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In The Matter Of The Directive Of The Parliament And The Council 2003/6/Ec “The Market Abuse Directive”, The Proposed Commission Directive Implementing The Market Abuse Directive And Financial Journalism

SUBMISSIONS OF THE EUROPEAN PUBLISHERS COUNCIL

7 January 2024

 

Summary of observations

  • Without appropriate clarification, Article 6(5) of the Market Abuse Directive (“MAD”) has potentially disproportionate effects contrary to Article 5 EC and violates the rights of journalists to legal certainty under Community law and under Article 10 of the European Convention on Human Rights (“the Convention”).

  • The Commission is likely to lack competence to enact the MAD Implementing Directive (“MADID”) as presently drafted since it involves the regulation of media content, in relation to which Article 151 EC prohibits harmonising measures such as MAD and MADID.

  • If Commission adopts MADID as presently drafted, it is likely

(1)        to exceed the competence provided by Article 2(b) of the Council Decision of 28 June 1999 (1999/468/EC) (“the 28 June 2023 Decision”) and Article 6(10) sixth indent of MAD since Articles 1(3), 2(4), 3(4), 5(2)(a) and 5(5) do not merely adapt or update MAD but modify its essential provisions; and/or

(2)        in relation at least to Articles 3(1)(b), 3(3), 5, 7 and 8 of MADID, in the varying extents set out below, to fail the test of proportionality required by Article 5 EC and Article 10 of the Convention.

  • Since the provision of “information society services” by EPC members is clearly affected by MAD and MADID, the regulation of the same media content under the MAD/MADID regime and under the E-Commerce Directive is likely to lead to arbitrary and inconsistent results depending simply on the means of publication, i.e. on-line or off-line.

  • Article 8(4) of MADID is likely, in relation to financial journalists established in non-EU countries, to breach the Community’s obligations under the General Agreement on Trade in Services (“GATS”) and the Understanding on Commitments on Financial Services (“the Understanding”).

Introduction

  1. These Submissions set out the position of the European Publishers Council (“the EPC”)[1] in relation to the lawfulness of the Directive of the Parliament and the Council 2003/6/EC known as the “Market Abuse Directive” (“MAD”) and the proposed Commission Directive implementing MAD as regards the presentation of investment recommendations and the disclosure of conflicts of interest, known as the draft “Market Abuse Directive Implementing Directive” (“MADID”).

  2. These Submissions examine the following:

(1)  Whether the restrictions on financial journalists in Article 6(5) of MAD breach Community law and/or the requirements of the Convention.
 

(2)  Whether European Commission (“the Commission”), if it enacts MADID as presently drafted, will exceed its competence under Article 6(10) sixth indent of MAD and/or and the 28 June 1999 Decision  governing the procedure for the exercise of implementing powers by the Commission on the basis that the provisions of MADID:

(a)  do not simply “adapt or update certain non-essential provisions” of Article 6(5) of MAD; and

(b)  modify the essential elements of MAD, contrary to Article 2(b) of the 28 June 1999 Decision and Article 17(2) of MAD.

(3)  Whether, in relation to MADID, the restrictions placed on journalists that would fall within the category of producers of investment “recommendations” or who may be characterised as “disseminators” of investment recommendations breach Community law and/or the requirements of the Convention.

Factual background

  1. Believing that the existing Community legal framework to protect market integrity was incomplete (see Recital 11 to MAD), the Commission produced an initial text of a “Proposal for a Directive of the European Parliament and of the Council on insider dealing and market manipulation” dated 30 May 2023 (COM (2001) 281 final). The Commission revised this Proposal on 19 April 2023 (COD (2001) 1118) and MAD was enacted following the completion of the co-decision procedure on 28 January 2003. MAD is one of a series of directives intended to strengthen the single European market in financial services (Recitals 1, 2, 10 and 11).

  2. The Commission has also produced a draft implementing directive for MAD in order to clarify Article 6(5) of MAD which relates to the fair presentation of research and other information recommending investment strategy and for disclosure of particular interests or conflicts of interest. The final text of the draft MADID was approved by the European Securities Committee on 29 October 2023 and by the European Parliament (“the Parliament”) on 22 December 2023 (OJ L339/77 24 December 2003).

  3. This legislative programme has a direct impact on the financial pages of newspapers and magazines and their on-line editions, and the services provided by on-line financial information suppliers such as Bloomberg, Dow Jones and Reuters which carry market-relevant information. Such printed and on-line publications may influence the investment decisions of private investors and professionals in the financial services markets.

Legal background

(1)  The importance of transparency and market innovation

  1. MAD stresses the importance of transparency in the financial services markets and notes that “[i]nsider dealing and market manipulation prevent full and proper market transparency, which is a prerequisite for trading for all economic actors in integrated financial markets” (Recital 12 to MAD). MAD notes that modern communication methods make it possible for financial market professionals and private investors to have more equal access to financial information, but states that they also increase the risk of the spread of false or misleading information (Recital 25 to MAD).

  2. MAD provides, at Recital 43, that “[i]n exercising its implementing powers in accordance with this Directive, the Commission should respect the following principles…the need to ensure confidence in financial markets among investors by promoting high standards of transparency in financial markets.

  3. MAD also provides, at Recital 43, that in implementing MAD, the Commission should respect “the need to provide investors with a wide range of competing investments and a level of disclosure and protection tailored to their circumstances” and “the need to encourage innovation in financial markets if they are to be dynamic and efficient”

(2)  The content of MAD

  1. Recital 12 to MAD provides, among other things, as follows:
    “Market abuse consists of insider dealing and market manipulation. The objective of legislation against insider dealing is the same as that of legislation against market manipulation: to ensure the integrity of Community financial markets and to enhance investor confidence in those markets…”
     

  2. Recital 22 to MAD provides as follows:
    Member States should be able to choose the most appropriate way to regulate persons producing or disseminating research concerning financial instruments or issuers of financial instruments or persons producing or disseminating other information recommending or suggesting investment strategy, including appropriate mechanisms for self-regulation, which should be notified to the Commission”.
     

  3. Recital 42 to MAD provides that “the Commission should…be empowered to adopt implementing measures providing that these not modify the essential elements of this Directive”.

  4. Recital 44 to MAD provides as follows:
    “This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union and in particular by Article 11 thereof and Article 10 of the European Convention on Human Rights. In this regard, this Directive does not in any way prevent Member States from applying their constitutional rules relating to freedom of the press and freedom of expression in the media”.

  5. Article 2(c) of MAD sets out one aspect of “market manipulation” which MAD prohibits:
    “dissemination of information through the media, including the Internet, or by any other means, which gives, or is likely to give, false or misleading signals as to financial instruments, including the dissemination of rumours and false or misleading news, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading. In respect of journalists when they act in their professional capacity such dissemination of information is to be assessed, without prejudice to Article 11, taking into account the rules governing their profession, unless those persons derive, directly or indirectly, an advantage or profits from the dissemination of the information in question”.

