council can either approve or, I believe, refer it back.
What is going to be the objective of the Government in this? Are they going to ask for further time to consider it? 1217 I think I am right in saying that at the end of the title the Directive has "final". There is not much finality in things of this kind which have already gone on for a long time, and I suppose it means final before it goes to the Commission; but I am not even sure of that because it might be altered in the light of representations made in the Economic and Social Committee or by the European Assembly itself.
We want to be quite certain here, first, as to what can happen in the light of this debate and, secondly, as to what attitude the Government intend to take. They are perfectly entitled to say—and I rather think they will say—that they will take into consideration what has been said in the course of this debate; but I hope that they will be able to go a good deal further than that in this case and indicate full support for what was said by their representative to the committee itself.
The Department of Prices and Consumer Protection gave this evidence to the Sub-Committee:We have no evidence whatsoever that there is any impediment at all to intra-community trade as a result of differing practices as now conducted".It went on to say:There is no evidence to suppose that advertising as such hampered the free movement of goods and services between countries".The Commission appear to have no evidence either, because another witness said that he had himself asked the Commission whether they could instance any such an effect, and the answer given was that there was a tendency for German customers to cross the border into Holland to buy certain household goods because of the less strict laws on price cutting and premiums offered with the goods. These are matters which are right outside the Directive before us. If one or other of the countries feel that their citizens may have been placed at a disadvantage vis-à-vis the other, surely the two countries can settle the question between them without the need for all the hoo-hah, if I may put it that way, that we are having over this matter.
What we must make clear—and I detected in what the noble Lord, Lord Kennet, was saying a doubt about this—is that we all accept that it is desirable that all States should have some form of 1218 laws against misleading, and possibly also unfair advertising. The fact of the matter is that they all do have that; and I think it is a shade arrogant of the Commission, or the Directorate General at any rate, to start off by saying that the object is to protect the interests of consumers, and so on, as if they were not protected already. However, it is fair to add that even if all the laws were identical there is no way of ensuring that the same view would invariably be taken in the case of each particular advertisement in each of the member States as to whether it was or was not an infringement of any of those laws.
If that is so, and I am sure it is so, should we not go as far as desirable and no further, which is just to make certain of what is intended, the protection that it is intended to provide and for whom it is intended to be provided, without going into great detail as to how it should be provided? At the present time when an advertisement contains a plain lie no doubt it is nailed in all States to some extent; and there, of course, the question is to what extent you can nail a lie and what proportion of lies are nailed. I would respectfully submit that the proportion is likely to be very much less than the proportion that is found under the self-regulatory system. Of course, lies are only a small part of the field of misleading and unfair advertisement, and one that should be dealt with and is dealt with by criminal law.
The second question that arises is whether the Directive leaves national authorities the choice of form and method. The evidence of the Department indicated quite clearly that it does not. What was said was:Where we part company with the underlying implication of the Directive is that there is a need to harmonise the means by which the objectives are to be achieved".Nor were they very enthusiastic about combining misleading advertising and unfair advertisement in the same Directive, the more so as one is mainly in the criminal field and the other mainly in the civil field. But I must say that given the different origins and developments and attitudes, for example, the difference between the British and German attitudes to advertising, I am inclined to think that any harmonisation would have to cover both, but it would not follow that the method 1219 should be the same. That is entirely a personal opinion.
My Lords, I hope that the Government will maintain the line of the Department of Prices and Consumer Protection on the second question. Surely it is not too much to invite the Commission to adopt a constructive rather than a destructive attitude towards the means of protecting the consumer. I do not want to be unfair to them. I know that the introduction, for example, of the injunction process was intended to be both innovative and constructive; but if it is going to result in the destruction of the self-regulatory system and in grave prejudice to the legal system, then I doubt very much whether it would be right to follow it. The real question here is that it is obvious that in a situation like this, as Lord Kennet has indicated, we are going to run into a certain amount of unpopularity; we have probably done so already. But that degree of popularity or unpopularity has to be measured against the real advantages and benefits to the Community and the country as a whole. I would have liked to finish by quoting Kipling, but I think I had better not.
§ 7.14 p.m.
§ Lord SAINSBURY
My Lords, may I congratulate the noble Viscount, Lord Trenchard, my colleague on Sub-Committee D, on his excellent presentation of the 38th Report of the Select Committee of the European Communities. The object of the draft Directive, which has already been quoted by the noble and learned Lord, Lord Diplock, is unexceptionable. I doubt whether anybody would quarrel with this objective. We would all agree, I am sure, that the consumer needs, and is entitled to, honest, truthful and unexaggerated information and that taste and decency should be observed. The draft Directive, however, prescribes in detail the method and forms of carrying out the objectives, and this, in the opinion of the Committee, is wrong and misconceived.
