Re Media Council of Australia Authorisation: Re Australian Consumers' Association's Application
[1987] ATPT 1
•31 Mar 1987
TRADE PRACTICES TRIBUNAL
Re Media Council of Australia Authorisation: Re Australian Consumers'
Association's Application
Lockhart J. - President, Prof. M. Brunt, Dr. B.I. Aldrich
19-22, 25, 27-29 August, 2-5, 9-12, 16-17 September 1986; 31 March
Trade Practices - Advertising - Codes of Conduct - Self-regulation by the advertising industry and by media groups in relation to
| advertising - Trade Practices Act 1974 (Cth), ss. 90(6), YO(€?), | 101. |
ACA applied under s. 101 of the Trade Practices Act 1974 for review of the authorisation by the Trade Practices Commission of the Advertising Code of Ethics and certain Product Codes adopted by MCA and members of its constituent and affiliated organisations.
Held: (1) The Tribunal must be satisfied that the proposed conduct would result or be likely to result in a benefit to the public and that such benefit would outweigh the detriment to the public constituted by any lessening of competition;
(2) The main product market for consideration by the Tribunal was the supply of advertising messages directed to the Australian consumer. The self-regulation of the advertising industry in Australia was a system of private regulation of the market for advertising messages, the Codes being collectively implementad and enforced in the exercise of significant market power;
A Code system might improve the quality of advertising methods and have procedural and enforcement efficiencies over other means of regulation. A benefit would exist where the performance of the Code system was likely to be better than the alternative market based system. The Codes were classified in order to identify the benefit and detriment resulting from the Code rules;
( 3 )
A benefit existed where the MCA Codes reflected the requirement of Federal and State legislation and related regulations;
( 4 )
Where Codes and rules went beyond the existing law and were enforced by the exercise of market power within a private regulatory system, such a system would result in a public benefit only if it reflected a proper understanding of community values which would
( 5 )
require outside inputs and involments;
( 6 ) Wider representation of the public, of advertisers and advertising agencies, and of bodies concerned with consumer affairs and health was necessary in the formulation and administration of the Codes. Attention should be given by the MCA to increasing the degree of consultation as to revising the MCA's Codes, while existing rights of appeal within the MCA system were inadequate;
( 7 ) The Tribunal was not satisfied that the Codes under review
would be likely to result in overall benefit to the public, nor that
any benefit would outweiqh any lessening of competition resulting f ~ a m
implementation of the Codes. The tests under Trade Practices Act ss.
9 0 ( 6 ) , 9 0 ( 8 ) were therefore not satisfied;
| ( 8 ) The MCA Code | system was capable of satisfying those tests |
upon restructuring and revision of the Code rules and the system of their implementation. The Tribunal allowed the MCA a reasonable time to undertake such a revision, prior to the Tribunal determining whether authorisation of the Codes would be granted, and if any such authorisation would be absolute or conditional.
IN THE TRADE PRACTICES TRIBUNAL
No. NSW 1 of 1986
IN THE MATTER OF AN APPLICATION
BY THE ATJSTRALIAN CONSUMERS'
ASSOCIATION TO THE TRADE
PRACTICES TRIBUNAL FOR THE
REVIEM OF THE TRADE PRACTICES
COMMISSION AUTHORIZATION OF
CERTAIN CODES OF THE MEDIA
COUNCIL OF AUSTRALIA.
INDEX
1. INTRODUCTION
2. PARTICIPANTS AND WITNESSES
, PPEVIOrJS AIJTHORIZATTONS
4 . THE APPLICATIONS OF THE MCA FOR ATJTHORIZATION OF THE PRESENT CODES
| q , | FELEVANT LAW - SCOPE OF THE APPLICATION AND |
STATUTORY TEST
6. THE CASES OF THE MEDIA COUNCIL AND THE ACA
| ||||
|
7. THE 'CODES M$D THE SELF REGTILATION SYSTEM 7.1 General
|
7
|
7.8 Penalties and appeals
| ||||||||
| 9 . |
| |||||||
| ||||||||
| ||||||||
|
| 8.5.1 Self rey1.11ation in other countries | 46 |
| 8.5.2 Remarks | 48 |
| ? . | THE ADVERTISING INDTJSTRY AND THE MARKET | ||||
| FOR ADVERTISING MESSAGES | |||||
| |||||
|
| identification of relevant markets | 51 |
| 7 . 3 | Features of the market for advertising | |
|
10. MARKET POWER, PRIVATE REGULATION AND ANTI-COMPETITIVE EFFECT.
| 10.1 The media "bottleneck" 10.2 Accreditation | ||||
|
11. THE TRIBUNAL'S APPROACH TO THE ASSESSMENT OF BENEFIT AND DETRIMENT
11.1 Classification of the Codes
|
| 12. EEMEFITfDETRIMENT | FOR CODE-RULES REFLECTING LAWS |
13. EENEFIT/DETRIMENT FOR OTHER CODE RULES
|
13.8.1 Comparative advertising and
disparagement
13.9.2 Therapeutic claims
13.8.3 The committee structure and
barriers to new competition
14. TI-[E FTJTURE OF THE MEDIA COTJNCIL'S SELF
KEGTJLATION SYSTEM
IN THE TRADE PRACTICES TRIBUNAL
No. NSW 1 of 1986
IN THE MATTER OF AN APPLICATION
| BY THE AUSTRALIAN CONSUMERS | ' |
ASSOCIATION TO THE TRADE
PRACTICES TRIBUNAL FOR THE REVIEW
OF THE TRADE PRACTICES COMMISSION
AUTHORIZATION OF CERTAIN CODES OF
THE MEDIA COUNCIL OF AUSTRALIA.
LOCKHART J. - President, Professor M. Brunt, Dr. B.I. ~ldrich
31 MARCH 1987
REVIEW OF COMMISSION'S DETERMINATION
1. INTRODUCTION
This is an application by The Australian Consumers' Association ("the ACA") for review of a determination of the Trade Practices Commission ("the Commission") dated 10 January 1986. By its determination the Commission granted authorization to the Media Council of Australia ("the Media Council") and members of its constituent and affiliated organizations to adopt certain Codes as standards to which the rules of the Media Council governing the accreditation of advertising agencies would apply. Pursuant to sub-s. 88(10) of the Trade Practices Act 1974 ("the Act") the Commission extended the authorization to apply to persons who and corporations which thereafter became members of the Media Council or members of its constituent or affiliated organisations and to advertising agents who were thereafter granted accreditation under the rules of the Australian Media Accreditation Authority ("the AMAA"). The Commission
considered whether the authorization should be limited in time. The Commission decided, especially in view of its powers under s. 91 to review the authorization in the context of changed circumstances, that an authorization limited in time was not appropriate. The Commission noted that it expected to have discussions regarding the Codes with the Media Council from time to time.
The Codes, which were the subject of the Commission's authorization, are six of the Media Council's seven proposed voluntary codes of advertising, namely:
the Advertising Code of Ethics; the Cigarette Advertising Code; the Alcoholic Beverages Advertising Code;
the Therapeutic Advertising Code;
the Slimming Advertising Code; and
the Domestic Insecticide Advertising Code.