  6. Article 6(5) of MAD provides as follows:
    “Member States shall ensure that there is appropriate regulation in place to ensure that persons who produce or disseminate research concerning financial instruments or issuers of financial instruments and persons who produce or disseminate other information recommending or suggesting investment strategy, intended for distribution channels or for the public, take reasonable care to ensure that such information is fairly presented and disclose their interests or indicate conflicts of interest concerning the financial instruments to which that information relates. Details of such regulation shall be notified to the Commission”.

  7. Article 6(10) sixth indent provides as follows:
    “In order to take account of developments on financial markets and to ensure uniform application of this Directive, the Commission shall adopt, in accordance with the procedure referred to in Article 17(2) [the procedure under Council Decision 1999/468/EC], implementing measures concerning…technical arrangements, for the various categories of person referred to in paragraph 5. Such arrangements shall take into account the rules, including self-regulation, governing the profession of journalist”.

  8. Article 10 of MAD provides as follows:
    “Each Member State shall apply the prohibitions and requirements provided for in this Directive to:

(a) actions carried out on its territory or abroad concerning financial instruments that are admitted to trading on a regulated market situated or operating within its territory or for which a request for admission to trading on such market has been made;

(b) actions carried out on its territory concerning financial instruments that are admitted to trading on a regulated market in a Member State or for which a request for admission to trading on such market has been made”.

(3)  The draft content of MADID

(a)  Background

  1. Recital 2 to MADID provides that “recommending or suggesting” an investment strategy may be done “implicitly”, “by reference to a price target or otherwise”.

  2. Recital 11 to MADID repeats verbatim Recital 44 to MAD as regards fundamental rights and the Convention.

  3. It should be noted that the following draft Recitals which appeared in the initial version of MADID have been deleted by the Commission in the final text:
    “(14) This Directive takes into account the rules, including self-regulation, governing the profession of journalists as provided for by Article 6 paragraph 10 sixth indent of Directive 2003/6/EC. 

    (16) Member States should be able to choose the most appropriate way of regulating persons producing or disseminating research concerning financial instruments or issuers of financial instruments, or persons producing or disseminating other information recommending or suggesting an investment strategy, including appropriate mechanisms for self-regulation. Details of such regulation should be notified to the Commission.” 

  4. Article 1(3) of MADID provides as follows:
    ““Recommendation” means research or other information recommending an investment strategy, explicitly or implicitly, concerning one of several financial instruments or the issuers of financial instruments, including any opinion as to the present or future value or price of such instruments, intended for distribution channels or for the public.”

  5. Article 1(5) of MADID provides as follows:
    ““Relevant person” means a natural or legal person producing or disseminating recommendations in the exercise of his profession or the conduct of his business”.

  6. Article 1(7) of MADID provides as follows:
    ““Distribution channels” shall mean a channel through which information is, or is likely to become, publicly available, “Likely to become publicly available” shall mean information to which a large number of persons have access”.

  7. Article 1(8) of MADID provides that the expression “appropriate regulation” includes self regulation.

(b)  Chapter II: production of recommendations

  1. Article 2(1) of MADID provides that the identity of the producer of a recommendation be clearly disclosed.

  2. Articles 2(3), 3(2), 5(4) of MADID provide that in the case of non-written recommendations, the requirements imposed by those Articles are adapted so as to operate proportionately.

  3. Articles 2(4), 3(4) and 5(5) of MADID provides that the requirements imposed by the earlier subparagraphs shall not apply to journalists subject to equivalent appropriate regulation, including appropriate self regulation, in the Member States, provided that such regulation achieves similar effects as those achieved by the earlier subparagraphs of each relevant Article.

  4. Article 3(1) of MADID provides, among other things, as follows:
    “Member States shall ensure that there is appropriate regulation in place to ensure that all relevant persons take reasonable care to ensure that:
    ...
    (b) all sources are reliable or, where there is any doubt as to whether a source is reliable, this is clearly indicated;

    (c) all projections, forecasts and price targets are clearly labelled as such and that the material assumptions made in producing or using them are indicated”.

  5. Article 3(3) of MADID provides as follows:
    “Member States shall require that all relevant persons take reasonable care to ensure that any recommendation can be substantiated as reasonable, upon request by the competent authorities”.

  6. In relation to disclosure of interests and conflicts of interests in making recommendations, Article 5(2) of MADID provides, among other things, as follows:
    “Where the relevant person is a legal person, the information to be disclosed…shall at least include the following:

    (a)  any interests or conflicts of interest of the relevant person or of related legal persons that are accessible or reasonably expected to be accessible to the persons involved in the preparation of the recommendation…”

(c)  Chapter III: dissemination of recommendations

  1. Article 7 of MADID provides as follows:
    “Member States shall ensure that there is appropriate regulation in place to ensure that, whenever a relevant person under his own responsibility disseminates a recommendation produced by a third party, the recommendation indicates clearly and prominently the identity of the relevant person”.

  2. Article 8 (fourth paragraph) of MADID provides as follows:
    “In case of dissemination of a summary of a recommendation produced by a third party, the relevant persons disseminating such summary shall ensure that the summary is clear and not misleading, mentioning the source document and where the disclosures related to the source document can be directly and easily accessed by the public provided that they are publicly available”.

The issues

(1)  The contribution of financial journalism to transparency in the market for financial services

  1. Financial journalism in the European Union makes a vital contribution to transparency in financial services markets by creating equal access for ordinary investors and market professionals alike to market information which would otherwise remain solely in the hands of powerful and established market operators. The rapid reporting by the financial press of market information, including market rumours, serves an important purpose in reducing the ability of market operators with inside information enjoying for extended periods the benefits of that information. In doing so, the financial press carries out its role under Article 10 of the Convention of as “purveyor of information and public watchdog” (Barthold v Germany (1985) 7 EHRR 383, paragraph 58). Modern communication methods have strengthened this beneficial role.

  2. Crucially, the financial press improves market transparency and carries out more effectively its role as public watchdog where it operates in the broadest possible media spectrum. Therefore, short articles or comment pieces by financial journalists in non-specialist newspapers or magazines or in tabloid journals, provided that they comply with the standard of responsible journalism, have an important role which deserves protection notwithstanding the necessary brevity of their analysis since their contributions are often received by a far greater proportion of the population than receive more detailed and specialist financial news and comment.

  3. As noted in Recital 25 to MAD, modern communications methods also increase the risk of the spread of false or misleading information. It is, however, primarily in the interests of financial journalists themselves to retain their independence and the trust of their readers and subscribers. The strong competition in the market for financial news and analysis in the EU and the generally high quality of such reporting increases the probability that the market itself will favour independent and trustworthy publications and the actions of journalists who breach the standards of their profession will be discovered and disclosed by their competitors.