The British system of self-regulation must be seen in the context of extensive statutory provisions. There are in all some 60 statutes, the principal ones, as already mentioned by the noble Viscount, Lord Trenchard, being the Misrepresentation Act 1967, the Trade Descriptions 1220 Act 1968 and the Fair Trading Act 1973, which between them provide powerful consumer protection covering not only advertising but all forms of trade description. The detailed control of advertising which follows on these statutory obligations is predominantly self-regulatory and based on a code of practice agreed by the advertising industry and operated by a number of formal institutions, including the Advertising Standards Authority. This system is so much more preferable, in my opinion, to the recourse to legal remedies through the courts. As has already been said, it has the advantage of speed; it leads to much quicker action against the offender than the legal process. Another advantage of a code of practice is that it can be easily adapted to changing circumstances and thereby kept up to date.
I agree with the Committee that the operation of detailed legal control as proposed in the draft Directive would undermine so much of the voluntary cooperation which has been developed in this country and would eventually lead to the discontinuation of our present efficient mixture of voluntary and statutory control. The draft Directive is also considered unsatisfactory because several definitions are imprecise, deficient, or capable only of subjective interpretation, and are deemed inadequate as a basis for legislation. For example, it is surprising that the word "advertiser" is not defined in the draft Directive. In fact, the Committee challenges the claim of the Commission that the different degrees of legal protection against misleading and unfair advertising in member States hinder trade within the Community. For it is unusual, as has already been said, for advertising campaigns to be planned with the prime object of transcending frontiers because of language, ethnic differences, differences in taste, et cetera.
It cannot be disputed that strong controls over advertising are desirable for consumer protection throughout the Community. Nor would we disagree that statutory requirements could not be made more effective in practice in the United Kingdom. But the legal mechanism described in the draft Directive seem to be much too heavy-handed and inflexible. I support the suggestion that the work of 1221 the Office of Fair Trading should be expanded to resolve any possible defects in the existing United Kingdom system. I have already detained your Lordships too long. I should like to conclude by echoing the wise words of Mr. Roy Jenkins, that the Commission should concentrate on areas of real need and should not seek to include unnecessary details, but rather lay down the primary objectives to be achieved and leave the detailed implementation to member States.
§ 7.22 p.m.
§ Lord MOTTISTONE
My Lords, I should like to begin by thanking my noble friend Lord Trenchard for so ably introducing the debate. As a fellow member of Sub-Committee D, I certainly agree with him and, notwithstanding the reports, statements and various meetings that have taken place since we made our report last summer, I would subscribe exactly to what we said then as being wholly applicable now. I shall not bore your Lordships with any detail as regards this matter because many other noble Lords have most capably covered the ground. There are only two matters that I should like to dwell on very briefly. First, it seemed to me that in his speech the noble Lord, Lord Kennet, in advertising the attitudes of our fellow countrymen in the Community, was trying to frighten us. Whether it was a frightening advertisement I cannot be sure, but he was trying to say to us: "Look, your recent report says that 7 per cent. of the advertisements do not conform to the ASA code. That can be translated into l¼ million advertisements and is not that a huge number?".
§ Lord MOTTISTONE
My Lords, this surely needs to be taken in perspective. My first point is how badly did those advertisement fail the test; how much did they fail purely on the matter of technicality; and how important is it? For example, I would be prepared to bet that any day—and today as much as any other—more than 7 per cent. of the cars parked in London are illegally parked in the wrong place. However, we, as a country, do not feel extremely guilty about that: we do not feel that we much change 1222 all of our laws. We might consider that we should improve them, but I do not think that we need feel a great sense of guilt that there are probably nearly 1 million motor cars illegally parked in London on any one day. That would not seem to me—although it sounds a huge number—to be a frightening situation.
Much the same sort of attitude needs to be applied to the statistics relating to advertisements. As my noble friend Lord Drumalbyn said, the situation is improving and that is perhaps because the system we have is not too bad.
§ Lord KENNET
My Lords, Yes, I cannot resist it. Will he give us his opinion of the following possible advertisement to be seen in tube stations. "Are you legal, decent, honest and truthful? Ninety-three per cent. of advertisers have to be."
§ Lord MOTTISTONE
Is it not slightly like, "Have you ceased beating your wife?" because it does not really pick up the point about how much the splendid qualities, about which the noble Lord has been talking, have been transgressed. However, let us leave it there.
§ Lord MACKIE of BENSHIE
My Lords, perhaps it would be worth mentioning that 6 million advertisements in Germany apparently transgress the code.
§ Lord MOTTISTONE
My Lords, that is splendid. I should like to pursue another point which is rather more important and which the noble Lord, Lord Kennet, touched upon. Can the Government clarify their attitude about the general business. The fact of the matter is that as the noble Lord, Lord Kennet, said the Secretary of State for Prices and Consumer Protection has, during the past month, been making statements to the effect that there needs to be a statutory back-up to the present self-regulatory system and that he is looking into that and asking questions about it. That to 1223 my mind does not fit in with the wholly admirable speech made by his Minister of State in another place on 16th November at column 707, when he said:This predominantly self-regulatory process is backed up by about 60 statutes each covering aspects of advertising, though the statute law is not foremost. The law is used to provide the necessary back-up if the administrative control should fail to be completely effective".At column 709 he said:I share the view of the Select Committee and the Scrutiny Committee in another place"—I am delighted to hear that he agrees with us—that two systems of regulation—one the voluntary system and the other recourse to the courts—could not in practice co-exist and that in their present form the Commission's proposals would seriously undermine the administrative control systems and would certainly not work as well".It would seem to me that the Secretary of State, in seeking to produce additional statutory back-up to cover the self-regulatory system, is in danger of creating the very condition which his Minister of State has told us is likely to make matters worse. That is made clear by the second quotation. It would be most helpful to hear from the Government exactly what is the policy that is emanating from the Department of Prices and Consumer Protection. It would seem to me that the views expressed by the Minister of State are wholly admirable and need the fullest support from the Government, including the Secretary of State. I shall not keep your Lordships any longer as I am sure we are all most anxious to hear what the noble Lord, Lord Thomson of Monifieth, has to say.
