Self-regulating the ad industry, the Dutch way  ( June '21,2001, HBL)

At a recent convention on `Advertising, Sales Promotions and Consumers' in Chennai organised by the Consumers Association of India, Felix Cohen, Director-General of Consumentenbond of the Netherlands was the keynote speaker. Consumentenbond is among the largest consumer organisations in that country with 640,000 households as members, which is 10 per cent of all the Dutch families. It has over a lakh subscribers to its publications as well as 230 employees. With a mission statement of wanting to enable consumers to make choices easier and better in a sustainable and socially justifiable society, the organisation carries out comparative research for its members, legal service for consumers as well as lobbies with politicians and civil servants on laws which impact consumers adversely.

The activities of Consumentenbond are comprehensive and exert tremendous influence on policy makers and manufacturers. For a country such as India with a nascent consumer movement, the Dutch organisation's experience is an eye-opener. Excerpts from his presentation:

Consumentenbond's mission statement makes it clear that the organisation helps consumers make well-considered decisions in buying goods and services by giving them objective information. Every month our members can take notice of the results of several tests published in our own independent magazine called Consumerguide. In this way the public can choose for products we think - by objective standards and accepted testing methods - are the best to buy in the market. We give comments and draw conclusions in relation to our investigations into quality, durability, safety, prices and other aspects of goods and services.

With 6,40,000 households as members, on a total population of 15 million people in the Netherlands, the things we say are taken seriously. In general, trade and industry take our opinion into account. This opinion can sometimes have a big influence on their sales. Therefore it is tempting to use the outcome of our tests in commercial advertising if this outcome is positive for a certain product. The use of our logo is not permitted, but within certain limits we are not against the use of our name in commercial business advertising, in relation to one of our tests, provided that this is done in a way which is not misleading.

We think it can be allowed when an advertiser says his product was `the best buy', according to tests done by us, but only if this is really true, of course, and only if the source is mentioned, and mentioned in a correct and complete way. This, however, is unfortunately not always the case. Sometimes our test results are abused by advertisers. If this is the case we have to take legal action. Most of these cases can be settled out of court, because advertisers listen and are willing to stop, or make the requested adjustments.

In the history of Dutch advertising, the practice of ``self-regulation'' has always played an important role. At a later state, legislation made protection of consumer interests more complete. In 1964, the Advertising Code Foundation was founded by a number of professional organisations in the line of the advertising business with the aim of subjecting advertising to a set of rules and regulations in order to protect consumers against misleading advertisements, and at the same time safeguarding the marketing function of the advertising business.

A set of rules was drafted, to which advertising was made subject: these rules are called the Dutch Advertising Code. The Advertising Code Foundation also set up the Advertising Code Committee. This is an independent administrative body which can give a judgement when a complaint is filed.

The Advertising Code Committee can give a judgement on every complaint, regardless of the advertising vehicle used, (that is to say: jurisdiction for the committee always exists, it does not matter if the advertising message is spread by television, radio, a newspaper, a magazine, direct mail, and so on). The Government has delegated the handling of complaints against radio and television advertisements (nationally, regionally and locally) to the Advertising Code Foundation. Any member of the public is entitled to file complaints. Companies (rivals, for example) can also lodge a complaint. Most complaints (90 per cent) are filed by consumers, however.

If an advertisement is found to infringe on the Dutch Advertising Code, the Committee will advise the advertiser to stop using it in its current form. In the event of a repeat offence or a serious violation of the Code, the affiliated media will be asked to stop publishing the advertisement concerned. The organisations which are members of the Foundation pursuant to the Netherlands Media Act have the duty to reject advertisements against which such a type of ban has been issued.

The past 30 years have witnessed a regularly recurring debate on whether the Advertising Code Committee should continue to be responsible for assessing subjective standards as `good taste' or `common decency' as included in the Dutch Advertising Code. This is an issue on which opinions vary. Some people are very much in favour of assessment of subjective standards, arguing that advertising should be handled with utmost care. Others, arguing that subjective standards can't be assessed in an objective manner, feel that any form of assessment of subjective standards should be abolished.

A third group, although not averse to the use of subjective standards in relation to advertising, are convinced that the Advertising Code Committee is not the appropriate organisation to determine what should and should not be deemed permissible where subjective standards are concerned; rather, that decision should be left to the advertisers, in consultation with their agency, which together should draw the line. The Foundation's Executive Committee, however, has up till now made no amendments to the existing system of assessment on the basis of subjective standards. It feels that these standards make a valuable contribution to the Committee's objective, which promotes socially acceptable advertising.

The special advertising codes of the Dutch Advertising Code complete the general rules and concern a range of subjects from cigarettes and tobacco products to alcoholic beverages and environmental advertising, as well as a code for telemarketing.

