The Amendments of the Law on Advertising: Why Is It Worth Being More Attentive?

Authors: Kristina Vilkiene, Assistant Attorney-at-Law in METIDA, Violeta Sutkiene, an Associated Partner and the Head of the Trademark and Design Division in METIDA

lawThe new wording of the Law on Advertising of the Republic of Lithuania particularized the list of institutions which are responsible for the control of advertising. It also discussed the use of religious symbols in the advertising, established the requirement for advertising a dietary supplement to indicate that the advertised product is the dietary supplement, and specified the conditions for issuing the permissions to the operators of advertising activity. A new version of the the Law on Advertising will take effect from the 1st August.

The use of religious symbols in advertising. The requirements for the advertising are supplemented with a provision which apart from other types of prohibited advertisements also bans the advertisements distorting or stigmatising the religious symbols of the religious communities registered in Lithuania

Outdoor advertising. The law was supplemented with a prohibition to install the outdoor advertisements in trees, nature reserves and state parks if such advertisements are not associated with the protected objects in the nature reserves or state parks. This prohibition is not applied to the installed outdoor advertisements in reserves and state parks which are situated in the territories of towns and cities.

The installation of outdoor advertising on commonly used objects has been specified. For this installation the consent of the majority of the owners of flats and other premises would be necessary, unless it was stated otherwise in the joint activity agreements or community acts of the owners of the flats and the other premises.

In the new wording of the law the procedures of the advance coordination with the relevant institutions regarding the image of the outdoor advertising has been amended resulting in the simplified procedures of obtaining the permission. Also, the law defines more specifically in which cases the permission for the advertising is not issued or the duration of the issued permission is suspended as well as when the permission is annulated.

The advertising of individual goods and services. The provision prohibiting food advertising has been amended. To be more precise, until now it was prohibited to indicate that a certain food product has extraordinary characteristics if in effect all similar products are recognised by the same characteristics. This provision has been reformulated in the new wording, whereupon it prohibits to indicate that a certain food product has extraordinary characteristics if all similar products are attributed to the same characteristics. This formulation expands the list of the common characteristics of a certain group of products shifting away from a stricter notion, such as ‘recognised’ to a wider and less categorical notion, such as ‘attributed’.

The law is supplemented with a provision that the advertisements of dietary supplements must contain an indication that “the advertised product is a dietary supplement”. Also, previously valid prohibition to distribute energetic drinks for advertising purposes for persons under the age of 18 has been supplemented with a condition ‘for free’.

When evaluating whether the advertisements in the process of making or already in use meet the requirements set for the advertising, it is crucial to examine their feasibility not only according to the Law on Advertising of the Republic of Lithuania, but also to the Law on Prohibition of Unfair Business-to-consumer Commercial Practices.  It imposes the prohibition of unfair business-to-consumer commercial practices and establishes the types and cases of unfair commercial practices. However, the prohibition is not applied to commercial practice that harms only the interests of competing commercial operators or is related only to transactions between commercial operators.

The practice of the Competition Council. Since the real meaning behind any legal act unravels through practical examples, it is interesting to analyze how the competition council applies the provisions of the of the Law on Advertising with respect to the marketing campaigns when the consumers receive stickers for the acquisition of certain products. After receiving a consumer’s complaint about the potentially misleading marketing campaign of Sabonis 220 goods in LUKOIL petrol stations, the Council conducted an investigation on the compliance of the advertisement with the requirements of the Law on Advertising of the Republic of Lithuania.

The consumer indicated in the complaint that the marketing campaign of Sabonis 220 in LUKOIL petrol stations promoted to purchase the advertising goods for a special price if a certain number of stickers has been collected. One of the offered goods during the campaign was a backpack PROFESSIONAL with wheels, which was priced at 98.99 Litas after collecting 15 stickers (usual price is 199 Litas). According to the consumer, the stickers were distributed when purchasing fuel or other goods in LUKOIL petrol stations. One sticker was given when 30 Litas was spent. Complaint’s provider after collecting 15 stickers aimed to acquire the previously indicated backpack, thus, referred to one of the LUKOIL petrol stations. However, the cashier explained that the mentioned backpack was not on the market anymore and would not be later even though, according to the consumer, there was still more than one month and a half left until the end of the campaign.