§ 7.29 p.m.
§ Lord THOMSON of MONIFIETH
My Lords, I must begin by declaring an interest. As has been indicated during the debate, one of the posts which I hold is Chairman of the Advertising Standards Authority which, as your Lordships know, gave both written and oral evidence to your Lordships' Committee. I should like to join with everyone else in congratulating the noble Viscount, Lord Trenchard, and his colleagues on the Committee, on the report that they have produced. I hope that, as it shows every sign of doing, the House will agree with the conclusions of the report, and I very much hope that Her Majesty's Government will, 1224 in fact, be guided by these conclusions in further discussions of this Directive in the Council of Ministers and elsewhere.
However, apart from its implications for British law and practice in the field of advertising standards, the report has very large implications for the development of Community policy, going far beyond the immedate subject matter of advertising control. Before I return strictly to advertising, I should like to say a few words about that aspect. As a former European Commissioner, it is a chastening and no doubt a salutory experience to find oneself at the receiving end of a Commission Directive. This particular Directive, as other noble Lords have said, seems to me to be unexceptionable in its aims: indeed, I think it is admirable in its aims. It is important to protect consumers from misleading advertising and, indeed, to ensure that advertising—so pervasive in our society—maintains socially responsible standards.
I was interested in what the noble Lord, Lord Hampton, had to say on that aspect. I would only say in parenthesis to his remarks about the danger of creating unneeded wants—the danger of forgetting about our finite resources—that I do not think we can expect the advertising business to take on itself the burdens related to much wider fields of political policy which are the responsibility of all of us. Indeed, I might say—and it is outside my responsibilities as chairman of the Advertising Standards Authority—that one of the conclusions I have reached as regards this country's economic problems is that we need more marketing rather than less if we are to regenerate our economy and dispose of the products of that regeneration. But, of course, the marketing must be responsible marketing according to good standards.
However, although as the report emphasises, this Directive is unexceptionable in its aims, it is misconceived in its methods. I would only add to what the report says that, apart from the methods being proposed being inappropriate and harmful inside the United Kingdom, I believe they are also quite unwise from the Community point of view. My noble friend Lord Kennet says that the only advertisements he likes are ones which are witty and amusing, and he certainly 1225 provided us with a witty and amusing speech. I think it is becoming known in the advertising industry that if one wants to get an advertisement past the present chairman of the Advertising Standards Authority, one good method is to make him laugh. My noble friend made me laugh with his speech, but I am bound to say that I did not think his speech conformed to what I would regard as being in conformity with the code of good Community practice.
I was rather shocked to hear him say that he finds that his colleagues in the European Parliament, where I am so glad he is now a Member, seem, as he put it, to have a total disregard for whether any proposals that come from the Commission are legal or illegal, or whether or not they are in conformity with the provisions of the Treaty. I hope that the Parliament is not becoming too careless about these matters because this is an important point in regard to this particular Directive. As other noble Lords have pointed out, no serious evidence has been produced to support the justification given in the Commission document that this rests on preventing distortion of trade within the Community. I think that the real justification for the Directive lies not in the Article 100 provision about "directly affecting the functioning of the Common Market", but in the Community programme for consumer protection and information adopted by the Council of Ministers in April 1975. As the noble Viscount, Lord Trenchard, emphasised, that programme was a very general programme which broadly laid down certain principles. I think that the judgment one has to make in the Community perspective is whether or not these principles are in fact being fulfilled in a sensible way.
The consumer protection side of the Commission's work is relatively new and, despite some misconceptions in this country, it is very much under-staffed. It is a very small and new department of the Commission. I believe that it is potentially an important part of the Community, if the Community itself is to have a human face and to do things which are relevant to the ordinary experience of the individual citizen. But, if it is to serve the consumer, it ought to beware of getting the reputation of intervening with too 1226 much grandmotherly fussiness in some of the details of our daily lives which are best left to national governments or, dare I say it from these Benches, sometimes best left alone altogether.
There are now a number of warning signs—this Directive is one and there was a recent Directive on doorstep selling—that the Commission ought to take a look at its consumer strategy and get its priorities right. The top priority for the consumer activity within the European Commission ought beyond doubt to be to ensure that consumer considerations are given much greater weight in the determination of the Common Agricultural Policy. Inside the Commission, those concerned with the consumer side should be taking on Directorate-General for Agriculture rather than getting in our hair here in the way they are doing. This is by far the most important and most relevant consumer responsibility for the Commission to assume. But, when the Commission moves more directly into the field of consumer protection, I think it should do so with considerable prudence and with a clear concept of what it seeks to do. I suggest the following points.