A seventh Code relating to mail order advertising was in the process of being reviewed by the Media Council and was not the subject of the Commission's determination.
The Australian system of self regulation in advertising has evolved through the co-operation of the media, advertisers and advertising agencies. Advertising codes have emerged which are essential to the self regulation system. The advertising industry is divided into four groups: the media, the advertisers, the advertising agencies and miscellaneous service groups. The media (newspapers, magazines, television, radio, posters and cinema) convey the paid
messages to the public. Advertisers are companies, government authorities and persons seeking to communicate paid messages to the public through the media. Agencies are engaged by advertisers to create advertisements and place them with the media. Miscellaneous groups supply services to the industry; for example, market researchers help to identify and define markets and production companies translate the concepts of advertisements into reality.
In advertising matters the governing media body is the Media Council. The Media Council is an unincorporated voluntary association comprising seven other associations. It was established on 19 December 1967 by resolution of its original constituent associations. Its formation brought together a number of organizations of particular types of media; namely, metropolitan newspapers, country newspapers, magazines, commercial radio stations and commercial television stations. Nearly all proprietors of commercial media in Australia are members of the Media Council and are bound by its objects and rules. All the self regulatory Codes emanate from the Media Council. It is the Media Council which had the carriage of the application to the Commission for authorization of the Codes.
The constituent member associations which currently comprise
the Media Council are:
. Australian Newspapers Council;
. News Limited;
. Australian Accreditations Bureau;
. Australian Magazine Publishers Association;
. Australian Provincial Press Association;
| . | Regional Dailies of Australia Limited; | ||
| . |
|
. Federation of Australian Commercial Television Stations ("FACTS"). All these associations except FARB and FACTS are represented on the Australian Publishers' Bureau ("the APB"). The APB represents virtually all newspapers and magazines.
Four other associations are affiliated with the Media Council and are bound by its rules. These are:
| . | Australian Suburban Newspapers Association Pty. Limited; |
. Associated Rural Press of Australia;
| The Outdoor Advertising Association of Australia ( "the OAAA" | ) ; and |
| . | The Australian Cinema Advertising Council ("the ACAC"). |
The Media Council is the body responsible for the accreditation of advertising agents. Every accredited advertising agent regards itself as bound to comply with and observe the Codes and maintain a standard of,ethics and conduct determined by the Media Council.
We shall refer to participants except the Media Council, to whom we have already referred.
The applicant for review before us, the ACA, is a company
| limited by guarantee. | It was formed in 1959 with the object of |
advancing the interests of Australian consumers. It has long demonstrated an interest in matters pertaining to the regulation of advertising. The ACA was dissatisfied with the grant of authorization and applied to this Tribunal for review of the Commission's determination. The ACA was not the applicant for authorization, but the Tribunal determined that it had a sufficient interest for the purposes of sub-s. 101(1) of the Act and proceeded to review the Commission's determination.
The Tribunal permitted various bodies to intervene in the proceeding before it, namely:
the Advertising Standards Council ("the ASC");
FACTS ;
FARB ;
the APB;
the AMAA;
the ACAC;
the OAAA;
Advertising Federation of Australia Limited ("AFA");
The Tobacco Institute of Australia Limited;
Rothmans of Pall Mall (Aust.) Limited; and
Phillip Morris of Australia Limited.
The Media Council, FACTS, FARB, the APB, the AMAA, the ACAC and the OAAA were represented by the same solicitors and counsel. Each of the remaining interveners was separately represented. Early in the proceedings leave to intervene was sought by and granted to the Secretary of the Commonwealth Department of Health, but the Secretary later sought and was granted leave to withdraw.
The Australian Association of National Advertisers ("the AANA") sought early in the proceeding before us to intervene, but later withdrew its application. Counsel for the AANA informed us that the AANA nevertheless supported the self regulatory system in the advertising industry and the present voluntary Codes.
The Tribunal heard evidence from twenty-eight witnesses and received many documents into evidence. The hearing before us occupied eighteen days and we had the benefit of full submissions from counsel and solicitors for the parties and for the interveners and counsel for the Commission. Schedule A to these reasons is a list of the witnesses.
Schedule B to these reasons is a list of the names and convenient abbreviations of the parties, interveners and other organizations mentioned in the evidence.
3. PREVIOUS AUTHORIZATIONS
This is not the first occasion on which authorization has been sought for the voluntary Codes of advertising of the Media Council, In 1976 the Commission granted authorization to certain corporations to continue to be parties to the agreement contained in the Media Council's Rules Governing Accreditation of Advertising Agencies and certain associated Codes and Standards. That authorization was granted subject to the condition that one rule (Rule
23) be amended and that another rule (Rule 19) be abandoned. The
applicants in that matter then applied to the Tribunal (constituted by
Deane J., President; Mr. J.A.F. Shipton and Mr. J.N. Walker) for a review of the Commission's determination. The decision of the Tribunal is reported as Herald & Weekly Times Ltd. and others on behalf of the members of the constituent and affiliated associations of the Media Council of Australia ("The Media Council Case") in [I9781 A.T.P.R. 40-058. The Tribunal said in its reasons for decision that, provided the Media Council was prepared to make certain amendments to its Accreditation Rules, it would allow the application for review and grant authorization of the Accreditation Rules and the associated Codes and Standards. The Tribunal found that real and substantial benefit to the public had resulted and results from the Media Council's Accreditation System including the benefits of efficiency and cost savings; the promotion of honesty, fairness and responsibility in advertising; and the encouragement and preservation of small advertising agencies. The Media Council subsequently indicated its willingness to make the amendments.
The authorization ultimately granted by the Tribunal on 31 March 1978 was thus for the Rules Governing Accreditation of Advertising Agents as amended and the associated Codes and Standards. It is important to note that the Codes and Standards then granted authorization were viewed as an aspect of the Media Council's Accreditation System. The Accreditation Rules establish a system under which:
1. all accreditation rules are binding on all participating media proprietors and all accredited advertising agencies;
2. eligibility for accreditation by the Wedia Council's accreditation authority is dependent upon an agency's
maintaining its independence and satisfying prescribed
service and financial requirements;
3. an accredited agency is granted unlimited credit and is responsible for payment for advertising and for making payment within the prescribed time;
4. only accredited agents are eligible to receive commission from a member media proprietor and that commission is subject to a maximum prescribed from time to time; and
5. advertising agents, in submitting advertisements to a media proprietor, are bound to conform to the standards of that media proprietor and to the Codes and Standards published by the Media Council and its associated bodies.