Code for Cigarettes

The Special Code for cigarettes and tobacco products, for example, shows that at the moment radio and television commercials for cigarettes and other tobacco products are prohibited and that other forms of advertising for tobacco products are subject to the Advertising Code for Tobacco Products. Either `yes or no' advertising for a product which has such a bad influence on public health, as tobacco, is to be allowed, has been a subject for discussions going on for years not only at a national level but at a European level as well.

Isn't it rather strange that up till now marketing, promotion, advertising sponsoring and distribution is possible and allowed in such big proportion while the use of tobacco products is an important cause of death? We think that's strange indeed and luckily our Minister of Public Health in the Netherlands thinks the same. The lobby of the tobacco industry is - as you might know - very strong. It tries to hold on to the saying that ``what is legal to sell is legal to advertise''.

An EU directive that was to harmonise legislation in all member EU-countries - aiming to restrict advertising on tobacco products - was declared null and void on judicial grounds, by the International Court of Justice of the EU. In the meantime, several EU countries already have taken steps at a national level to reduce tobacco advertising to a minimum. In the Netherlands the law is amended also at this moment.

The Government thinks the Dutch Advertising Code is not going far enough. All advertising not only in radio and television but, for example, also in newspapers, magazines, and on the walls of a building, is prohibited. So, it looks like only in stores itself, advertising for tobacco products is allowed in the near future. This will mean a big step in advertising history and in the protection of consumers.

Advertising for children

Ads aimed at children, in our point of view, are another important subject to discuss. Nowadays children form an important target group for commercial communication. In economic terms, they are an important group in the eyes of the advertising business. Regarding the protection of vulnerable consumers stricter and special rules are justified according to the Advertising Code Foundation. As protection of children against misleading ads was not enough in the opinion of Consumentenbond the rules were sharpened several times in the last decade.

In spite of rather strict rules, Consumentenbond is still concerned about advertising aimed at children, because of certain developments. Business `sponsoring' of schools is a worrying subject, for instance. Self-regulation here already exists but is being evaluated at the moment. Studies maybe will give enough arguments to lead to the conclusion that legislation is needed. Objectivity of school lessons in each case must be maintained under all circumstances.

Furthermore, advertisers try to reach children by the Internet and borders between advertising and games in this way are becoming more and more indistinct. In the opinion of Consumentenbond, it should always be made very clear when a message is meant to be an advertisement so that it is recognisable by everybody. Also the quantity of commercials around television programmes - especially during Christmas, when children receive a lot of presents in Western society - should be limited. In Sweden, television advertising aimed at children is prohibited in general.

At the moment, Sweden being chairman of the EU, there is discussion if this prohibition should be followed by all other EU members. In our view this is going too far for Dutch standards. Children have to be well-protected, but we must also be prepared to be a society in which advertising is accepted. Advertising - in the good sense of the word - can be informative for children also and can help them to make choices. Adults and schools also have a responsibility to teach children what advertising is all about. Consumentenbond therefore has developed learning programmes and a CD-ROM about advertising to educate children.

Advertising can be seen as an important source of information for consumers in a quantitative and qualitative sense. It can help consumers oversee which products are in the market and what their qualities are. Consumers can take advantage by using this information in their decision-making. The aim of an advertiser, however, is to sell as much as possible. This interest brings pressure to bear upon the value of the given information. In general in advertising the good side of a product will be overexposed and the bad side underexposed. It often occurs that product information is not optimal. Consumers should be aware of this and should not take everything for granted. They have a responsibility of their own to investigate and ask questions before buying. Parents, relatives and schools should contribute to educate children about the principles and risks of advertising.

To a certain extent exaggerating in advertising is inherent and has to be accepted. Advertisers, on the other hand, have to be responsible and not exaggerate too much and try to be as clear and complete as possible. Misleading ads and unfairness in the advertising business cannot and will not be tolerated.

The Netherlands' advertising practice shows that self-regulation can be a success, at least in general. The Dutch Advertising Foundation is a well-accepted institute. Judgements are accepted in general. Complementary legislation in the battle against misleading is needed, however, as a safety net in case of possible failures.

Consumer organisations can and should form countervailing powers against marketing strategies. They can play a positive role in doing well-organised product research and informing the public in an objective way, using the media. Also, by giving legal advice and legal aid - as well as by developing powerful consumer policy - consumer organisations can strengthen the position of consumers. They should fight for justified rules and legislation where this is needed and should file complaints, or go to court on behalf of consumers' common interests when rules are violated. The consumer organisation's function of being a watchdog in today's advertising society is indispensable. A dog to watch over consumer rights and interests, but also a dog to bark and bite if necessary, in case of misleading advertising practices.