First, where public safety or health is concerned, there is a strong case for combining national regulations in a single Community regulation, though it it is still very necessary to do that in a common-sense way. Secondly, where there are distortions to trade and where there is the opportunity for an expansion of inter-Community trade, there is a great public advantage in exporters facing a single Community standard instead of having to cope with six, seven, eight or nine separate national standards. But here harmonisation should be optional for those who wish to export, leaving the Scots with their haggis, or the Bavarians with their beer to go on making them in their own peculiar way if they do not wish to send them across the internal frontiers of the Community.
Finally, where the Community has a really positive and important role to play in consumer protection is in providing comparative information about arrangements in each others' countries and encouraging member States to adapt the best practice in the Community as a whole to its own legal and administrative 1227 traditions. The present President of the Commission, Roy Jenkins, has just been quoted by my noble friend. I offer another quotation from the President. He said recently:It is no part of our philosophy or practice to enforce uniformity. What would be the purpose of trying to make the British act like the French or the Italians act like the Danes?But he added:That is not to say that all of us may not after have something to learn from others".I very much hope the Commission will increasingly concentrate on that side of things, because I think one is bound to say that, despite these assertions, which were made in the days when my noble friend Lord Soames and I both sat in the Commission, one needs constant vigilance and constant effort to try to maintain the right sort of balance in these matters.
Clearly, in this case, the balance has gone wrong. I think that the present Commission has gone wrong basically because it seeks to apply the essential characteristics of one national system—with the greatest possible diffidence and respect to the noble and learned Lord, Lord Diplock, it is probably more the German system in the advertising field than the French system—to the Community as a whole. That is as unwise as seeking to apply our pragmatic British system to other countries of the Community. I have no doubt that the German practice, with its reliance on litigation, is consistent with German traditions. But other countries have their own ways of doing things. I certainly agree entirely with the noble and learned Lord, Lord Diplock, about the very great difficulty of grafting one legal system—one legal habit—on to another. But to hang the reversal of the burden of proof on so improbable a peg as advertising control is an extraordinary thing to do. I might just add that one of the strengths of the self-regulatory system is that under it the burden of proof lies with the advertisers. It can lie with the advertiser in a self-regulatory system; but once you get into the courts it is quite another matter to reverse that very fundamental tradition.
In Britain's case the system we have built up, as has been described by other noble Lords—and I shall not cover the same ground—is a peculiarly British 1228 mixture of statutory control and self-regulation, very consistent with the mixed economy that it serves. The Advertising Standards Authority side of it has recently been the subject of this report by the Office of Fair Trading, which has been described. I was happy to hear the quotations that other noble Lords have made from that report, because I think it shows that it is working reasonably well.
My noble friend Lord Kennet dealt with the question of the percentage figure it produced, the 93 per cent. figure, which he quite understandably turned the other way and then did his arithmetic. The noble Lord, Lord Mottistone, asked for a judgment about what the real figure was in terms of serious breaches of the code of practice. Our judgment in the Advertising Standards Authority would probably be that the real figure is around 2 per cent. or 3 per cent., and that is consistent with what is mentioned in the report where it says that a number of the breaches were technical breaches and not breaches of substance.
I would therefore put it to my noble friend Lord Kennet in this way: I do not think that misleading advertising makes people lose sleep a great deal at night. It would hardly be described as one of our great national problems. But if you were to say in the matter of divorce that you had 97 per cent. success in marriage, if you were to say in the matter of industrial relations that you had a 97 per cent. success in avoiding unnecessary strikes, I think that on these really important matters people would judge that the institution of marriage was not in bad shape and that industrial relations in this country were rather healthy. I think that that is a fair perspective into which to try to put these statistics.
There is general agreement that, although our British system is probably one of the most developed in the world—and I think it has been looked at independently and found to be working well—it is by no means perfect and there is room for improvement. I could perhaps tell the House that the Advertising Standards Authority will be having discussions with the Director-General of the Office of Fair Trading about the various detailed recommendations he makes; to discuss co-operatively and constructively with him 1229 as to how our internal procedures might be made even more efficient.
I think also that there is a general agreement that spreads from the consumer organisations, on the one side, through the Government Departments and agencies, and to the advertising business, that there would be advantage in some further statutory back-up to deal with what is commonly called the "pirate fringe" which operates outside the self-regulatory system, and to which my noble friend Lord Kennet referred. There is less agreement on how this can best be achieved, but there is a broad consensus that it is something that is best left to be worked out at the national level.