In relation to 5., Rule 31 of the Accreditation Rules stated:
"All advertising submitted to a Media Proprietor shall conform to the standards of the Media Proprietor concerned, and in addition -
(a) shall be clean, honest and truthful advertising, and
| (b) | shall not be liable to misinterpretation either directly or by implication or by omission, and |
| (c) | shall not contain statements or visual presentations offensive to public decency and good taste, and |
| (d) | shall comply with all Commonwealth and State and Territory laws, ordinances, rules and regulations, and |
| (e) | shall conform strictly with any advertising standards or Code of Ethics which may be published by MCA from time to time." |
The detailed Codes and Standards submitted to the Commission for authorization on that occasion were as follows:
| the Advertising Code of Ethics of the ~ e d i a | Council; |
the Slimming Advertising Code;
the advertising guidelines for hair and scalp treatment;
the Domestic Insecticide Advertising Code;
the Therapeutic Advertising Code;
the standards of broadcasting practices of the predecessor
body to FARB; and
the Television Advertising Board's Regulations and Approval
of the Commercials and Timing System of the predecessor
body to FACTS.
However, the standards and regulations (in (6) and (7) respectively) were not .included in the Commission's authorization and hence were not before the Tribunal or included in its authorization as the Commission decided to give them fuller consideration: see Commission determination (1976) TPCD LA30051 at para. 4.6.. Nor was item (5) above included in the Tribunal's authorization. In any event, a Therapeutic Advertising Code was granted separate authorization by the Commission in 1977 (see the list below).
The authorization granted by the Tribunal in 1978 was for the Accreditation Rules and the following Codes:
the Advertising Code of Ethics of the Media Council;
the Slimming Advertising Code;
the advertising guidelines for hair and scalp treatment;
the Domestic Insecticide Advertising Code.
Paragraph 3 of the Tribunal's authorization contains this important statement:
"This authorization neither operates as or involves a grant of authorization in respect of any of the provisions of the rules and regulations of constituent or affiliated organizations of the Media Council of Australia which are not now or hereafter the subject of a grant of authorization under the Trade Practices Act."
The Tribunal noted the following:
"The Trade Practices Commission is requested to examine from time to time the working of the accreditation system of the Media Council of Australia for the purpose of considering whether by reason of altered circumstances it is desirable that this authorization should be varied or revoked. "
We have dealt with the decision of the Tribunal in the Media Council case in 1978 in some detail because that decision provides a useful starting point for the present application. Although that decision is relevant for present purposes, its relevance must be qualified by certain considerations. It was the Accreditation System and Rules with which the Tribunal was primarily concerned in the 1978 case; and most of its reasons are directed to those matters.
The application to this Tribunal is for authorization of certain Codes as standards to which the rules governing the accreditation of advertising agents would apply. The Accreditation System and the Accreditation Rules are not themselves directly in issue in the proceedings before us. As the Commission noted in para.
110 of its determination in the present case:
". . . the MCA Accreditation Rules are not the
subject of this application, although in its consideration of the Codes the Commission has taken into account the context in which they would be administered".
The relevance of the Accreditation System and Accreditation Rules to the review conducted by us was .treated by the parties and interveners in evidence and final submissions as having broadly the same relevance as it had before the Commission.
Although the Accreditation Rules are not themselves directly in issue before us, the result of our review of the six Codes in issue will directly affect the operation of the Accreditation System. Advertising submitted to a media proprietor shall conform strictly with the advertising standards or Advertising Code of Ethics of the Media Council (see Accreditation Rule 31(e), the terms of which are set out earlier). Hence, in practice there is a close nexus between the Accreditation Rules and System and the Codes which are the subject of this present review.
Although certain of the Codes and Standards of the Media Council were regarded by the earlier Tribunal in 1978 as part of the subject matter of review and of subsequent authorization, their public benefit was not subject to any real contest by the parties or any detailed scrutiny by the Tribunal. Indeed, the Tribunal said that it would "pay regard" to the Commission's findings as to public benefit where there were no special reasons to do otherwise. Further, when the Tribunal was conducting its review in 1978 it was essentially examining the Accreditation System and Rules with a view to their prospective operation. It did not have the benefit, which we have, of years of previous experience of the Codes and Standards as authorized from time to time. We shall refer to this point in more detail later when considering the tests which must be applied by us in the present
| matter. |
Thus, the Codes which were before the Tribunal in 1978 and the subject of its authorization, although having many elements of similarity to the Codes the subject of the present review, had many and distinct differences; not the least of which is that the Cigarette Advertising Code and the Alcoholic Beverages Advertising Code were not before the Tribunal at that time.
The following additional authorizations have also been granted by the Commission, both before and after the review of the Tribunal in 1978, but were not within the scope of that Tribunal's review:
| of FARB; ~17156 of 6 December 1977 - advertising standards for advertising of alcoholic beverages; A17155 of 6 December 1977 - voluntary code for the advertising of goods for therapeutic use; A17040 and A90058 of 20 December 1977 - voluntary advertising codes for cigarettes; A30045 of 23 July 1979 - amendments to voluntary code for the advertising of goods for therapeutic use; A90324 of 16 may 1980 - amendments to voluntary code for the advertising of goods for therapeutic use; A30022 of 3 June 1980 - standards for mail order advertising; ~ 9 0 2 9 8 of 9 October 1980 - voluntary code of advertising alcoholic beverages; and | A21264 of 23 June 1977 - standards of broadcasting practice accreditation of advertising agencies. |
Also, applications (numbers A11709 and A21265) for authorization of the FACTS Television Advertising Practices and Commercials Acceptance Procedures were granted by the Commission, although subject to conditions, in a determination dated 12 September
1984. FACTS decided not to accept the conditions and the Commission subsequently revoked the authorization.
4. THE APPLICATIONS OF THE MEDIA COUNCIL FOR AUTHORIZATION OF THE PRESENT CODES
There were four applications for authorization to the Commission which, following authorization by the Commission, are therefore the subject of this review. They are as follows:
| A30106 dated 9 August 1984 | - the Advertising Code of Ethi,cs, |
the Cigarette Advertising Code,
the Slimming Advertising Code,
the Domestic Insecticide
Advertising Code;
| A30110 dated 8 November 1984 - the | Alcoholic | Beverages |
Advertising Code;
A30111 dated 8 November 1984 - the Therapeutic Advertising
Code; and
| A90429 dated 6 May 1985 | - the six Codes in so far as they |
contain provisions that may be
exclusionary.
In May 1985 application A30111 was amended before the Commission to incorporate a proposal of the Commonwealth Department of Health.
The first three applications were made under sub-s. 88(1) of the Act for an authorization under that sub-section to make a contract or arrangement, or arrive at an understanding, a provision of which would have the purpose, or would have or might have the effect of
substantially lessening competition within the meaning of s. 45 of the Act. The fourth application was made under sub-s. 88(1) in relation to the whole of the Codes for an authorization under that sub-section to make a contract or arrangement, or arrive at an understanding, where a provision of the proposed contract, arrangement or understanding would be, or might be, an exclusionary provision within the meaning of s. 45 of the Act.
In each case the application states that, subject to authorization, "the Media Council of Australia intends to adopt the Codes as standards to which the Rules Governing the Accreditation of Advertising Agencies will apply".
All six Codes arose out of a major review by the Media Council of its earlier Codes which had been in force for at least five or six years. We noted earlier that a seventh Code, relating to mail order, is in the process of being reviewed by the Media Council and is not, therefore, part of the conduct being reviewed in this determination.
