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EPC media alerts: January 2004

The monthly update on EU media issues

Market abuse

Implementing Directive breaches constitutional protections for journalism

Assurances made by Commissioner Bolkestein to the European Parliament at the Second Reading of the Market Abuse Directive safe-guarding self-regulation and limiting the impact of the legislation on financial journalism have not been carried through into the final text of the implementing directive. This first use of the Lamfalussy Process whereby firstly primary legislation agreeing points of principle and objectives are adopted, then secondly expert committees interpret the detailed implementation of the directive, has been shown to be deeply flawed. The Level 2 implementation directive (MADID) now contains new legislation which dramatically widens the impact of the adopted Level 1 MAD on the media, both in Europe and in third countries. The introduction of new legislation and/or the altering of the essential elements of the level 1 text is explicitly contrary to the rules of the process. The directive as it stands will impede the vital role that financial journalism plays in covering financial markets.

According to the EPC, assurances made by Commissioner Bolkestein and officials working for him that the legislation would only impact journalists who make share tips have proved worthless. The definition of "investment recommendation" in the final text is so vague and broad that almost any financial opinion or comment on a company by a journalist will become subject to MAD regulation. A great deal of mainstream financial coverage, including the reporting of investment recommendations originating from investment firms will be affected. The regime will reduce the flow of information to private investors, quite contrary to its intention.

MAD itself also gave safe harbour from the legislation to financial journalists who were already subject to appropriate self-regulation. MADID undermines this totally insisting that any self-regulation must be "equivalent to" and produce "similar effects to" regulation for investment firms - regulation that includes requirements such as disclosing sources and general presentation of news.


EPC sends legal opinion to Bolkestein

The EPC and the European Newspaper Publishers Association (ENPA) have co-signed a letter from journalists’ and media organisations to Commissioner Bolkestein (sent 20 January) expressing their deep concerns, outlining the legal case against the directive that suggests that article 6.5 of the latest text of the implementing Market Abuse directive is ultra vires, in conflict with the level 1 text of the directive and in breach of certain articles of the EC Treaties - under the EU Treaty, legal competence for media content remains with Member States - as well as in conflict with article 10 of the European Convention of Human Rights. The letter calls on the Commission to act immediately to safeguard press freedoms which have been put under unprecedented threat by MADID.

The EPC has a firm legal case against the directive which has been outlined to the Commission but is hoping that the Commission will work to find quick and satisfactory solutions before measures are implemented at national level which go way beyond the original remit of the directive and which undermine longstanding constitutional safeguards for the media. The UK treasury has already intimated that it will have a "hands-off" approach and respect UK self-regulation of the media. The choice of approach, however, is entirely at the discretion of each Member State.


Media legislation drawn up by financial services experts

One of the EPC’s criticisms is that the expertise of those who participated in the drafting of MADID lies in the field of financial services, and not in media regulation. The EPC contests that there is no reason why financial services regulators should have the knowledge either of media regulation or of the detailed workings of journalism. However, neither CESR nor the ESC were guided by a "media market practitioners panel" nor did they give the appearance of seriously trying to inform themselves of media regulations or the practical implications of their proposals as they related to the media.


The EPC is continuing to maintain a dialogue with the Commission on this issue to explore ways of resolving its concerns. For example, the Commission might consider publishing supplementary guidance as to how Member States should implement the measures as they relate to the media. Whilst this guidance would have no legally binding effect, Member States could be expected to take it into account when drafting their legislation.


The implementing measures are due to be written into law in all Member States by 12 October this year.

Rome II

Council indicates there are serious concerns about freedom of speech

Rome II, ( the proposal for a council regulation on the law applicable to non-contractual obligations that concerns which national laws should be applied in disputes) is still under discussion. The EPC has been concentrating on the ways in which the regulation would effect the free circulation of the press in the EU.

The key phrase for the EPC remains the issue of "Country of Origin". For instance, in terms of defamation cases the current Commission approach would permit a French citizen to claim he had been defamed by, or had his privacy invaded by an article published in a UK-based newspaper (if online so much the better). He then would be able to sue where he feels the damage has been caused - in this case probably in France, and according to French law where in the case of privacy, laws are much more strict than in the UK. Actually under current law publishers can already be sued abroad but they can limit their exposure to damages due to small numbers of people reading the hard copies of their papers outside the country of origin and main publication. The Internet makes the potential for "damage" a lot wider.

The EPC has been working to persuade the Commission to amend their proposal to allow the "country of origin" principle to continue to avoid complicated and costly legal disputes brought in the Member State of the claimant’s choosing. Currently publishers distribute information they know is legal in the country of publication. If this "mutual recognition" is removed, publishers will be subject to 15 + different legal frameworks and may be sued for unwittingly distributing publications outside their own Member State containing content illegal in the country of the recipient.
The TV Without Frontiers Directive and E-commerce directive apply the principle of Country of Origin and internal disagreements within the Commission continue in the context of Rome II on how to get around this potential contradiction should the Regulation be adopted in its current draft.

There is currently some discussion in the European Parliament on whether or not the press should simply be removed from the scope of the regulation. A "project group" within the EP Legal Affairs Committee is due to publish its report on the issue in February and the First Reading is still scheduled for April. There is some doubt, however, as to whether it will be possible for the Council - which has voiced concerns about freedom of speech issues expressed by publishers - to reach its Common Position before the EP elections.

Click here to request a copy of the letter.

TV without frontiers

Review of TVWF postponed again

In the meantime, the long-awaited decision on a review of the Television Without Frontiers Directive was put on hold in back in December. Instead the Commission decided to propose a "two step approach": the rules on television advertising and on the protection of minors will be the subject of new initiatives in the first quarter of 2004. For other issues, work with experts in focus groups and independent studies will take place in 2004 as a preparation for any legislative proposal concerning an update of the Directive that could be put forward in 2005. One of the studies is said to focus on co-regulation in the media.

Unfair commercial practices

Mutual recognition under threat again

Despite a long-running consultation with all stakeholders, reports from both the EP Legal Affairs and Environment committees on the draft directive on Unfair Commercial Practices have now been produced reflecting exclusively the views of consumer groups. Much to the disappointment of the EPC, they call, among other things, for the removal of country of origin and mutual recognition from the directive - a principle supported in the Commission’s draft proposal.

The EPC is currently in discussion with MEPs on both committees to ensure that a text, which better reflects the more sensible Commission proposal, will be the result of the debate.


February vote for IPR directive

The EPC was pleased to see that the EP Legal Affairs Committee has voted unanimously in favour of a report that backs a strengthened proposal, compared to the one presented earlier this year, with regard to the Enforcement Directive on Intellectual Property Rights. In particular, the EPC is pleased that the report extends the scope of the directive to include work published online.

The vote in Plenary will take place in February and if possible, the Rapporteur Janelly Fortou will try to seek an agreement with Council in order to adopt the Directive at first reading.

For more information on any of the following issues, contact Heidi Lambert Communications Tel: +44 1245 476 265.

Internet regulation
Market abuse
Tobacco advertising
Children's advertising
Jurisdiction and applicable law
Duty to trade fairly
Sales promotion


Angela Mills, Director of  EPC: Tel: +32 2 231 1299 (Brussels) or +44 1865 310 732 (UK) angela.mills@epceurope.org.

Heidi Lambert: Tel: +44 1245 476 265 heidilambert@hlcltd.demon.co.uk.