This Directive, as drafted, would not help with the real improvements needed; and this Directive, as drafted, would do very great positive harm. I was much encouraged to hear from the noble Viscount and others Mr. Burke's reaction to seeking to bring about changes and improvements in this Directive. Mr. Burke has a very important responsibility in the Commission. It is fair to say that he inherited this Directive. This Directive, rather to my surprise when I returned to London, had been gestating in the backrooms of the Berlaymont when the noble Lord, Lord Soames, and I were there. I hope that it will be possible for the Commission to amend it in the light of the general debate that has been provoked not only in the British Parliament but within the wider Community institutions. I also agree with my noble friend that, if at the end of the day it were not possible to do so, I think on this matter if Her Majesty's Government were to say, No, it would be entirely consistent with a policy towards the Community based on a firm conviction about the advantages of Community membership for Britain. There is no obligation as part of the Community to say, Yes, to everything, although I am sure in this case that it ought to be possible to find a compromise so that the admirable aims of the Directive can be achieved by each country following its own legal and administrative traditions.
If I may trespass for just 30 seconds on the debate to follow shortly about the European Monetary System, I would only say that although I think we are entirely justified in taking the view that has been formed in the British Parliament about this 1230 Directive, and although I believe that a negative view about this Directive is entirely consistent with a positive and enthusiastic view about Britain's real future lying in the European Community, it helps a great deal for the United Kingdom to carry conviction on these lesser matters in the Community if once in a while we would be really positive about the great issues.
§ 7.47 p.m.
§ Lord REDESDALE
My Lords, I should like first to join with everybody else in thanking the noble Viscount, Lord Trenchard, for giving us the opportunity of debating the draft Directive this evening. I should also like to heartily congratulate all those members of Sub-Committee D who have spoken tonight, as well as those who took part in producing such an excellent report.
At this late stage in a debate I feel it is rather like a shy at a fair where most of the coconuts have already been knocked off and there are very few prizes to be won. However, I must at this stage declare an interest in that I currently advertise in most of the European countries; I have spent 25 years in the advertising industry, and I feel that these things are a qualification rather than something that precludes one from speaking in such a debate.
There is one thing I found in those 25 years in advertising; that is, that nearly everybody considers themselves to be experts on one side, and also of course that nearly everybody you ever talk to says that personally they have never been influenced by advertising. These are the two sides of the argument. On the other hand, some consumerists attribute quite fantastic pulling power to advertisements which not even an old-time huckster could hope for in his wildest dreams. Somewhere in between there is the true effectiveness of advertising.
Obviously the vast majority of those people concerned, such as the advertisers, the trade bodies, the agencies, and the media, subscribe wholeheartedly to the underlying concept of protecting the consumer from misleading advertising. However, this draft Directive is certainly not the way of achieving this. I cannot resist going through just one or two of the Articles, and raising one or two points. I shall try not to delay the House too 1231 long, especially those who are following on the "snake". I am sure that the noble Lord, Lord Soames, may be getting hungry, but he would never make a meal of a "snake"!
On Article 2 we come to the definitions. I think that this was amply covered in the report. It is obviously far too wide. Take the word "misleading", for instance. The Trade Descriptions Act in law covered this much better, because instead of using this general term "misleading" it actually says "false to a material degree". There are other bits that come up, and they were discussed at some length in another place, such as what exactly "unfair" meant. "Unfair" could, rather like the Rent Act in some ways, turn round and bite the people it is designed to protect, so "unfair" could be extremely damaging not only to consumers but advertisers, and for all the wrong reasons.
"Fear" came up and that, too, was debated. Apparently it is okay for a Government to use fear, but not an advertiser. I suggest that certain principles must be adhered to; either something is good or bad. Then there was the question of "arouses expectation" and I thought that, on this point, the noble Lord, Lord Hampton, ran away from the Directive a little, in that he was saying that false hopes could be aroused and that the whole basis of advertising, which is promise, was wrong. The noble Lord was in the industry and he must be aware that it has done a considerable amount of good, in that it increases the volume of trade so that prices can be kept at economic levels, and I need not develop all the arguments on this theme, which we know so well.
The noble Viscount, Lord Trenchard, discussed Article 3 and the section which describes omitting material information, that really touched on the point of the contravention of the codes was raised. The noble Lord, Lord Kennet, in his amusing speech (though I regret he is not in his place now) said there were about 1.5 million—though if he was referring to 25 per cent. it would be 1.75 million—misleading advertisements. As the noble Lord, Lord Mottistone, pointed out, it is a question of degree; some of those were minor infringements and therefore the figure must come right down.
The noble Lord, Lord Kennet, made other interesting points and, in his second 1232 intervention, admitted that he could not resist; perhaps we should call him the unresisting rapporteur! Could a self-regulatory system run alongside a legal system? He thought that perhaps it could. I do not believe it could work, although I subscribe to the view that perhaps the ASA could be given additional back-up powers through the OFT; that, I think, would be a sensible system, but I do not think the two could be run side by side as was indicated in the Directive.