In February 1986 the Tribunal was informed that the Media Council proposed to amend certain of the Codes, the subject of the applications, to reflect legislative requirements and to incorporate changes requested by the Office of Road Safety, Canberra, the Commonwealth Department of Health and the ASC. The Tribunal has noted the amendments and is of the view that, if it is disposed to grant authorization to the Codes, the subject of the formal applications, the amendments would raise no additional questions.
The process by which the "old" Media Council Codes have come to be authorized has been one of marginal accretion and substitution. The present set of applications represents an important new phase in this process. The Tribunal is called upon to examine not only some new Codes but virtually a complete set of new Codes arising out of the Media Council's own major review.
5. RELEVANT LAW - SCOPE OF THE APPLICATION AND STATUTORY TEST
The content of this Section has been determined by the President of the Tribunal as the Act entrusts to him decisions on questions of law arising in a review.
This is the first occasion on which the Tribunal has examined extensively and comprehensively the proposed new Codes and the working of the Codes as already authorized. This review is concerned not with an examination of each of the five Product Codes and the Advertising Code of Ethics merely as documents. The Codes must be considered by us in the context of the self regulatory system of advertising in Australia as a whole, in the light of past experience, with a view to determining how the new Codes are likely to work in practice in the future. The operation of the old Codes which are to some extent the subject of prior authorizations is a permissible and useful guide to the likely operation of the revised Codes.
The applicant for review, the ACA, has no onus cast upon it to show that the Commission was wrong in granting the authorization. The Tribunal must itself be satisfied of all matters, after examining the relevant material, by applying the tests propounded in sub-s.
90(6): see Re Queensland Co-Operative Milling Association Ltd., Defiance Holdings Ltd. ("the Q.C.M.A. Case") (1976) 25 F.L.R. 169; 119761 A.T.P.R. 40-012 at p. 17,226 and Re Tooheys Ltd., Tooth & Co.
| Ltd (1979) 39 F.L.R. 1; (1979) A.T.P.R. | 40-113 at p. 18,186. |
| - |
The Tribunal shall not make a determination affirming, setting aside or varying the Commission's determination unless it is satisfied in all the circumstances that the provision of the proposed conduct would result, or be likely to result, in a benefit to the public and that, that benefit would outweigh the detriment to the public constituted by any lessening of competition that would result, or be likely to result, if the proposed conduct were engaged in.
One of the applications for authorization was treated by the parties and by us as being in respect of an arrangement that falls in or may fall in an exclusionary provision within the meaning of that expression in s. 4D of the Act. The test is the same whether or not the provisions of the arrangements are governed by sub-s. 90(6) or constitute "exclusionary provisions" because the language of the relevant sub-section in that event, namely, sub-s. 90(8), is in all material respects the same. Hence, for all practical purposes one applies the public benefit and detriment test already outlined. We note that this was also the Tribunal's view in the 1978 determination: see The Media Council Case (supra) at pp. 17605-6. In support of the proposition that a similar process of balancing benefits and detriments is appropriate under both sub-ss. 90(6) and 90(8): see - The
| Locksmith's Case (1980) A.T.P.R. | 40-176 at p. 42,431; also In re Rural |
| Traders Co-Operative (W.A. | ) Ltd. ("The Rural Traders Case") (1979 | ) 37 |
F.L.R. 244; (1979) A.T.P.R. 40-110 at p. 18,123.
When applying the statutory test of balancing public benefit against public detriment we must determine, so far as is reasonably practicable, what would be likely to happen in practice in the absence of this Tribunal's authorization of the 1986 Codes such that the 1986 Codes would not be operative. Market forces would be at work, involving questions such as the likelihood of advertisers, advertising agents and the media imposing their own codes, controls or standards of conduct without the restraints imposed by the 1986 Codes.
Although the Codes and conduct previously authorized by the Tribunal and the Commission (excluding the 1986 Codes) would probably technically remain authorized and the conduct countenanced by them would also probably retain the protection of the authorization, we do not accept that the previously authorized Codes and Standards would continue to remain under the protective umbrella of the previous authorizations other than for a short period of time.
If this Tribunal were to conclude that the application of the statutory test formulated in sub-ss. 90(6) and (8) led. us to refuse authorization of the 1986 Codes then the very fact that certain of their content has already been the subject of authorization which would remain technically in force must then, in our view, lead the Commission to exercise its powers pursuant to sub-s. 91(4) and make a determination revoking the relevant authorizations at least to the extent that their continuance would be inconsistent with the findings of this Tribunal in relation to the 1986 Codes. Also, it is difficult to see what, if any, practical value the existing authorizations of the old Codes and Standards would be to the Media
Council and its constituent and affiliated bodies in the event that this Tribunal declined authorization in view of the dependence of the operation of the Accreditation System (approved in 1978) upon the legal status of the Advertising Standards and Code of Ethics of the Media Council from time to time (see Accreditation Rule 31 as mentioned earlier).
The subsistence of the present authorizations, both of the "old Codes" and of the Code content of the Accreditation Agreement (Rule 31), would in our opinion be merely a temporary technicality which the Commission would be bound to set to rest as soon as possible after this Tribunal were to refuse authorization. Any other conclusion would result in a nonsense, set at nought the powers of this Tribunal as the statutory body charged with the duty of reviewing authorizations granted by the Commission and be disruptive of the efficient working of the Act.
In our opinion, conduct that answers the statutory description of anti-competitive lessening of competition does not necessarily constitute anti-competitive 'detriment for the purposes of s. 90. It is erroneous to equate anti-competitiveness with detriment. Anti-competitive behaviour may in certain circumstances be a positive benefit.
It is important to note that the authorization granted by the Commission, the subject of this review, is not directly concerned with the rules, codes or procedures of the constituent or affiliated organizations of the Media Council; including bodies such as FACTS, FARB and the APB. Nor are the arrangements between the Media Council
and the other foundation bodies, the AFA and the AANA, in relation to the ASC the subject of this review. Nor is this review directly concerned with the charter or the procedures of the ASC itself. Hence, the grant of any authorization in this matter would not operate as a grant of authorization in respect of any of the rules, codes or procedures under which the constituent or affiliated organizations of the Media Council operate. However, in applying the statutory tests to the six Codes with which this application is concerned, bearing in mind that they are involved here as standards to which the Accreditation Rules apply, we must have regard to the practical operation of those Codes as we perceive it is likely to be. This must be viewed in the context of the operation of the self regulatory system as a whole.
The Commission had before it the various applications for authorization mentioned earlier in respect of the 1986 Codes. It seems that the Commission exercised the power conferred by sub-s. 90(13) of the Act, namely, that as the applications were made by the same body and involved the same or substantially similar issues, the Commission could treat the applications as if they constituted a single application and, therefore, prepare one draft determination in relation to the applications. It is the determination of the Commission in relation to the applications for authorization that is the subject of the review before us pursuant to sub-s. 101(1) and that determination adopted a composite or global view in respect of the applications.
The Codes do not exist independently of their respective
rules; each Code is but the sum of the rules of which it consists.