  4. The known instances of alleged market abuse in the media have been few and each such case, to the understanding of the EPC, has been addressed in the Member States either through legal process or by established self-regulatory mechanisms. Despite the express invitation of the EPC, neither the Commission nor CESR have furnished evidence of widespread abuse, or of abuse that has not been addressed by existing mechanisms in Member States. It can reasonably be said that the standards upheld by the media in this area have been high, and indeed considerably higher than those of investment firms regulated by national securities regulators. The need for radical intervention in the regulation of the press has not been established by the Commission.

  5. In addition, if the Community is to “encourage innovation in financial markets” (Recital 43 to MAD), it should be slow to hinder the use or benefits of the improvements in information technology which strengthen the financial press in carrying out its beneficial role in the financial services markets and under Article 10 of the Convention.

(2)  The tests for the legality of the restrictions on financial journalism

  1. In order to take any action in respect of MAD or MADID, the Community legislature or any part of it must be legally competent do so and the exercise of that competence must be proportionate (as required by Article 5 EC) and must respect fundamental rights (in particular, Articles 6 and 10 of the Convention).

(a)  Competence

  1. The Community has no express competence to legislate for the conduct of journalists or publishers in relation to the content of their publications.[2] Journalists that write about business and/or financial matters generally produce original articles or reports which may properly be described as “literary” works as referred to in Article 151 EC.[3] In respect of media content, the Community has no competence other than that granted by Article 151 EC, which provides that, in respect of “literary” works, the Community may only take action to encourage “cooperation between Member States” (Article 151(2) EC). Article 151(5) EC specifically excludes harmonising measures such as MAD and MADID.

  2. The Community legislature must be careful, when legislating under its internal market competence in this area, not to exceed its powers and seek to regulate media content. In several respects, set out below, the provisions of MADID appear directly and indirectly to seek to regulate the content of the work of business and financial journalists.

  3. Further, in enacting MADID, the Commission is bound by the terms of Articles 6(10) sixth indent and 17(2) of MAD and by the requirements of Council Decision 1999/486/EC. MADID may only, therefore, adapt or update non-essential provisions of Article 6(5) of MAD. The Commission is expressly forbidden by Decision 1999/486/EC from enacting in MADID any provision which modifies any essential provision of MAD (Article 17(2) MAD).

  4. This limitation is consistent with the policy of the Lamfalussy procedure which is intended to allow the Commission to introduce technical measures which update or clarify the underlying legislation. The competence of the Commission is limited in this way since to allow it a broader power to alter or add essential provisions in the underlying legislation would undermine the legislative process of the Community and would, in the case of MAD, violate the legislative powers of the Parliament and the Council under Article 251 EC.

  5. If, in the case of MADID, the Commission were to permitted to ignore the legislative prerogatives of the Parliament and the Council, the constitutional balance enshrined in the Treaty between the Commission, Parliament and Council would be robbed of is effectiveness or effet utile to the detriment of democracy (represented by the Parliament) and the interests of the Member States (represented in the Council). Whether or not the Parliament or the Council openly objects or not is irrelevant. The Commission, as guardian of the Treaties, has a particular duty to respect the said constitutional balance.

(a)  Proportionality

  1. In assessing the proportionality of a measure, it is necessary to establish whether it goes further than is reasonably necessary to achieve its legitimate aim. If, contrary to these Submissions, the Commission has competence to enact MADID as presently drafted, the proportionality of the provisions in MADID must be examined with particular care since the legislation at issue will be at the very limit of what the Community legislature is permitted to regulate under Community law e.g. Articles 3(1), 4(1), 5(2), 6(1), 7 and 8 of MADID all, to varying extents, prescribe certain content for journalistic work, a matter which on its face is outside the competence of the Community (see, Article 151(5) EC).

(b)  Fundamental rights

  1. Article 6(1) of the Convention provides, among other things, as follows: 
    “In the determination of his civil rights and obligations…everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law….”

  2. Article 10 of the Convention provides as follows:
     “(1)  Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers…
    “(2)   The exercise of these freedoms since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society…for the protection of the reputation or rights of others.” 

  3. In the case of MAD and MADID it may be argued (although no mention of Article 10(2) of the Convention is made in any of the Explanatory material or in the legislation itself) that any restriction imposed is necessary for “protection of the rights of others” or perhaps the “prevention of crime”. The restrictions must:

    (1)  pursue a legitimate aim or aims; and

    (2)  be ‘prescribed by law’;  to comply with the principle of legal certainty the law  must be easily accessible and must be formulated with sufficient precision for the ordinary citizen to rely upon the legal rules to regulate his or her conduct, and to avoid arbitrariness in the application of the law: see e.g., Sunday Times v United Kingdom (No. 1) (1979) 2 EHRR 245; Huvig v France (1990) 12 EHRR 528; and

    (3)  be ‘necessary in a democratic society’ for the protection of the legitimate aim; that is, they must be proportionate to the end pursued, and no more.

  4.  In deciding whether a given interference with free expression is necessary in a democratic society, the court “is faced not with a choice between two conflicting principles, but with a principle of freedom of expression that is subject to a number of exceptions which must be narrowly interpreted”: Sunday Times v United Kingdom (No.1) (1979) 2 EHRR 245, at 281, paragraph 65. The European Court of Human Rights explained in Sunday Times v United Kingdom (No.2) (1991) EHRR 229 (Spycatcher), at 241-42, that there must be a “pressing social need” for “any restriction on free speech”.

  5.  It is clear from the judgment of the European Court of Human Rights in Sunday Times (No.1) that the principle of proportionality does not involve striking a balance between equally competing interests, but giving effect to a principle of free expression subject to exceptions to be narrowly construed.

  6. The ECJ set out, in Case C-274/99 P Bernard Connolly v Commission [2001] ECR I-1611, the status of Article 10 of the Convention as a matter of Community law.

  7. The ECJ held, at paragraph 37, that fundamental rights form an integral part of the general principles of law, whose observance the ECJ ensures. For that purpose, the ECJ draws inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international treaties for the protection of human rights on which the Member States have collaborated or to which they are signatories. The Convention has special significance in that respect (see, in particular, Case C-260/89 ERT [1991] ECR I-2925, paragraph 41 and Case C-94/00 Roquette Frères [2002] ECR I-9011, paragraph 25). 

  8. The ECJ noted that those principles have been restated in Article 6(2) of the Treaty on European Union, which provides that “The Union shall respect fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms signed in Rome on 4 November 2023 and as they result from the constitutional traditions common to the Member States, as general principles of Community law”.