Regarding Article 5, the legal aspect, I would not dream of throwing a ball at any remaining coconuts because the noble and learned Lord, Lord Diplock, ably and learnedly covered the point. However, I wish to touch on the point where the Directive seemed to be wonderfully optimistic in saying that a cheap, effective and quick method of legal safeguards could be introduced. In my humble experience, I have found the law never to be cheap—indeed, always to be expensive—and it seems to move with the speed of rock erosion. Lord Diplock covered the question of the burden of proof on advertisers and spoke of—I reiterate it only because I believe it to be so important—what is perhaps the most fundamental basis of English and Scottish law; namely, that you should be innocent until you are proved guilty. Regarding Article 8, the purpose apparently is harmonisation, although there seems to be some doubt about the total purpose. The Directive said it allowed for some countries to have stricter legislation, and that does not seem to be a move towards harmonisation.
I do not want to detain the House because the matter has been ably covered by previous speakers. I want to leave your Lordships with one thought in particular because it is vital: the self-regulatory system works because it demands observance of the spirit as well as the letter of the code, whereas—those of us who have been in business know this only too well—an ingenious copywriter could weasel-word his way around the law. I look forward to hearing from the Minister as to how the Government will proceed further with this matter.
§ 7.55 p.m.
Lord WALLACE of COSLANY
My Lords, I wish on behalf of my colleagues 1233 on these Benches and on behalf of the Government to thank the noble Viscount, Lord Trenchard, for initiating the debate and for his contribution. I am sure he will agree with me that we owe a debt of gratitude to the sub-committee which dealt with this issue in so much detail. My task tonight is made somewhat easier by knowing that, apart from one issue, there is very little between us, either between the committee or the Government, or indeed between many of the speakers. I am also conscious of the fact that we have an important debate to follow, so I will not detain your Lordships for long.
I will not follow some of the light relief examples given by Lord Trenchard and some of the other examples which were adduced by noble Lords, but I am sure that the authorities responsible will take due note of all that has been said. The noble Lord, Lord Newall, and others referred to the report of the Director-General of the Office of Fair Trading. I do not intend to quote from that report because it is with my right honourable Friend and under considerable and careful study at the present time. The matter is, therefore, receiving attention. I share the interest of the noble Lord, Lord Hampton, in advertisements on the Tube, although sometimes the additions to them are perhaps a little embarrassing. I thought the noble Lord raised a moral approach to advertising, and I am sure that his views were acceptable to and fully understood by Members of your Lordships' House.
My noble friend Lord Kennet has been appointed to a difficult job by a system of pondération, something at which the imagination boggles. I have served on the Council of Europe, but it seems that the EEC and the European Parliament is a far more complicated body and I am rather pleased I have not got there. He made an important point when he spoke about appeals to fear; clunk-click is one and the tobacco warning is another. To be fair, I do not think the Commission is necessarily trying to stop those. Article 2 of the Directive defines advertising as 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, and Governments are not normally engaged in trades, bus-nesses or professions, although they 1234 encourage people to buy seat belts and to promote the supply of goods.
§ Viscount TRENCHARD
My Lords, is the Minister aware that the problem of fear does not depend just on Government advertising? I would remind him of articles like burglar alarms, fire extinguishers, safes and insurance policies. One could go on giving examples. They are all legitimately advertised from the point of view of fear.
Lord WALLACE of COSLANY
Yes, my Lords; I would agree with the noble Viscount on that point. I was referring mainly to Government-sponsored advertising. However, more generally, any definition of fear presents serious problems, but within the control procedures proposed it could also lead to long legal arguments. I believe—and I hope the noble Viscount will agree—that subjective matters of this kind are better covered, as indeed they are now in this country, in codes of practice. It all comes back to that; and I believe that is the best way to deal with the matter.
The noble and learned Lord, Lord Diplock, made a considerable contribution to the debate, and for that we are extremely grateful. He referred in particular to Articles 5 and 6. I do not propose to go into detail now because of the time factor, bearing in mind that there is a debate to follow, but I can assure the noble and learned Lord that we fully appreciate, and agree with, the points that he expressed, particularly on Article 6 which I regard as an extremely serious matter, and which involves a principle of British law that must be protected.
The noble Lords, Lord Drumalbyn and Lord Mottistone, both wanted an indication of Government policy. The Government are now considering how best the existing controls on advertising might be strengthened and improved. They do not believe that self-regulation of itself is enough, as they have made clear. They think that the codes of practice which underlie the self-regulatory system need strengthening with modern, effective, statutory, back-up framework. They are conscious that this needs to be done in ways which will not destroy the good will of the industry on which effective regulation depends. This is why 1235 they will give the most careful study to the recent report from the Office of Fair Trading and will listen carefully to the views of the industry before deciding on appropriate action to be taken; but they are firmly of the view that the existing system of self-regulation—and not action through the courts—is a strength to be built upon.
I believe that the contribution of my noble friend Lord Thomson of Monifieth carried weight for two reasons: first, his experience as Commissioner, and now his position as Chairman of the Advertising Standards Authority. I am sure that the words he uttered will be very carefully considered in Brussels and in other places where the Common Market and the Commission operate. I thank my noble friend for his criticism of the Commission, which will be welcomed not only by Members of this House, but by many members of the British public outside.
I thank the two Opposition speakers, the noble Lords, Lord Redesdale and Lord Newall, for their careful and considered expressions of opinion, and indeed for the restraint which they exercised in a situation where there could have been some violent criticism. I will not go into detail now regarding the contribution of Lord Redesdale, but I should say that we share his criticism of the articles which he quoted, and I think that that will meet his point, at least so far as the debate is concerned.