There is also a real degree of overlap between certain of the rules in one Code with rules in another Code. Each Code must be examined, both in content and prospective operation, in its own right and as part of the set of related Codes; related because they overlap or interact with each other and are administered by various bodies which are common to more than one. It is important to note that the task of examining each of the six Codes requires an examination of each of its components, namely, its rules. Also, it is necessary to keep in mind that the Codes are part of a larger scheme and, therefore, to consider the operation of the Codes and the scheme as a whole as well as independently of each constituent element.
The Tribunal must engage in a rehearing in the fullest sense and it must reach its own conclusions on the evidence. The reasoning process of the Commission is not itself the subject of this inquiry: The Q.C.M.A. Case (supra) at pp. 17,226-7; The Media Council Case (supra) at p. 17,601; Re Tooheys Ltd., Tooth & Co. Limited (supra) at
p. 18,183; The Rural Traders Case (supra) at pp. 18,122-3 and - The
Locksmith's Case (supra) at p. 42,430.
The comparison is between the future with the relevant conduct and the future without the relevant conduct: Re Tooheys Ltd., Tooth & Co. Ltd. (supra) at pp. 18,186-7. It is doubtful if past benefits may be relied on in support of the present applications for authorization (see A.C. Hatrick Chemicals Pty. Ltd. (No. 2 ) , (1978) A.T.P.R. 40-057 at p. 17,590 and Re Tooheys Ltd., Tooth & Co. Ltd. (supra) at p. 18,186) except to the extent that the past may be indicative of the future.
The application of sub-ss. 90(6) and 90(8) must involve a number of comparisons. In identifying the relevant public benefit the Tribunal must compare the position which would apply in the future were the proposed arrangement not entered into, or given effect to, with the position in the future which would arise if the arrangement were entered into or given effect to. The Tribunal must consider all the circumstances that relate to public benefit including how the proposed arrangement is likely to operate in practice so as to give rise to public benefit. The Tribunal is not confined to some narrow or rigid examination of the documents constituting the Codes. Our function is to examine the practical operation or working out of the subject matter of the application for authorization.
6. THE CASES OF THE MEDIA COUNCIL AND THE ACA
6.1 The Media Council's case
The Media Council's case before the Tribunal rested on five
main propositions:
1. The Codes "encourage honesty, fairness, responsibility, decency and accuracy in advertising". While the Codes overlap the general law, they "embody higher standards and cover different fields". The Codes seek to reflect "responsible community standards". In effect it was claimed that the beneficial character of the standards embodied in the Codes is patently obvious; it is the control of "misleading and deceptive, harmful and offensive" advertising.
2. There are pronounced operational and enforcement efficiencies by comparison with the legal system or vetting by individual media operators. First, the Codes are generally accepted and applied by individual advertisers and advertising agencies. The Codes have the consent of the governed and, in any event, there is the force of peer group pressure. Second, the system has vetting procedures collectively and expertly administered by bodies within the industry which are speedy, economical, preventative, flexible and conducive to uniformity. Third, in so far as doubtful advertisements may be published, the system responds to complaints through the ASC and offers the prospect of speedy withdrawal of offending advertising and the imposition of penalties additional to those that would be enforced by the Courts.
3. Greater reliance upon government controls would not only be characterized by operating inefficiencies but would be politically and constitutionally difficult to achieve.
4. Self regulation, with only limited participation of "outsiders", is appropriate not only for efficiency but also because the Code system furthers the legitimate interests and aspirations of the advertising industry; the Codes seek to substitute the "collective industry wisdom" for the short-sighted and foolish decisions -'the lapses of judgement and experience - of a minority of the industry.
5. "There are no anti-competitive detriments." As a matter of principle, an anti-competitive effect may be a public benefit
rather than a detriment. In this case, the Codes incorporate standards and procedures which are entirely beneficial. Moreover, competition, when properly understood, does not include all the behaviour by which one competitor may seek to advance himself over his rivals. A competitor who murders, maims or imprisons his rival is not engaging in competition. Nor is one who lies or uses harmful advertising.
6.2 The ACA's case
In its submissions and in examination of witnesses, the ACA explored numerous strands of complaint about the Media Council's Codes and the workings of the associated structure. Certain assertions and arguments were not proceeded with to the conclusion of the hearings. In the end, the substance of the argument put to the Tribunal by the ACA can be summarized in the following general propositions:
1. The Codes and the procedures for their implementation have a clear anti-competitive effect. That this constitutes a detriment is demonstrated by numerous examples in which the outcomes of the operation of the self regulation system are plainly contrary to the public good.
2. The benefits resulting from application of the Codes, as accepted by the Tribunal in 1978, were benefits of a potential nature only which remain substantially unrealized in practice.
3. Procedures for the review and revision of the Codes, so as to reflect changing attitudes in significant sections of the community, have not kept pace with needs arising from the emergence of new issues, such as sex stereotyping and other forms of discrimination in advertising, the appeal of cigarette advertising to adolescents and the control o f advocacy advertising.
4. Interpretation of the Codes in practice by the ASC has been neither consistent nor responsive to emerging public concerns and does not invite confidence.
5. A self regulation system potentially can exhibit benefit exceeding anti-competitive detriment; but changes to the Media Council's system are needed to make the system less inward looking, less self serving and sufficiently responsive to public interest concerns about the secondary impacts of advertising.
6. In particular, the balance of ASC membership and the absence of adequate participation from consumer interest groups in the workings of the Media Council's system reduces effectiveness and equity. These deficiencies should be remedied.
6.3 The clash of values
There were fundamental differences between the case presented
by the Media Council and the advertising industry on the one hand and
the case presented by the ACA on the other. There was a pervading disagreement as to the benefits and risks to the community resulting from advertising. The Media Council stressed the role of advertising as an essential and commercially proper device for informing consumers about available products. The ACA stressed adverse secondary impacts that were seen to warrant greater control at the expense of market freedom.
The participants found little common ground as to what represents suitable standards for advertising in practice and as to the purposes and underlying values appropriate for a system for the self regulation of advertising. The Tribunal considers these questions in some depth in later sections of this determination (in particular Section 13.3).
7. THE CODES AND THE SELF-REGULATION SYSTEM
7.1 General
The advertising industry's self regulation system of Codes and procedures to apply them is a self-imposed discipline with the object of prescribing and monitoring standards of advertising which are said to be in the public interest. The stated objective of the self regulation system is that it is a series of advertising Codes developed by common consent within the advertising industry to accord with community expectations and standards which are administered through a complex network of institutions and procedures. Each element in the system is designed to perform a distinctive function so that due standards are maintained consistently with the efficient day to day operation of advertising work. Breaches of the Codes expose
| the offender to penalty. |
The parties which have adhered to the system since its inception and co-operated in the establishment and implementation of its procedures are, the Media Council and its constituent and affiliated organizations from the media sector, the AFA on behalf of the advertising agents, and the AANA which represents major companies advertising their products through the media.
The proposed conduct, with the revised Codes, would employ the present system of administering authorized Codes. It is not possible to assess the effect of the proposed new Codes without examining also the likely force of the procedures and practices by which they would be administered, enforced and interpreted in practice. Much evidence was presented in this regard and will be discussed in Section 11.