  9. At paragraphs 39 to 42 of its judgment in Connolly the ECJ held as follows:
    “As the Court of Human Rights has held, 'Freedom of expression constitutes one of the essential foundations of [a democratic society], one of the basic conditions for its progress and for the development of every man. Subject to paragraph 2 of Article 10 [of the ECHR], it is applicable not only to information or ideas that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb; such are the demands of that pluralism, tolerance and broadmindedness without which there is no democratic society…

    Freedom of expression may be subject to the limitations set out in Article 10(2) of the ECHR…Those limitations must, however, be interpreted restrictively. According to the Court of Human Rights, the adjective 'necessary involves, for the purposes of Article 10(2), a 'pressing social need and, although '[t]he contracting States have a certain margin of appreciation in assessing whether such a need exists, the interference must be 'proportionate to the legitimate aim pursued and 'the reasons adduced by the national authorities to justify it must be 'relevant and sufficient (see, in particular, Vogt v Germany, § 52; and Wille v Liechtenstein judgment of 28 October 1999, no 28396/95, § 61 to § 63). Furthermore, any prior restriction requires particular consideration (see Wingrove v United Kingdom judgment of 25 November 1996, Reports of Judgments and Decisions 1996-V, p. 1957, § 58 and § 60).

    Furthermore, the restrictions must be prescribed by legislative provisions which are worded with sufficient precision to enable interested parties to regulate their conduct” (emphasis added).

  10. At paragraph 48 of the judgment, the ECJ acknowledged in a Community context that in exercising their power of review, the Community Courts must decide, having regard to all the circumstances of the case, whether a fair balance has been struck between the fundamental right to freedom of expression and the legitimate interests protected by Article 10(2) of the Convention. 

(3)  The legality of the provisions in MAD

  1. Article 6(5) of MAD is, of itself, insufficiently clear for the purposes of the requirement of legal certainty under Community and Convention law. The expression “persons who…disseminate research concerning financial instruments or issuers of financial instruments and persons who… disseminate other information recommending or suggesting investment strategy” is sufficiently vague and broad to extend the operation of Article 6(5) of MAD to every legal and natural person who, whether in the course of its business or not, supplies, passes or delivers as a gift or as part of a sale to the public, any document containing the relevant information. This would include, for example, a newsstand seller or a public lending library.

  2. Foreseeability is inherent in the phrase ‘prescribed by law’ in Article 10 of the Convention.[4] A norm cannot be regarded as a ‘law’ unless it is formulated with sufficient precision to enable the citizen to regulate his conduct: he must be able, if need be with appropriate advice, to foresee to a degree that it reasonable in the circumstances, the consequences which any given action may entail.[5]

  3. Article 6(5) of MAD is plainly not formulated with sufficient precision to enable EU citizens generally, and not only financial journalists, to regulate their conduct so as to comply with the Directive.

  4. The Community legislature has expressly recognised this issue under the new comitology (Lamfalussy) procedure. MADID is the “Level 2” instrument intended to explain and clarify Article 6(5) of MAD.

  5. It should be noted, however, that if the clarification purportedly provided by MADID is inadequate, it is unlikely that Article 6(5) of MAD alone is sufficiently clearly formulated to comply with the requirements of Community and Convention law.

(4)  The legality of the enactment of MADID

  1. The legal base for MADID is Article 6(10) sixth indent of MAD. Under Article 17(2) of MADID and the Decision 1999/486/EC, MADID may not modify the essential elements or provisions of Article 6(5) of MAD. For all of the reasons set out below, the Commission has, by increasing substantially the scope of MAD in relation to journalists, altered the essential elements of Article 6(5) of MAD. . The Commission is unlikely to have competence to regulate media content in the way contained in MADID, and if enacted in its present form, MADID will be liable to be declared a nullity by the Community courts.

  2. Even if MADID may regulate media content, MADID is likely to be found to have exceeded the requirements of its legal foundation in any event. In relation to Article 6(5) of MAD, the following matters in particular should have informed the drafting of MADID to ensure that it dealt only with non-essential technical details and did not modify the essential elements or provisions of MAD:

(1) Article 6(10) sixth indent of MAD provides that the Commission may enact “technical arrangements, for the various categories of person referred to in paragraph 5…Such arrangements shall take into account the rules, including self-regulation, governing the profession of journalist”.
(2) The reference to “appropriate regulation” in Article 6(5) of MAD refers to Recital 22 of MAD. Recital 22 of MAD which provides that “Member States should be able to choose the most appropriate way to regulate persons producing or disseminating research concerning financial instruments or issuers of financial instruments or persons producing or disseminating other information recommending or suggesting investment strategy, including appropriate mechanisms for self-regulation”.
(3) The stated position of the Directorate General for the Internal Market, which informed at least one media company (in a letter from the Director of Financial Markets at the Internal Market Directorate General to the Editor-in-Chief of Reuters dated 29 October 2023) that “Article 6(5) of the proposed Market Abuse Directive applies exclusively to the rather small category of persons making investment recommendations to the public. The rule does not apply to those who report on recommendations established by others. The mere fact of analysis reporting by Reuters in itself will therefore not make it subject to the scope of Article 6(5) of the future Market Abuse Directive”.
(4) The stated position of the Internal Market Commissioner Bolkestein, who informed the Parliament in October 2002 that “[f]inancial journalists are free to write whatever they wish. There is not the slightest doubt that they can write as they please. The only thing the Directive says is that when they recommend to the public certain stocks in which they themselves have invested, they must state that fact”.

  1. In fact, as is set out in greater detail below, MADID as presently drafted is not limited to technical matters which adapt, update or clarify Article 6(5) of MAD.

  2. In relation to regulation by the Member States, the reference to Member States being “able to choose the most appropriate way of regulating” the relevant persons affected by MAD has been removed from MADID. A Recital which made reference to this power in the Member States, and which appeared in the initial draft of MADID (set out in paragraph 19 above), has been deleted in the latest version. Similarly, in relation to self regulation, a Recital which referred to this method of implementation which appeared in the initial draft of MADID (set out in paragraph 19 above) has been deleted in the latest version. MAD expressly intends Member States to choose appropriate ways of applying it and self regulation is expressly acknowledged as an appropriate method. This is an important part of MAD which requires clarification in order for it to be fully effective.

  3. Instead of clarification, however, Articles 2(4), 3(4) and 5(5) of MADID limit the ability of Member States to choose self regulation in relation to journalists to regulation which achieves “similar effects as those [expressly required by MADID in relation to the producers of recommendations]”.

  4. Firstly, Articles 2(4), 3(4) and 5(5) of MADID seek, therefore, to ensure that the regulatory regime for journalists is for all practical purposes identical to or indistinguishable from the regime to be applied to the producers of recommendations, such as investment analysts. Apart from the fact that a wide range of restrictions may thereby be imposed on the press e.g. the requirement to disclose the identity of the person responsible for the production of the recommendation (Article 2(1) of MADID), imposing an identical regime on journalists as on the producers of recommendations extends an “essential element” of MADID, namely the scope of Articles 2, 3 and 5, to financial journalists further than is intended in MAD.