The Directive has attracted a good deal of criticism in this country, not least from your Lordships' own Select Committee. It is all the more important to distinguish between the content of the Directive, which certainly leaves considerable scope for improvement, and the general policy objective which underlies it. I hope that this is common ground. Your Lordships' Committee's report acknowledges (in paragraph 27) some sympathy with the aims of the draft Directive, and it is right to do so. The object of seeking improved protection for the consumer against false or misleading advertising is unexceptionable. It is a view which seems to have been shared generally in the debate in another place. With all the benefit of hindsight, perhaps it is unfortunate that the Commission should have translated this sensible object into a Directive in 1236 quite the present form. Because there is no doubt that certain features of the present draft have proved unduly restrictive, they have cut across our present approach to advertising control—based on a mixture of voluntary and publicly enforced measures, rather than civil law—to a quite unnecessary degree, and to an extent which makes the Directive in its present form unacceptable to the United Kingdom.
The Select Committee has rightly drawn the attention of this House to the fact that, in its present form, the Directive not only would require the adoption of effective laws against misleading and unfair advertising, and for these laws to be enforced through the courts, but also outlines in some detail the procedures by which the laws are to be put into effect. The committee has pointed to the implications of the proposed legal procedures for existing United Kingdom law and practice. It is concerned about the requirement that associations, as well as individuals, should be allowed to institute proceedings. It questions the provision for the granting of injunctions without proof of fault. It questions the responsibility which is laid on the courts to settle the terms of a corrective statement for publication. It is also concerned that the burden of proof in relation to the correctness of a factual claim is reversed in this Directive, and that the Directive might require the creation of new criminal offences.
The committee is right to question these features in the present draft Directive. They are all important matters. They have important wider legal implications for United Kingdom law and practice which, whatever their general merit, ought not to be imported on the back of a Directive narrowly concerned with advertising. However, the Government go even further. In the debate in another place on 16th November my honourable friend the Minister of State for Prices and Consumer Protection questioned whether a rigid legal procedure enforced by the courts is the most effective way of controlling advertising. The Government's view is that given the control arrangements that have already developed in this country, new provision for civil action in the courts under novel rules is not the most effective way of improving the control of advertising, and indeed would cut across the controls we already have.
1237 The House will recall that in giving evidence to the Select Committee the Department's representatives said that they thought that the process of law by itself perhaps was too blunt an instrument for dealing effectively with false and misleading advertising. I understand that the CBI and the Advertising Association also share this view; and, in representing their views on this Directive, both bodies have said that advertising control should be based on an efficient mixture of statutory and voluntary control. The Government agree with them. They think that those who framed the draft Directive may have failed to appreciate the strength of the system of advertising control we already have in this country.
This system was explained in some detail to the Select Committee. In this country advertising has long been regulated dominantly by a process of self-regulation, either by the Advertising Standards Authority through its codes of practice, or through the codes approved by the statutory Independent Broadcasting Authority. It has been explained that this predominantly self-regulatory process is backed up by something like 60 Statutes, each covering particular aspects of advertising. Of all these, perhaps the most important is the Trade Descriptions Act 1968, which, among other things, prohibits false or misleading statements about goods, prices and services in all areas of marketing. But the pattern of development of control in this country has been that the "front-line" controls over advertising are basically self-regulatory. Although self-regulation is operated within a statutory framework, the main effect as the pattern has developed is that the detailed statutory controls have now tended to become almost back-up powers should the self-regulatory system go wrong.
The Government cannot accept a Directive which could have the effect of undermining the authority of the self-regulatory element of the system, and not work as well. The really important feature of the self-regulatory system lies in the codes of practice which it operates. The Government are in no doubt that codes of practice are better than Statute law as the primary regulators of advertising, for a number of reasons. They can be applied in the spirit as well as in the letter: objective inter- 1238 pretation of the law requires it to be obeyed according to the letter, giving considerable scope for avoidance. Codes can embrace subjective questions of taste and morals, even questions of social responsibility in advertising, which are not easily definable in Statutes but which are as important for consumer protection as misleadingness or unfairness. Most importantly, codes of practice can be updated more frequently than the law to take account of continuous changes in marketing practices and the social acceptability of advertisements.
For all these reasons the Government believe that the better control for advertising than the strict legal remedy pursued through the courts would be to continue to develop codes of practice and, where necessary, to strengthen this form of administrative control within an appropriate statutorily-based regulatory framework. The Government do not disagree with the Commission that self-regulation of itself is an insufficient control and needs to be supported by statutory control, but the Government firmly believe that any development of the appropriate form of statutory control is best left to member States to develop in accordance with their existing legal traditions and institutional arrangements.