7.2 The wider regulatory context
All advertisements displayed by conventional media are expected to comply with the Media Council's Codes. They must also comply with the requirements of Federal and State legislation, and (for the electronic medial with the standards and conditions imposed by the Australian Broadcasting Tribunal ("the ABT"). Federal and State Parliaments have enacted legislation to protect consumers from abuses perceived to arise from the power of advertising.
The Act, pursuant to s. 52, prohibits corporations from
engaging in misleading or deceptive conduct or conduct that is likely
to mislead or deceive. It also prohibits false representations about
goods .and services offered by suppliers (e.g. s.53). The Act covers many areas where consumers are vulnerable and where selling malpractices are common (e.g. bait advertising and false representation in relation to advertising of employment and the sale of land).
The Broadcasting & Television Act 1942 empowers the ABT to determine standards for programs broadcast and to grant, renew, suspend, revoke and accept the surrender of licences to broadcast. That Act prohibits the broadcasting of advertisements of certain products, notably medicines (unless approved by the Secretary of the Department of Health) and cigarettes. It also imposes ultimate liability for offensive advertising on the licensees of radio and television stations. The ABT publishes program an,d advertising standards, both of which are reviewed from time to time by it in consultation with the public and the industry. The ABT's Advertising Standards charge licensees with responsibility for the form and content of advertisements they broadcast, and cover:
. compliance with other laws;
. the scheduling of advertising;
. the identification of advertisements;
. the identification of advertisers; and
. local content requirements.
Advertising a variety of medicines and therapeutic products is restricted by statute in the States; for example, in N.S.W. by the Poisons Act 1966 and the Therapeutic Goods and Cosmetics Act 1972. Numerous other Acts also include provisions that limit advertising in specific ways.
The capacity of advertisers to inform freely potential customers about available goods and services through the media can also be limited by the policies of particular media. The proprietor or management of any advertising medium has the right to refuse placement or request amendment of any advertisement that is considered unacceptable by that medium.
The Media Council states that its self regulation system complements these other forms of control on advertising. This view is supported by evidence that statutory control is, on occasions, designed and conducted with regard to the parallel operation of the self regulation system.
7.3 The system of Codes
The system of codes has changed significantly since the Tribunal's decision in 1978. As then authorized it comprised an Advertising Code of Ethics and three Product Codes dealing specifically with advertising of slimming preparations and the like, hair pieces and treatments, and domestic insecticides. Later authorizations by the Commission allowed the evolution of the Codes by the addition of Product Codes for therapeutic products, cigarettes and alcoholic beverages. Comprehensive review of the Codes by the Media Council since 1983 has led to significant redrafting to achieve the system of Codes that is the subject of the present proceedings, and which comprises:
. the Advertising Code of Ethics;
. the Therapeutic Advertising Code;
. the Cigarette Advertising Code;
. the Alcoholic Beverage Advertising Code;
. the Slimming Advertising Code; and
. the Domestic Insecticide Advertising Code.
The Advertising Code of Ethics is a general code stipulating required standards for all media advertising. The other five Product Codes add requirements for the advertising of certain classes of product where the advertising industry has concluded that undesirable advertising might appear unless specific potential abuses and contentious practices are ruled out.
As we said earlier, a seventh code, setting standards for mail order advertising, is in the process of review by the Media Council and is not the subject of an application for authorization at this stage.
| 7.4 | System governance |
Policy decisions on the Codes, on system structure and on the composition of component bodies of the system, are made by the Media Council or are delegated to other bodies under its authority. The Media Council's activities are deeply concerned with advertising matters and its operating expenses are met by levies from members broadly in accordance with their advertising revenues. Membership includes numerous constituent and associated media organizations, with the result that proprietors of Australian print, radio, television and other media are well represented.
The AFA represents the vast majority of advertising agents in Australia. The AANA represents a large number of companies which advertise their products. Neither the AFA nor the AANA, representing other arms of the advertising industry, participate formally in the overall governance of the self regulation system. However, the AFA and the AANA, together with the Media Council, are members of the Australian Advertising Industry Council ("the AAIC" ) which provides a forum for consultation and a common platform. They also nominate members of certain bodies that perform roles within the self regulation system, notably the ASC.
The pattern of representation on the several bodies within the self regulation system, is perceived by the ACA and some others to bring into question the credibility of the system and its capacity to exercise sound judgement. This issue is discussed separately later.
| 7.5 | Code review and revision |
The Codes and Standards Authority ("CASA") i,s a committee of the Media Council established in December 1982 to advise the Media Council in all matters relating to the Codes and Standards. Set up in the first instance to oversee a comprehensive review of the Media Council's Advertising Codes, it was retained as a standing body and meets monthly. It has seven members, all representing media organizations, with two observers nominated by the AFA. Advertisers are not represented directly on CASA.
CASA is in turn advised in three sensitive product areas by sector advertising councils which have a wider representation of advertisers. These councils are the Therapeutic Advertising Council ("the TAC"), the Tobacco Products Advertising Council ("the TPAC") and the Alcoholic Beverages Advertising Council ("the ABAC").
The TAC is the oldest established council. It has nine members. Three of its members represent media interests, at least one of which must be a member of CASA. Of the others, one represents the AFA, one the AANA and four represent manufacturers' interests. The TAC is supported by a Working Party which also includes in its membership a representative from the Federal Department of Health. The TPAC has seven members. Four members represent the print media. There is one member from each of the AFA, the AANA and the Tobacco Institute of Australia. The ABAC has eight members, four of whom represent media interests (one of whom must be a member of CASA), three represent advertisers of beer, wine and spirits and one member is from the AFA. Evidence indicated that the Media Council is contemplating corresponding public health representation on Working Parties in support of the TPAC and the ABAC.
The revised Codes which are the subject of this proceeding are derived from a systematic review of Codes conducted in 1983 under CASA. Submissions were invited from the public. Many submissions were received, processed and considered according to defined procedures, which are now adopted by the Media Council as procedures for regular review.
The Media Council states that Codes are not drafted, or intended to be read, as statutes. Rather, they are drafted in lay language to assist practical advertising industry people in their duty to prepare and publish advertisements that conform with advertising ethics and with current legislation.
| 7.6 | Clearance procedures |
Each arm of the media maintains an organization which
scrutinizes and approves certain advertisements prior to publication,
display or broadcasting. The following organizations presently exist:
1. The Commercials Approvals Office of FARB checks radio advertisements for products covered by the Media Council's Advertising Codes (whether they are to be recorded or broadcast live);
2. Through its Commercials Acceptance Division, FACTS checks and approves all advertisements covered by all the Media Council's Codes. This procedure is, in practice, conducted within the voluntary commercial clearance system operated by FACTS on behalf of all its member stations. One result is that all television commercials are checked for compliance with the ABT's standards;
3. Print media advertisements for products covered by the Media Council's Product Codes are checked and approved by the APB;
4. All outdoor advertising for products subject to the Media Council's Product Codes is examined for approval prior to display by the OAAA; and
5. Cinema advertising, whether as slides or film, is subject to prior clearance by the ACAC.
Each media organization that operates a clearance body faces the dilemma of avoiding procedural delay to the publication or broadcasting of advertisements (the overwhelming proportion of which satisfy the Codes) while efficiently checking for compliance. Except for television, where all commercials are checked voluntarily for reasons related to the ABT's licensing obligations, the clearance bodies confine obligatory clearance to advertisements for products subject to the tighter constraints of the Media Council's Product Codes. Clearance is determined by experienced permanent staff at a stage in the development of the final advertisement that allows inexpensive modification if a breach of a Code is found. In the normal course clearance processes are rapid, taking only hours to complete. Each formally cleared advertisement is given an identifying number so that the relevant medium can readily determine whether the advertisement has been cleared.