  5. Secondly, MADID provides no guidance as to the meaning of the expression “similar effects”. In relation to Member State regulation generally, MADID requires it to be “equivalent appropriate regulation” but fails to specify to what this regulation must be equivalent. If the Member States’ own regulatory regimes for journalists, including self regulation, must be equivalent to that prescribed by MADID for the producers of recommendations, it is not clear if this is compatible with the reference to “similar effects” (emphasis added).

  6. On their face, the requirements for “equivalence” and “similar effects” are potentially inconsistent since different and varying regulatory regimes which are not equivalent to the regime prescribed by MADID can produce “similar effects” to what the MADID regime is designed to produce, such as a reduction in market abuse, an increase in investor confidence and a strengthening of the internal market for financial services.

  7. If it is the intention of the Commission that Member State’ regulatory regimes and press self regulation must be exact equivalents of the regime outlined in MADID, the very principle of allowing Member States “to choose the most appropriate way” of regulating, which is expressly enshrined, in MAD, is undermined. This is an “essential provision” of MAD which is not merely adapted or updated in a technical manner by the Commission in MADID, but is modified to reduce the ability of Member States to achieve the objectives of MAD by domestic regulation and the ability of the press to achieve the same objectives by self regulation.

  8. Thirdly, the definition of “recommendation” in MADID is sufficiently broad that it may cover journalists who do not deliberately and expressly recommend investments to their readers and whom the Commission has stated ought to be excluded from the scope of MAD, e.g. the anonymous “Lex” column in the Financial Times where discussions and analysis of the merits or demerits of particular equities and other investments may be interpreted to involve information “implicitly” “suggesting an investment strategy”. The written assurances provided by the Directorate General for the Internal Market in this respect provide little comfort for the press since they carry no legal weight and would not be determinative in any potential dispute involving any national regulatory authority or the Courts. The width of the definition of “recommendation” in Article 1(3) of MADID is not a technical clarification of Article 6(5) of MAD but expands substantially the scope of MAD which is one of its “essential” attributes, contrary to Articles 6(10) sixth indent and 17(2) of MAD and Decision 1999/486/EC.

  9. Fourthly, despite the fact that Article 6(5) of MAD expressly limits the disclosure obligation to the interests of the producers and disseminators of relevant information, Article 5(2)(a) of MADID not only adopts this obligation (“any interests or conflicts of interest of the relevant person”) but creates a new obligation, unmentioned in MAD, that the interests or conflicts of interest of “any related person” also be disclosed. As is noted below, no definition of this expression is provided in MADID and, of course, none appears in MAD since that latter Directive was never intended to apply to such a class of persons. This potentially very wide extension of the scope of the disclosure obligation in Article 6(5) of MAD is not a technical clarification of that provision but modifies one of its “essential” attributes, namely its scope in relation to financial journalists, contrary to Articles 6(10) sixth indent and 17(2) of MAD and Decision 1999/486/EC.

  10. Fifthly, an essential provision in MAD is the safeguard for journalists in Article 1(2)(c) of MAD which provides that, in relation to the dissemination of information by journalists, the rules governing that profession must be taken into account, provided that the journalists concerned did not derive an advantage or profit from the dissemination. This safeguard does not appear in MADID and its absence from the implementing measure, which deals with the self regulation of the press, has the effect of modifying an essential element of MAD.

  11. Finally, in order properly to implement MAD the Commission is required to respect fundamental rights and in particular, Article 10 of the Convention (Recital 44 to MAD). If, as these Submissions state below, MADID is likely to contravene the requirements of Article 10 of the Convention in several respects, it is not properly implementing Article 6(5) of MAD as required by Article 6(10) sixth indent.

(5)  The legality of the content of MADID

(a)  Chapter II: production of recommendations

  1. Since the definition of a “recommendation” under Art. 1(3) MADID includes the provision of information which implicitly suggests that a certain investment should be traded in some way, there is a substantial risk that any journalist (not even a financial journalist) reporting, even occasionally, on a business issue, may be suggesting, implicitly, that an investment should be made or sold and will therefore be required to comply with Chapter II of MADID. For example, it is not difficult to imagine a situation where a non-financial journalist who interviews a businessman or who writes about an industrial relations dispute may implicitly suggest that shareholders in the relevant companies hold on, or sell their shares in that company, as the case may be.

  2. It is common for respected financial newspapers or magazines in the EU to comment on developments in listed companies which could come within the definition of “recommendation” without difficulty. For example, the “Lex” column of the Financial Times has, for several decades, provided brief informed analysis in short form of the status or prospects of various companies, markets or types of investment such as commodities. The “Lex” column has a high reputation for independence earned over many years.  Its daily contents are likely to amount to “recommendations” for the purposes of MADID regardless of the intention of the journalist, and attract the stringent requirements of Chapter II.

  3. There is no attempt in the definition of “recommendation” to limit its effects to financial analysts only. The definition of “recommendation” ought to be amended to exclude financial journalists from its scope since such journalists cannot properly be equated with financial analysts and do not hold themselves out as such. If financial journalists are to be covered by Chapter II of MADID, its effect should be limited to journalists “whose main business it is to produce recommendations”. This proviso already appears in Article 4(1) of MADID in respect of the additional obligations imposed in relation to the fair presentation of recommendations. If this proviso, at the very least, were inserted into the definition of “recommendation” in Article 1(3) of MADID, it would limit the scope of application of Chapter II of MADID in relation to journalists and may avoid a number of the legal consequences set out below.

  4. Moreover, as a result of the broad definition of “recommendation” in MADID, the practice of certain magazines which regularly examine business affairs, individual companies and investments but which anonymise their articles, such as The Economist, the Lex column mentioned above and most news agency copy, may be prohibited by Article 2(1) of MADID from continuing with this practice. This provision contains an absolute requirement that the identity of the producer of the recommendation be revealed and admits of no exceptions. The policy of not disclosing the names of financial journalists is intended to benefit journalistic independence and has extensive beneficial effects for the internal market for financial services.  