My Lords, the Government intend to press strongly for this principle as the Directive continues its passage through the various EEC institutions. There will be ample opportunity to do so. The draft Directive—for that is what it is—in its present form has not yet got very far. As your Lordships may know, it has been presented to the Council of Ministers, which has submitted it for consideration to the European Parliament and to the Economic and Social Committee. The Directive is still at this stage, and awaits the resolution of the European Parliament and the opinion of the Economic and Social Committee. The European Parliament has asked no fewer than three committees of that Parliament to report on the present draft, although the primary responsibility, as has already been indicated, is that of the Committee on Public Health, Environment and Consumer Protection, for which my noble friend Lord Kennet, as we know, is the rapporteur and who tonight must obviously be better equipped to go forward with his duties, having also studied, I understand, the 1239 report of their debate in Hansard of the House of Commons.
No doubt both the European Parliament and the Economic and Social Committee will suggest a number of amendments which should be made to the Directive, not only in the light of the work done by them but also in the light of many discussions which the Commission has had on this Directive with interested parties. I have no doubt that the Commission will also take into account discussion in other places, like that in another place on the 16th November and in your Lordships' House this afternoon.
There seems no doubt that the present form of the Directive will be changed. The Government think it right to remove from the Directive all the features I have mentioned and, in particular, to alter the present text of the Directive to permit advertising to be regulated by appropriate authorities—like the Advertising Standards Authority or the Director General of Fair Trading—in addition to the courts. They want the useful work of these authorities in the advertising field to continue; and they share the view of the Select Committee and of the Scrutiny Committee in another place that two systems of regulation, administrative and legal, cannot co-exist.
My Lords, I turn now to the other main claim which the Commission has made for this Directive. It has said that misleading advertising and unfair advertising are improper ways of influencing the market process. The Commission has claimed that the differing degree of legal protection against misleading and unfair advertising in member States hinders their objective of promoting harmonious development of economic activities throughout the EEC. The Minister of State has made clear in another place that the Government question the need in the context of an advertising Directive to harmonise laws in order to secure the free flow of goods and services across frontiers. For this reason, the Government understand the wish of the Select Committee to challenge the legal basis of the Directive.
It is hard to understand why legal differences in member States about advertising should directly affect the working of the Common Market. But I wonder 1240 what tactical advantage can be gained from pressing a narrow view of the vires of the proposed Directive on the lines which have been suggested by the Select Committee in their 38th Report. It seems to me that whether or not the Directive is validly brought under Article 100, there is nothing to prevent the Commission, upon challenge, pressing its proposals under Article 235 or some other wide-ranging article of the Treaty of Rome. I wonder whether it would not be better to concentrate on amending the content of the Directive on the lines I have been discussing.
There are a number of grounds on which the Directive in its present form can be criticised. One which I have not yet mentioned is the concept of "unfair" advertising which has been introduced into the Directive and which may have more to do with protecting advertisers from each other than with protecting the consumer. But there is good reason to believe that the Commission recognises many of the difficulties. The comments of Mr. Roy Jenkins on 1st October have already been quoted in this debate. He added—and this is very important in the context of the advertising Directive, as the Minister of State has said in another place—that the Commission,should not seek to include unnecessary detail",but should,rather … lay down the primary objectives to be obtained and leave the detailed implementation to member States".Moreover, he went on to say that the Commission would be very willing to consider taking action to amend or withdraw proposals taking into account these guidelines.
My Lords, I again repeat the words of the Minister of State in another place, that,the proper application of these welcome principles will meet all my objections to the present draft Directive. I shall continue to press for their application in all future considerations of this Directive …"—[Official Report, Commons, 16/11/78, col. 711].Since he spoke those words we have had the words of Commissioner Burke. I have his speech with me, but in view of the time I will not quote it in any great detail.
Lord WALLACE of COSLANY
As noble Lords will fully understand; and I expect that those who said "Hear, hear!" loudest obviously enjoyed the lunch as well. However, he did say in a very helpful spirit that,the whole merit of the Commission's procedure is the considerable degree of public discussion which is engaged in in regard to its proposals, and, where they seem to be unacceptable, the Commission can take appropriate action".I think that your Lordships' House is in no doubt that in their present form the proposals are quite unacceptable, and no doubt Commissioner Burke will take careful note of this important debate today, as indeed will, I hope, our own noble rapporteur. I am sure the House will join me in again thanking the noble Viscount, Lord Trenchard, and of course his committee, for the valuable and instructive work that they have carried out, for which the Government, and I am sure your Lordships' House, are grateful.
§ 8.19 p.m.
§ Viscount TRENCHARD
My Lords, I thank the noble Lord for that reply, which we shall all read with great care. May I just say to him that I trust that he and the Department will bring to the Commission's attention the possibility of using Office of Fair Trading-style tests as to whether or not controls are working. I am quite clear that the result of any comparative test would be favourable to this country as compared with others. Finally, I think you have to be very careful at expecting to have your cake and eat it, with the statutory back-up that everybody is suggesting is needed. I am not saying that it is impossible, but it will be very difficult if it is not to defeat its objective.
My Lords, I thank everybody who has taken part in this debate; and, as a final example of misleading advertising, perhaps, your Lordships can consider whether or not the British Railways advertisement that it is quicker by rail is misleading.
§ On Question, Motion agreed to.