The high volume and rapid throughput of the clearance bodies requires a somewhat mechanical approach to the interpretation of the Codes in assessing each advertisement. Heavy reliance, in this regard, is place on precedent. The clearance bodies (except in respect of television advertisements) also provide advice on request
as to the implications of the Advertising Code of Ethics with respect
to specifically planned advertisements.
Failure to obtain clearance for an advertisement from the appropriate clearance body constitutes a breach of the Code and exposes the advertising agency concerned to penalty under the system. Failure to obtain clearance for an advertisement will also result in refusal of the relevant media operators to publish or broadcast the advertisement. The requirement for prior clearance of advertisements for television or for certain product classes, therefore also, has force against unaccredited agencies and direct advertisers.
7.7 Advertising tribunals
There are two bodies within the Media Council's system of advertising self regulation which are constituted to adjudicate on complaints against specific advertisements.
The Joint Committee on Disparaging Copy ("the JCDC") handles complaints within the advertising industry relating to Rule 2.16 of the Advertising Code of Ethics which prohibits unfair or misleading disparagement of identifiable products, services or competitors. The JCDC determines whether an advertisement has wrongly disparaged the relevant goods, services or competitors and, as a result, is in breach of the Code. The JCDC has six members, four representing media interests, one member from the AFA and one from the AANA. The Chairman, who is one of the four representatives of Media interests, is appointed by CASA.
The Advertising Standards Council ("the ASC") is funded by the Media Council, the AFA and the AANA. It has the central function of receiving public complaints about specific advertisements and then determining whether such advertisements are in breach of the Advertising Codes. The ASC, by its rulings, interprets the Codes in practice so that its rulings serve as references and precedent for clearance bodies and for members of the advertising industry generally. The ASC consists of an independent Chairman (who is, as was his precedessor, a retired Judge) with twelve other members; seven of whom are public members unconnected with the advertising industry and five of whom are representatives of the advertising industry.
Members of the public may complain about an advertisement in any one or more of three ways: by writing to the medium in which the advertisement appeared; by writing to the clearance body for the relevant arm of the media; or by writing direct to the ASC. Procedures for lodging complaints have from time to time been advertised to the public by the Media Council. The ASC is the final appellate body for public complaints. When the ASC receives a complaint, directly or referred from the media, its Secretariat seeks comment, where applicable, from the appropriate clearance body, the advertiser, the advertising agency and the medium concerned. Proceedings of the ASC in dealing with complaints are not public, although its rulings are published.
The ASC gives advice to the Media Council and its committees in relation to the Codes. Its Chairman also acts as an appeals tribunal under the provision of the Rules Governing the Accreditation of Advertising Agencies.
7.8 Penalties and appeals
As the administration of the Advertising Codes is conducted under the Media Council's rules, which also provide for the accreditation of advertising agencies (such conduct was authorized by the Tribunal in 1978), the Media Council self regulation system is able directly to exercise sanctions on advertising agencies where breaches of the Codes or of required Media Council procedures occur.
The AMAA is a committee of the Media Council empowered to accredit advertising agencies. It has 13(12) members, ll(10) of which represent media interests and two represent accredited agencies. The AMAA performs other functions, one of which deals with breaches of the Codes. Breaches of the Codes are reported to it for determination of penalties against the advertising agency concerned. Minor or technical breaches will be noted in the agency's file: significant breaches can lead to a reprimand and warning; serious breaches, and especially repeated breaches, incur monetary penalty. The ultimate sanction may be the loss of accreditation. The monetary penalties of which evidence was given were pitched to exceed the agency's commission on the relevant advertising.
The Media Council's system is less able to impose formal sanctions on an advertiser responsible for a breach of the Codes. Once a breach is determined in the prior clearance process, or by determination of the ASC, the media will not publish or broadcast it. Where an advertisement is subject to clearance the sanction is complete and modified advertising must be prepared. In other cases,
the sanction is confined to advertisements that are intended for repeated publication or broadcast. As a result additional costs are incurred and a planned marketing campaign can be disrupted.
Where an advertisement has been refused clearance an advertiser has access to appeal procedures. For the print media, an appeal is heard by the Review Panel of the APB with a further right of appeal to the Chairman of the ASC. The APB Review Panel is constituted by three senior executives .of member organizations of the Bureau. An appeal lodged against a decision of the Commercials Acceptance Division ("the CAD") of FACTS is heard by the Commercials Clearance Appeals Committee("the CCAC") of that body which consists of the Chairman of FACTS, the Chairman of the FACTS Television Codes Board (which oversees the CAD), and a nominee of the AFA. An appeal against refusal of clearance by FARB is heard by the Codes Committee of FARB, which consists of four radio station executives. There is no further right of appeal against decisions by the FACTS and FARB appeal bodies.
| 7.9 | Table of representation on the Media Council's system bodies |
As noted earlier, the credibility and capacity for sound judgment of the Media Council's self regulation system was questioned in evidence and argument, inter alia, on grounds that the membership of the various bodies within the system is not appropriate. The following tabulation exhibits the pattern of representation of interested parties on the relevant bodies:
Members Representing:
| No : | Media | AFA | A | AN A | Public Other |
........ ........ ........ ........ ........ ........ ........ ........ ........
POLICY AND ENFORCEMENT
| Media Council Executive 7 | 7 |
| AMAA | 1 2 | 10 | 2 |
| CODES | |||
| CASA |
| TAC | 9 | 3 | 1 |
| Working Party | 7 | 3 | 1 |
| ABAC | 8 | 4 | 1 |
| TPAC | 7 | 4 | 1 |
| TRIBUNALS | |||
| JC DC | |||
| ASC | |||
| APPEALS | |||
| APB Review Panel | 3 | 3 | |
| FACTS CCAC | 3 | 2 | 1 |
| FARB Codes C'tee | 4 | 4 | |
| Notes: |
| * | Present at meetings as observers; media observer at ASC meetings represents CASA. |
Media representatives on TAC, ABAC, TPAC, JCDC include one person
representing CASA.
Other representation:
Manufacturers: TAC(4), TAC Working Party (I), ABAC(~),
TPAC(2), Department of Health.
8. THE CODES
| 8.1 | Broad structure of the Codes |
The Codes proposed for authorization exhibit considerable variety in their form and content. Particular Codes and elements of them differ in their scope, purpose, generality of expression, standing in relation to current law and regulation and precision of application. The six Codes fall into two classes. The Advertising Code of Ethics is a general statement setting out requirements to be satisfied by all advertisements. The Tribunal is also asked to authorize five Product Codes; each of which particularizes and amplifies the general requirements of the Advertising Code of Ethics when applied to a class of products: cigarettes: alcoholic beverages; therapeutic products; slimming preparations; appliances and treatments; and domestic insecticides.