During the investigation it was noted that UAB LUKOIL BALTIJA (Ltd), whose main activity was retail and wholesale of oil products, as well as UAB Tuta (Ltd), whose one of the main activities was production and trade of goods marked with Sabonis 220 trademark, performed a marketing campaign Sabonis 220 in LUKOIL petrol stations for a certain period of time

The conditions of the campaign were spread on the website www.lukoil.lt and in the promotion booklets of Sabonis 220. The conditions indicated that “<…> 1. purchasing any goods  in LUKOIL petrol stations from 21/06/2012 to 21/08/2012 for no less than 30 Litas you will receive a sticker. <…> 8. The stickers can be collected in LUKOIL petrol stations from 21/05/2012 to 21/08/2012. 9. The cards with the collected stickers can be exchanged with the promoted goods with a discount until 31/08/2012 <…>”. The sixth section of the conditions indicated that “the number of the promoted Sabonis 220 goods is limited”.

During the investigation it was indicated that within the initiative and interests of UAB LUKOIL BALTIJA (Ltd) and UAB Tuta (Ltd) a few types of advertisements were disseminated using various means information transmittal. The companies had also released an advert about the changes in campaign indicating that some goods have already been sold and some are temporarily out of stock. This advert was disseminated for a certain period of time on the website www.lukoil.lt and by the tills of LUKOIL petrol stations. Later the consumers were informed about the received additional amount of specific goods. Finally, another advert was released indicating that the campaign was cancelled and only certain goods can be redeemed for the collected stickers.

The competition council stated that, as it can be seen from the previously mentioned adverts, the consumers were encouraged to purchase all promoted goods after collecting a specific number of stickers. In these advertisements the goods were clearly identified, i.e. either all goods were visually shown (in the way that the consumer could see their essential differences), or, additionally, to the visual image of the goods the names of the goods as well as their prices with the discount and the usual prices were provided. Meanwhile, in the campaign booklets apart from the visual information or the information about the prices, the descriptions of goods were additionally provided. However, the conclusions of the investigation and the consumer’s complaint indicated that it was not possible to acquire one particular good until the end of the campaign even though it was not even halfway through.

The investigation stated that in case of the lack of goods the companies informed the consumers which goods were unavailable to be acquired in the LUKOIL petrol stations, however the campaign was further performed. During a certain period of time the campaign was temporarily suspended due to the shortage of the goods (during this period of time the stickers were not distributed), and later the campaign was cancelled informing the consumers until when they can purchase the promoted goods.

According to the decision of the Competition Council, the advert of the goods of Sabonis 220 collection which was presented only visually and which encouraged the consumers to collect LUKOIL stickers and then exchange them with Sabonis 220 travelling collection for the special price depending on its offer was misleading. The Council took into account the circumstance that even from the first days of July until the end of the campaign it was not possible to purchase PROFESSIONAL backpacks with wheels. Moreover, the advertisement in which in addition to the visual presentation of all the promoted Sabonis 220 goods, the text information on the names of the goods, their prices after collecting 15 stickers and their usual price were provided and the campaign booklets where the descriptions of goods were presented and which offered to purchase Sabonis 220 travelling collection for a special price after the accumulation of a certain number of stickers are not correct and provided in a misleading manner, therefore it could have misguided the consumer and hindered the opportunities for other agricultural business entities to compete.

During the investigation a conclusion was drawn that there is no grounds to suspect that the advertisement disseminated on the radio and the advert informing abound the amended conditions of the campaign have characteristics of the misleading advertising. It was also indicated that in the advertisement on the radio the consumer is not informed on which goods would be available to be redeemed after collecting a certain number of stickers. And thus, in was concluded that the consumer after hearing the advertisement on the radio should not expect to purchase a certain product for the special price. Furthermore, it was decided that in the advert, where the consumers are informed about the changes in campaign conditions, does not have features of the misleading advertising.

