Germany's Sponsored Story Law Left Intact
(CN) - Germany can continue to restrict advertisements that masquerade as "legitimate" news stories, Europe's highest court ruled Thursday.
Laws governing German press and media require publishers to include the word "advertisement" in pieces for which they receive money, unless the layout makes it obvious that the bit is an ad. But a dispute between a Stuttgart newspaper and a local advertising circular caused Germany's highest court to question whether its media advertising law is compatible with EU regulation of unfair business practices.
Stuttgarter Wochenblatt, the newspaper, pointed to two instances in which the Rolf-Lukas von Schmidt Verlag-owned circular Good News ran sponsored stories that included the words "sponsored by," but not the required "advertisement" banner across the top.
The Court of Justice of the European Union said Thursday that the EU laws on unfair business practices do not apply to either legitimate newspapers or sponsored story publishers, but rather to the advertisers.
"Even though such publications are thus liable to be classified as commercial practices, there are two considerations which must be borne in mind," the court wrote. "Firstly, even if a direct connection could be established with respect to such a piece of commercial communication, that connection would be with the products and services of those undertakings, in this case the advertisers. Secondly, it is common ground that the circular's publisher did not act in the name of or on behalf of those undertakings within the meaning of EU law. In such a scenario, the law is indeed intended to protect consumers of products and services of those same undertakings and their legitimate competitors."
The court continued: "However, since the fact that the newspaper publisher proceeds with such publications which are liable to promote - possibly indirectly - the products and services of a third party is not liable to alter significantly the economic behavior of the consumer in his decision to purchase or take possession of the free newspaper in question, such a publishing practice is not in itself liable to be classified as a 'commercial practice' within the meaning of EU law."
Until European lawmakers adopt specific legislation for the press, member states are free to regulate on a national level - provided the regulations comply with freedom to provide services and freedom of establishment constitutional rights, the court concluded.