  5. The requirement in Article 3(1)(b) of MADID that “all sources are reliable” is disproportionately vague and restrictive of freedom of expression since it is not clear whether the source should be reliable in the opinion of the relevant journalist at the time, or according to the standards of reasonably financial journalism, or whether the source must have been objectively reliable. Moreover, the requirement that “all” sources are reliable or that any doubts in respect of any of a journalist’s sources be “clearly indicated” places an excessive burden on a journalist in at least the following respects:

(1) The “source” may be a person within the broad definition in Article 1(4) of MADID who has, by virtue of his employment or close connection with a company, produced a report on the financial affairs of the company which reveals some impropriety and who has secretly disclosed this report in the public interest to a journalist. The journalist may regard the source as unreliable and will use so much of the material as he sees fit according to the standards of his profession. Regardless of his reliability, however, it is normally not in the public interest to allow the identity of such a source to be revealed. The requirement in Article 3(1)(b) that doubts as to the reliability of a source be “clearly indicated” may lead to the identification of the source. The importance of such confidential disclosures to the financial media, and the need to protect the anonymity of the sources, has been recently confirmed in the Enron and Parmalat affairs. Discouraging public interest disclosures to the media is neither in the general Community interest nor consistent with the objectives of MAD. Moreover, in such cases there may be a strong public interest in disseminating the “recommendation” as defined in MADID. In those circumstances, as a matter of Convention law, the accuracy of the information becomes less important provided that its disclosure is in the public interest and there is a factual basis for the journalist’s belief in the relevant material. The European Court of Human Rights has emphasised that a requirement in domestic law to prove the truth of opinions or value judgments[6] on issues of or public interest[7] is a disproportionate interference with freedom of expression.[8]
(2) A journalist may be satisfied that the main body of his sources for a particular article are reliable but may not be satisfied in respect of others to whom he gives reduced attention as a result. It is impossible for financial journalists who work with limited space in non-specialist newspapers or magazine or in tabloids to set out such information in detail. Such journalists, in accordance with the standard of responsible journalism, must decide themselves which sources to prefer and where they believe that their doubts are relevant, they decide if and how to give them prominence. To require financial journalists in such journals to set out their articles in the detail required by MADID is likely to hinder disproportionately the ability of these journals to offer financial news or reporting.

  1. The requirement in Article 3(3) of MADID that the journalist must be able to show, if asked by the competent authority, that his recommendation was “reasonable” is disproportionately vague and restrictive of freedom of expression since it is not clear if this means that the recommendation must be reasonably accurate at the time or that is was reasonable to make the recommendation at the time (even if its strict accuracy could not be established the potential gains were such that it was still worth recommending). No guidance as to how such “reasonableness” is to be assessed appears in MADID. This is surprising in the light of the fact that MADID is expressly intended to clarify Article 6(5) of MAD.

  2. Article 5 MADID sets out the general standard for disclosure of interests and conflicts of interest. This provision requires disclosure of the interests and conflicts of interest of the relevant person and of “any related legal persons that are accessible or reasonably expected to be accessible to the persons involved in the preparation of the recommendation”. There is no definition of “related legal person” in MAD or in MADID and the expression admits of an excessively wide interpretation. This provision is also likely, in my opinion, to violate the requirements of legal certainty and foreseeability referred to above.

(b)        Chapter III: dissemination of recommendations

  1. As noted above, in relation to dissemination of recommendations by journalists Article 1(2)(c) of MAD recognises the need to rely on “rules governing their profession” and limits the full application of MAD to the cases where journalists derive some advantage or profit from the dissemination. This important safeguard for journalists does not appear in Chapter III of MADID which also governs the dissemination of recommendations.

  2. The drafting of Article 7 of MADID creates a risk that it may be interpreted to require that whenever a relevant person under his own responsibility disseminates a recommendation produced by a third party, the recommendation indicates clearly and prominently the identity of the third party. The heading of the Article “Identity of disseminators of recommendations” indicates that this is not the intention of the provision, but this heading provides guidance only and is not legally binding. The importance of preserving the confidentiality of sources in public interest disclosure cases requires that Article 7 state clearly that the disclosure of the third party’s identity is not required.

  3. Article 8 of MADID as presently drafted requires disseminators of summaries of recommendations produced by third parties to refer to source documents and to where the disclosures related to the source document can be directly and easily accessed by the public provided that they are publicly available. For companies such as Bloomberg and Reuters which provide a business newswire service and for the short financial new items in most non-specialist newspapers and magazines, it would be likely to be disproportionate and unnecessary to set out the detail required by Article 8. In the case of sophisticated information systems of the types supplied by Bloomberg or Reuters, the mostly professional users are sufficiently expert not to require or desire the information suggested by the draft legislation. In the case of the non-specialist or tabloid media, a legal obligation to set out such potentially extensive data may encourage such media to reduce or remove financial news reporting from their service.

  4. Moreover, since what is being provided by all of the EPC members is news as opposed to investment advice, any delay in publication while the information required by Article 8 of MADID is being located, risks damaging the quality of the material itself since news is often a perishable commodity where the matter may be urgent and the public have a right under Article 10 of the Convention to receive the news without excessive delay.[9]Delay increases opportunities for market abuse.

  5. In addition, Article 8(4) of MADID requires that “in the case of dissemination of a summary of a recommendation produced by a third party” the source document must, without exception, be mentioned. This provision could include a document produced by a third party and disclosed in secret in the public interest to a newspaper, which described improprieties in his employer company. This document might, on one view, suggest indirectly that shares in that company should be sold even if this was not main objective of the person making the public interest disclosure. Nevertheless, if the report amounts to a “recommendation” within the meaning of MADID, the source document must be mentioned. Such reference could allow or facilitate the identification of the source. The consequence of adopting Article 8(4) of MADID in its present form is that future disclosures by sources (often employees of the company in question and fearful of exposure) in the public interest to a financial journalist will not be made as a result of an unqualified obligation to mention the source document. These disclosures serve an important purpose in maintaining transparency of markets and preventing crime in the EU.

  6. It is not necessary or proportionate to enact a complete ban on a journalist in certain limited circumstances, strictly in the public interest, electing not to mention his source document despite the fact that the information provided by the source implicitly might suggest that investors should act in a certain way in relation to a certain investment.

E-Commerce Directive

  1. As to whether there is any unjustifiable inconsistency between the provisions of MAD which govern the competence of the Member States and the analogous provisions of the E-Commerce Directive, the following two questions arise:

(1)  since “information society services” within the meaning of Article 2(a) of the E-Commerce Directive are provided by EPC members, whether MAD has any impact on the provision of such services; and
(
2)  whether there is any unjustifiable inconsistency between the regimes established by the E-Commerce Directive and by MAD.

  1. The fact that the on-line services provided by the members of the EPC are information society services” within the meaning of Article 2(a) of the E-Commerce Directive has recently been confirmed by the Directorate General Internal Market in its “First Report on the Application of the E-Commerce Directive”(COM(2003) 702 final), section 1 of which states, among other things, that

“on-line newspapers and specialised news services (such as business or financial information fall within the scope of the Directive”.

  1. Further, in the First Report on the Application of the E-Commerce Directive, the Commission states that “[t]he Directive applies horizontally across all areas of law which touch on the provision of information society services, regardless of whether it is a matter of public, private, or criminal law”.