The Competition Council emphasized that the advertisement encouraging to acquire all the Sabonis 220 promoted goods can be divided into two groups, i.e. firstly, the advertisement by which the consumer was presented with visual and textual information offering to collect the stickers and purchase Sabonis 220 travelling collection for the special (smaller) price (all Sabonis 220 goods were included) and secondly, the advertisement by which the consumer was offered to collect the LUKOIL stickers and purchase Sabonis 220 travelling collection for the special price, and where all the Sabonis 220 promoted goods were only visually presented.

In both cases the main information that reached the consumer focused on offering him or her to participate in the campaign and purchase a product or products from Sabonis 220 travelling collection for the special price. The Council noted that the consumer both from the advertisement with only the visually indicated goods and from the advertisement in which in addition to the visual indicated goods textual information was also provided could have identified the types of the goods, their main properties and choose the desired product. Therefore, the analyzed advertisement, which promoted to acquire all the advertised goods, informed the consumers that after collecting 15 stickers they could acquire one or several advertised goods, which would best match their needs for a smaller price than indicated in the advertisement. From the conditions in the campaign the consumers could additionally see the beginning and the ending dates of the campaign and until when they can redeem the promoted product with a discount as well as which actions should be undertaken in order to receive a sticker.

The Council noted that the conditions of the campaign, its duration and the specification that “the number of goods is limited” were presented for the consumers in all advertising means excluding the advertising in the territories of the petrol stations (on the posters or the hangers). Thus, the consumer had to additionally search for the conditions of the campaign after seeing the advertisement in the petrol stations in order to get more information on the duration of the campaign and until when the stickers can be collected in order to purchase a desired product for the special price.

The consumer after evaluating the provided information in the advertisements and the conditions of the campaign might have foreseen in advance which product was necessary for him/her according to the relevant properties of that item and correspondingly made efforts and travelled to the LUKOIL petrol stations to purchase that product for a smaller price after collecting 15 stickers.

To summarize the discussed information in terms of the released advertisements and the implemented conditions of the campaign, it can be concluded that the consumer after evaluating the promotion to purchase the product from Sabonis 220 collection for the special price, the duration of the promotion and the specification indicating that “the number of the goods is limited” as well as the period of time when the stickers can be collected could have reasonably expected that during the main part of the campaign he or she would be able to purchase their desired product from Sabonis 220 collection upon the gathering of 15 stickers. It is assumed that the consumer despite the information in campaign that “the number of the goods is limited” and the evaluation that for the collection of the stickers more than one day might be required had a reasonable basis to think that the supplier of advertising would have an enough number of the promoted goods in an anticipation for a long duration of the campaign, and that there would not be a shortage of goods before the campaign has even not reached its halfway point. Meanwhile, as it was indicated during the investigation, according to the consumer’s complaint, the consumers could not purchase the PROFESSIONAL backpacks with wheels from the first days of July until the end of the campaign. Hence, the consumer could use the promotion offer to purchase the desired product or products from Sabonis 220 collection only for a short period of time (about 6 weeks) in comparison to the whole duration of the campaign (about three months). In these circumstances it is reasonably stated that the consumer may have been mislead by the promotion provided in the advertisement and as it was confirmed from the consumer’s complaint was factually misinformed, because he did not receive the desired product, although he decided to participate in the advertising campaign with intention to acquire it.

The Council noted that the specification indicating that “the number of the goods is limited” does not automatically eliminate the responsibilities of the organizer of the campaign, since in this case the consumer would risk to participate in this type of promotion, as the supplier of advertising could apply this specification at any time of the dissemination period of the advertisement (even in the beginning of the campaign or when it has not even reached its middle point) and in this way could avoid any responsibility and not provide the customer with the advertised goods or services.