  2. As to issue (1) in paragraph 85 above, the provision of these services, which involves presenting data which implicitly suggests how investors should act and disseminating the recommendations of third parties, is manifestly affected by the requirements of MAD and MADID in relation to the content and presentation of financial journalism.

  3. As to issue (2) in paragraph 85 above, Article 3 of the E-Commerce Directive provides, among other things, as follows:

“1. Each Member State shall ensure that the information society services provided by a service provider established on its territory comply with the national provisions applicable in the Member State in question which fall within the coordinated field.

 2. Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide information society services from another Member State”.

  1. The “coordinated field” concerns requirements with which the service provider must comply in his host Member State. Together with Chapter II of the E-Commerce Directive, Articles 3(1) and (2) provide for the concept, common in Community harmonisation measures, of “home-country control” and provide that the Member States authorise and supervise according to their own laws, the information society service providers established on their soil. These provisions are clearly applicable to on-line versions of newspapers and to the services of on-line information suppliers such as Bloomberg and Reuters

  2. MAD, however, contains a different basis for determining the competence of the Member States. Article 10 of MAD provides that each Member State shall regulate:

(1) actions carried out on its territory or abroad concerning financial instruments that are admitted to trading on a regulated market situated or operating within its territory or for which a request for admission to trading on such market has been made; and

(2) actions carried out on its territory concerning financial instruments that are admitted to trading on a regulated market in a Member State or for which a request for admission to trading on such market has been made” (emphasis added).

  1. A range of overlapping competences is thus created between different Member States. For example, under Article 10 of MAD, the French authority is competent to regulate an English journalist making recommendations in England in an English newspaper regarding investments traded on the Paris Bourse and vice versa. Under the E-Commerce Directive, however, only the home state authority will have the competence to regulate an on-line publication, perhaps containing identical content to the printed version.

  2. This significant difference in determining which Member State is to regulate (to the extent set out above) the content and presentation of financial reporting is likely to lead to create inconsistent and arbitrary results depending simply on the means of publication i.e. off-line or on-line.

  3. This distinction is illogical, in my opinion, and no explanation or reasons have been offered by the Commission to seek to justify it. It also undermines the objective of “technology neutral” regulation.

The international obligations of the EU: GATS and the Undertaking

  1. In circumstances where many recommendations are disseminated by the international financial media by satellite television and the internet, the provisions of MADID will affect to a very significant extent the operations of the news organisations established outside of the Community, particularly in the United States, which provide services to persons and undertakings within the EU. The Commission does not appear to have considered in its assessment of the effects of this legislation the opinions of third country operators.

  2. Apart from the restrictive effects which MADID will have on the provision of financial media services into the Community and the resulting adverse impact on the wider European financial services market, MADID is likely to place the Community in breach of its international obligations under GATS and the Understanding. The services provided by large financial media operators established outside the EU, such as Dow Jones, Bloomberg, Thomson Financial and Fairfax fall under that part of the definition of “financial services” set out in Article 5(a)(xv) of the Annex on Financial Services annexed to the GATS.  Many such companies are also providers of other services covered by GATS, notably “news agency services”.

  3. The disclosure obligations created by, among other things, Article 8(4) of MADID will impact more heavily on a large non-EU financial information service provider than they will on domestic EU Member State financial information services providers (“domestic EU providers”). In preparing summaries and reporting new developments to customers, efficiencies of resources, space and time are the key competitive factors. Non-EU providers disseminate information to users in many different jurisdictions. The substantially different disclosure burdens under MADID will require these providers to have three different sets of internal processes and procedures. One set of processes for information dissemination concerning the financial instruments covered by MADID for publication in Member States, and a second subset for publication elsewhere. A third set of processes will be required for information about financial instruments not covered by MADID whether published in the Member States or elsewhere.

  4. This is likely to necessitate significant business reorganisation, and a greater exposure to risk (depending on place of publication), for the non-EU providers. Restructuring information reporting processes to deal with unique requirements for one type of reporting in the jurisdiction of Member States carries a significant cost. It will impact upon the training of personnel, limit employee relocation flexibility, and require costly new methods to be developed for the delivery of information by electronic means. Length of articles in different jurisdictions will change, reducing the amount of information which may be disseminated in several places simultaneously. This problem is exaggerated for large non-EU providers, which may summarise a number of financial reports or recommendations in the one document (by way of a summary of developments or for comparison). In the case of public interest exceptions from making disclosures about the identity of confidential sources, these providers will be in breach of legal requirements in some places but not others.

  5. Clearly, the impact of MADID on such non-EU providers will be different to its impact on the treatment of domestic EU news agencies, and the expansion of the activities of the non-EU providers as financial information services providers in the EU will be affected to their detriment.

  6. For the following reasons, MADID is in contravention of the EU’s obligations under Articles VI.1, Article XVII.1 of GATS, and under Articles 10 (subparagraph (b)) and 11 of the Understanding:

(1)  Under Article VI.1 of GATS, the EU undertakes specific commitments in relation to services in the nature of financial information services (and other services, including “news agency services”). There is nothing in MADID to ensure that there can be a “reasonable, objective and impartial manner” of application of MADID to non-EU service providers. The nature of the industry; the characteristics of the dissemination of information; and the unreasonable manner in which the disclosure burdens will affect the non-EU providers, combine to produce the result that MADID cannot, under its current terms, be equally administered to each of the different types of information services providers.

 

(2)  For the same reason, in this particular services industry and news agency services, MADID involves a breach of Article XVII.1 of GATS and Article 3 of the Understanding in the case of financial information services. Domestic EU providers will be less hindered by the disclosure burdens because they will not have to create the different business and reporting structures referred to above.

 

(3)  The EU’s GATS Schedule of Specific Commitments, as it relates to financial services, is expressly predicated on the provisions of the Understanding. Article 10(b) of the Understanding provides that Members should not cause significant adverse effects on financial service suppliers of any other Member of “non-discriminatory measures that limit the expansion of the activities of financial service suppliers into the entire territory of the Member”. Article 11 of the Understanding provides that a Member should not “limit or restrict the present degree of market opportunities nor the benefits already enjoyed by financial service suppliers of all other Members as a class in the territory of the Member”.

 

(4)  MADID will thereby discriminate against non-EU providers which will see their business funding streams decrease and their European prices increase. Domestic EU providers (solely domestic Member States publishers, and domestic Member States publishers without an international position) will not be similarly affected. Financial information services by non-EU providers will therefore be limited, in terms of possible expansion (Article 10(b)) and market opportunities (Article 11).

  1. It is significant that in its “Report on the Financial Services Reform Bill 2001” of August 2001, Australia’s Parliamentary Joint Statutory Committee on Corporations and Securities accepted that Australia's obligations and commitments under Articles 10 and 11 of the Understanding prevented Australia imposing a financial services licensing regime on news agencies of other WTO Members that provided financial information services. The Committee's approach demonstrated the broad ambit of Articles 10 and 11 of the Understanding.

Recommendations

  1. As regards curing the suggested defects in the draft legislation, an initial step would be to extend the express requirement for proportionality in Articles 2(3), 3(2), 5(4) of MADID and in the case of non-written recommendations to all recommendations as defined in the directive.

  2. Despite the express reference to the Convention in the Recitals to MAD and MADID, the substantive provisions of those Directives must be clarified by way of amendment (including the insertion of the relevant definitions referred to above) to avoid a breach of Article 10 of the Convention and Article 5 EC.

  3. MADID needs to be redrafted to accord with the strict requirements of Articles 6(10) sixth indent and 17(2) of MAD and the 28 June 2023 Decision. In particular, the following amendments or amendments of like effect ought to be adopted by the Commission:

(1)  the Recitals referred to in paragraph 19 above ought to be restored to MADID in order properly to inform its interpretation once enacted;

(2)  a single heading should be introduced in respect of journalists to cover each of the concerns set out in these Submissions;

(3)  in the definition of “recommendation” in present Article 1(3), journalists should be expressly excluded from its application save where it can be shown that they have obtained some personal advantage or profit from the making or disseminating of the relevant information. ;

(4)  similarly, “dissemination by journalists” should be defined as follows or in a definition of similar scope:

“the knowing communication of the recommendation by a journalist  who receives it directly from the producer of the recommendation”.

(5)  a general article should be introduced in the body of MADID providing as follows:

 “In relation to each of the obligations imposed on journalists by this Directive, Member States should be able to choose the most appropriate way to regulate journalists  producing or disseminating research concerning financial instruments or issuers of financial instruments or journalists  producing or disseminating other information recommending or suggesting investment strategy, including appropriate mechanisms for self-regulation, which should be notified to the Commission. Where such regulation is in place, this Directive shall not apply to the journalists  so regulated”

(6)  if this article or an article of like effect is introduced, present Articles 2(4), 3(4) and 5(5) should be deleted;

(7)  alternatively, in relation to Articles 2(4), 3(4) and 5(5), the words following “journalists subject” be altered to state: “to appropriate regulation, including self regulation, in the Member States”;

(8)  in present Article 3(1)(b), the expression “all sources are reliable” should be deleted and the word “material” should be inserted before “source”;

(9)  present Article 3(1)(c) should be deleted since it is unworkable in any form;

(10)  present Article 3(3) be deleted or amended to insert “is reasonable in accordance with the rules governing the profession of journalist” after the word “recommendation”, deleting the remainder of the paragraph;

(11)  the reference to “any related person” should expressly exclude journalists save where expressly provided in the Directive ;

(12)  in present Article 7 the words “except where, in accordance with the rules governing the profession of journalist, it is appropriate not to”; and

(13)  in present Article 8, the order of present paragraphs 3 and 4 be changed so that existing paragraph 3 becomes paragraph 4 and revise the new paragraph 4 to read (amendment in bold):

     “The first, second and third paragraphs do not apply to news reporting on recommendations produced by a third party where the substance of the recommendation is not altered”.

(14)  In the restructured Directive express provision must be made for the safeguard for journalists contained in Article 1(2)(c) in MAD;

(15)  In Chapter IV of MADID, in light of the extra-territorial effect of the Directive and the potential breaches of GATS and the Undertaking, MADID should be made expressly subject to Articles VI.1 and Article XVII.1 of GATS, and Articles 10 (subparagraph (b)) and 11 of the Understanding in relation to financial information services providers established outside the EU.

Legal action

  1. We hope that the concerns and suggestions, which we make in these Submissions, will be of use to the Commission. We are grateful for the fact that the Commission have proved willing to engage with us in discussing the most appropriate way to implement Article 6(5) of MAD and we are ready to participate in any further discussions.

BRIAN KENNELLY

7 January 2024

Blackstone Chambers
Temple
London EC4Y 9BW


[1]           Impresa, Portugal; Telegraph Group Ltd., UK; Schibsted, Norway; Trinity Mirror plc, UK; Financial; Times Group, UK; Grupo Correo, Spain; The Bonnier Group, Sweden; Der Standard, Austria Burda Media, Germany; Editoriale L’Espresso, Italy; Groupo Prisa, Spain; Telegraph Group Ltd, UK; Reed Elsevier; Axel Springer Verlag, Germany; News International, UK; Verlagsgruppe Georg von Holtzbrinck GmbH; Reuters plc; The Egmont Group, Denmark; Gruner + Jahr, Germany; Lambrakis Publishing Group, Greece; Corriere della Sera, Italy; Independent Newspapers PLC, Ireland; Agora Poland; SanomaWSOY Corporation, Finland; Hachette Filipacchi Medias, France; Ringier, Switzerland; Daily Mail and General Trust, UK; De Telegraaf, Netherlands; Societe Ouest-France S.A., France; VNU, Netherlands; De Persgroep, Belgium

 [2]               Article 5 EC provides further that “[t]he Community shall act within the limits of the powers conferred upon it by this Treaty and of the objectives assigned to it therein”.

 [3]               That such work by journalists may properly be described as “literary” work is confirmed by Article 2(1) of the Berne Convention on copyright law which has been adopted in each of the Member States.

[4]               Sunday Times v United Kingdom (1979) 2 EHRR 245, E Ct HR; Müller v Switzerland A 133 (1988) 13 EHRR 212, E Ct HR. See also Application 10038/82 Harman v United Kingdom 38 DR 53 (1984), EComHR.

[5]               Gaweda v Poland [2002] 12 BHRC 486, paragraph 39.  

 [6]               As to the need for some factual basis of support: Jersusalem v Austria, Judgment of  27 February 2001para. 43 and Dichand v Austria ,Judgment of 26 February 2002, E Ct HR para. 43.

 [7]               In A v B plc [2002] 3 WLR 542 (CA), the UK Court of Appeal explained that in the vast majority of situations what is or is not in the public interest would be obvious. It also emphasised that this was a case-specific issue but that courts should not ignore the fact that if newspapers did not publish material in which the public was interested (aside from the question of whether that material was itself related to a matter of public interest) that would lead to fewer papers being published which was itself not in the public interest. 

[8]               Lingens v Austria (1986) 8 EHRR 407, E Ct HR, para. 46 and Thorgeirson v Iceland (1992) 14 EHRR 843, E Ct HR, para. 65. The E Ct HR has also held that a procedural bar in domestic law in proving the truth of factual statements will violate art 10: see Castells v Spain (1992) 14 EHRR 445, E Ct HR, where there was no defence of proof of the truth of statements which were held to amount to criminal defamation of state bodies.

 [9]               See, further the decision of the UK House of Lords in Reynolds v Times Newspapers Limited [2001] 2 AC 127, 205, paragraph B-C.