It was also evaluated that the consumer had to take some continuous actions which could have lasted for more than one day in order to purchase the promoted goods for a smaller price. There also could have been longer or shorter breaks between the purchases, thus the participant could have collected the stickers during a different period of time or the consumer could have decided to participate in the promotion not in its beginning, but later.

After evaluating the likelihood of the misleading, the Council has divided the customers according to the beginning of the participation in advertising campaign: the consumers knowing the duration of the promotion could have started collecting the stickers not from its first days, but later. It has been assumed that when the consumers were informed about the changed conditions of the campaign, i.e. that the specific goods are already sold out, they could have not yet collected all the stickers (even though they started collecting them after hearing the non-changed advertisement), because they would not expect that the goods might run out when the campaign is not even halfway through especially when the estimated duration of the promotion in the rules of the campaign was about three months. Thus, the advertisement informing the changed conditions of the campaign could have prevented the consumers, who decided to participate in the campaign after the conditions had been changed, from misleading, however it could not do so for the costumers, who had started collecting the stickers before the conditions were changed.

It was emphasized that the information about the temporary shortage of certain goods was announced only on the website www.lukoil.lt and in the outdoor or indoor advertisements at the LUKOIL petrol stations. Meanwhile, in the advertising booklets the information was not changed throughout the whole duration of the advertising campaign. However, it was noted that even the dissemination of the changed advertisements does not eliminate the misleading information from the perspective of consumers who started participating in the campaign and collecting the stickers before the changes took place in the advertisement. Hence, without carrying out any relevant changes, the information provided in the advertising booklets could have further misguided the consumer about the opportunity to purchase a certain product from Sabonis 220 collection.

According to the Council, the explanation of the companies indicating the attempts to order more goods that were out of stock, which eventually were not ordered, due to a long production period, does not eliminate the responsibility of the organizers of the campaign. The organizers could have ordered the lacked goods, collected the information of the consumers who desired to purchase those items and informed them where they could redeem the goods when they were available. Also, the company could have taken other actions for the benefit of their customers, such as prolonging the duration of the campaign or the redemption period of the goods. However these solutions of the were not sought.

The competition council did not agree with the arguments of the companies that the consumer is not influenced by the circumstance that upon the collection of the stickers he or she would not receive a particular product which he or she intended to purchase, but instead could purchase other promoted goods of a similar or other type. The consumer could have clearly identified the characteristic features of each product from both visual and textual information provided in the advertisement and clearly see their differences, therefore the consumer could have reasonably chosen a particular product, in the absence of such opportunity consumer’s expectations would be infringed.

It was noticed that the consumer during a specific period of time had to purchase goods for 30 Litas and more only in LUKOIL petrol stations in order to purchase the promoted goods for the special price. And only after collecting a particular number of stickers in the period of time indicated in the advertisement the consumer had an opportunity to acquire the promoted goods with an expected discount. This supplier’s of advertising behavior not to hold their promise to reward the consumers for their loyalty (in this case allowing them to purchase the promoted goods with a discount), namely buying a certain number of goods in a particular period of time in the places marked with a trademark of the supplier of advertising (in this case in LUKOIL gas stations), is evaluated with respect to the fair competition of the rivals of the suppliers of the advertising. It is noted that during the campaign the supplier of advertising “traps” the consumers, meaning that they are made them purchase goods only from them and not from other market players who are the competitors of the suppliers of the advertising. It is assumed that if the consumers had known that certain promoted goods would not be available to them even before the halfway point of the campaign, they may have potentially decided not to participate in the campaign and may have bought goods in other petrol stations, as it can be confirmed in the consumer’s complaint. These circumstances suggest that LUKOIL due to their illegal actions occurred in a relatively better situation in comparison to their competing companies, since they may have attracted more customers and thus harmed or could have harmed LUKOIL competitors.

In this case, the advertisements either visually or additionally providing textual information promoted consumers to purchase a particular product from Sabonis 220 collection in the LUKOIL petrol stations for the smaller price during the campaign after collecting a certain number of stickers. Respectively, the consumer after seeing the information of such sort could have reasonably expected to acquire the promoted goods for the special price upon the collection of a certain number of stickers. Meanwhile, in the conditions the beginning and the end dates of the campaign were indicated as well as when the consumer may purchase the promoted products with a discount and which actions they should take in order to receive a sticker.

Therefore, the consumers seeing the entirety of the advertisement, i.e., the variety of the goods and the opportunity to purchase the promoted goods for the smaller price, and after being introduced with the conditions could have been encouraged to commute to LUKOIL petrol stations, purchase goods for no less than 30 Litas and collect the stickers in order to purchase a desired product. In fact, as it can be seen from the consumer’s complaint they were indeed factually encouraged. It is assumed that if the consumers had known that the particular desired product or products would not be in stock not even before the halfway point of the campaign, they might have not started collecting the stickers, i.e. they might have come up with a different decision regarding the transaction, e.g., they may have commuted to other petrol stations to refill their fuel tanks. Considering the fact that the consumer’s economic behavior could have been influenced during the dissemination of advertising all the promoted goods and the opportunity to purchase them until a certain date (even if conditions of the campaign indicate that the number of the goods is limited) there is no ground to state that the consumer had to make sure to purchase the desired product when the campaign was not halfway through (until the advert about the cancellation of promoted goods was released), especially taking into account that the collection of the stickers may take longer than one day and even longer than one week. Therefore, the dissemination of the amended advertisements does not allow to state that there was no influence on the consumer’s decision to participate in the campaign when the advertisement about all the promoted products had been disseminated, however not having an opportunity to purchase the wanted goods not even halfway through the campaign, even though this precise product was the reason why the consumer decided to participate in the advertising campaign in the first place. Moreover, in the advertising booklets all the Sabonis 220 goods were indicated throughout the whole time of the campaign. Consequently, the consumer taking into account the information provided in such booklets even in the later stages of the campaign could have assumed the possibility to purchase a product from the promoted collection and, thereby, may have decided to  participate in the campaign.

After evaluating these circumstances it was concluded that the companies’ incorrectly and misleadingly disseminated advertisement or only misleadingly disseminated advertisement could have influenced the consumer’s economic behavior. As a result, it has been stated that in accordance to the Republic’s of Lithuania Law on Advertising the advertisement is misleading.

The Law on Advertising indicates that the supplier of advertising is liable for use of misleading, if he fails to prove, that this Law has been violated due to no fault of his. The size of the fines for the misleading advertising is established according to the medium of the minimum and maximum of the fine and depends on the mitigating or aggravating circumstances, the type, duration and scale of violations.

When imposing the fines in this specific case it was taking into account that the companies’ disseminated advertisement did not comply with the justice and dissemination criteria indicated in the Law on Advertising.

The Competition Council evaluated the entire advertising campaign and determined the mitigating circumstances of the companies’ activities – the backpack was given to the consumer, who filed the complaint about the advertisement, in order to compensate for the harm caused by the experienced inconvenience. Therefore, it is assumed that from one consumer’s perspective the actions comply with the mitigating circumstance indicated in the Law on Advertising: the operator of the advertising activity after having committed the infringement by their own behavior compensated for the loss or eliminated the caused damage. It was stated that during the campaign certain methods were used in order to avoid a potential misleading, i.e. during a particular period of time in the territories of LUKOIL and on the website www.lukoil.lt the advertisement was disseminated indicating the consumers which promoted goods form Sabonis 220 collection could be purchased and which goods were out of stock. This complies with the section of the Law on Advertising which defines the mitigating circumstance:  the operator of the advertising activity willingly prevented the consumer from the harmful consequences after having committed the infringement.

The aggravating circumstances of the violations of the Law on Advertising were not defined. For the use of misleading advertisement UAB LUKOIL BALTIJA (Ltd) was fined 20 000 Litas, whereas UAB Tuta (Ltd) was fined 1 000 Litas (the difficult financial situation of the company was taken into consideration).

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