The Media Council perceives that separate Codes are necessary for particular classes of products because of peculiarities of the products themselves or the requirements of the law with respect to them, all of which bear upon the advertising of those products. For example, cigarettes may not be legally sold to minors (variously defined in different States) and are subject to public health concerns about promotional methods which encourage consumption. The sale of alcoholic beverages to the young is also restricted.
Each Code consists of:
1. A Preamble which states the object or intent of the Code and
statements of principle bearing on its application:
2. Code Rules which stipulate requirements of form, content and presentation to be satisfied by all relevant advertisements; and
3. Supplementary information helpful to the application and enforcement of the Code which includes procedures for the handling of complaints against specific advertisements.
| 8.2 Relationship to the. | law |
Many rules of the Codes proposed for authorization directly reflect existing requirements of the law. For example:
"Advertisements must be truthful and shall not be misleading
or deceptive" - Advertising Code of Ethics, Rule 2.5; and
"All television commercials shall comply with:
| (a) | Australian Broadcasting Tribunal Television Program and Advertising Standards" - Advertising Code of Ethics, Rule 2.18.a. |
The wording of such rules is not a precise statement of the relevant law and no provision is made for differences in the law between States.
Other Code rules that do not reflect laws are claimed to reflect professional ethics and community requirements. For example:
avoiding grave offence:
"An advertisement shall not contain anything which in the light of generally prevailing community standards is likely t o cause grave offence to the community or a significant section of the community" - Advertising Code of Ethics, Rule 2.4;
avoiding undesirable advertising impacts on vulnerable
groups:
"No advertising for cigarettes may include persons who have major appeal for children or adolescents under 18 years of age" - Cigarette Advertising Code, Rule 2.4; and
preventing advertising abuses which encourage consumption of certain products in ways or in quantities beyond those thought to be accepted by the general public:
"The content of cigarette advertisements shall be directed only to adult smokers and only intended to effect or deter a change of brand" - Cigarette Advertising Code, Rule 2.1
"Advertisements for alcoholic beverages shall not show people consuming alcoholic beverages shortly before or whilst driving motor vehicles, swimming, operating boats or shortly before or whilst engaging in any activities or work where such drinking is potentially dangerous" - Alcoholic Beverages Advertising Code, Rule 2.7.
Some broad patterns are apparent from the evidence which enable the Code rules to be classified according to the existence of corresponding laws:
1. the Advertising Code of Ethics reflects laws, regulations and rules that are justified on other grounds;
2. the Cigarette Advertising Code is predominantly a set of rules not founded upon applicable laws. As advertising of cigarettes is prohibited in the electronic media, this Code
applies only to print media, and cinema and outdoor
advertising;
3. the Alcoholic Beverages Advertising Code is also predominantly a set of rules that is not founded upon applicable laws; and
4. the Therapeutic Advertising Code closely reflects laws which restrict the advertising of medicines and therapeutic treatments; but its rules go further and restrict, in like manner, advertising of all therapeutic claims whether requirements of the law to that effect are present or not.
| 8.3 | Precision and generality in drafting |
The rules in the Codes vary considerably in their precision of expression. These variations mean that in particular instances, where it is claimed that an advertisement breaches a provision of the Codes, there may be some difficulty in interpreting the relevant rules, adjudging breach and determining a sanction. Plainly, rules expressed in precise language may be more easily interpreted than those expressed in more general terms. On the other hand, it was argued before us that a rule in general terms lends itself to more flexible interpretation in the light of experience and changing community attitudes.
Some Code rules are so broadly expressed as to be little more than a statement of the draftsman's perception of desirable social objectives. For example:
"Advertisements for any product which is primarily meant to be used by and/or purchased by children shall not contain anything which would result in their physical, mental or moral harm.. ." - Advertising Code of Ethics, Rule 2.13 (in part) ;
"In essence, advertisements for cigarettes shall not encourage people, particularly the young, to start smoking or encourage existing smokers to increase their consumption." - Cigarette Advertising Code, Rule 1.1;
"Advertisements should not use copy or illustrations which indicate that sexual success is due to smoking. Advertisements may depict success or distinction but shall not claim that cigarette smoking contributes significantly to the attainment of social or business success or distinction."
- Cigarette Advertising Code, Rule 2.7; and
"Advertisements for alcoholic beverages shall be directed only at increasing brand or beverage share of existing markets, rather than promoting any increased consumption of alcoholic beverages." - Alcoholic Beverages Advertising Code, Rule 2.3.
Other rules, while still expressed in general terms, are more specific in identifying consequences to be achieved or avoided. For example :
"All advertisements for cigarettes must carry the health warning in printing or writing of such a size and prominence that it may be read or understood with ease." - Cigarette Advertising Code, Rule 2.5; and
"Advertisements for alcoholic beverages shall not depict or encourage consumption at a frequency or in a quantity likely to lead to over indulgence." - Alcoholic Beverages Advertising Code, Rule 2.10.
Many rules are expressed with such precision that compliance or breach in specific cases must be self-evident. The Therapeutic Advertising Code has numerous rules precluding unverifiable advertising claims or claims of efficacy for particular medical conditions. Other Codes also include rules expressly prohibiting defined advertising claims. For example:
"No advertisement may claim health properties from any cigarettes.. ." - Cigarette Advertising Code, Rule 2.11 (in part) ;
"Advertisements shall not claim that vitamin, mineral or herbal therapy in themselves contribute to weight loss." - Slimming Advertising Code, Rule 2 . 6 ; and
"An advertisement relating to vitamin therapy ... shall ... : . . . contain no claims or dramatisation of benefits for
irritability, sexual activity, nervousness or that vitamins will stimulate appetite or growth or provide nutritional insurance;" - Therapeutic Advertising Code, Rule 2.6.1.3
| Some rules prohibit advertisements which show defined conduct or which include defined classes of people. | For example: |
"No advertisement shall show a child using any insecticide product. " - Domestic Insecticide Advertising Code, Rule
| 2 . 3 ; | and |
"Except in crowd or other scenes, where background is not under the controlof the advertiser, no persons shall be employed in cigarette advertisements who are under 2 5 years of age and will not be represented to appear to be below this
| age. " | - Cigarette Advertising Code, Rule 2 . 2 |
These examples illustrate the diversity of form evident in the Codes before the Tribunal and the range of differences in precision of expression. In considering the workings of the Codes in practice and the resulting benefits and anti-competitive detriments the Tribunal is obliged to consider the implications for effective interpretation and enforcement of the Codes arising from this diversity.
8.4 Procedural provisions
Certain administrative procedures of the self regulation system are seen to be so central to its orderly working and enforcement that compliance with these procedures is enforced as Code rules are enforced; by treating non-compliance as a breach of the Codes.
For products subject to one of the Product Codes, and for which clearance by the appropriate clearance body is required prior to publication or broadcasting, failure to gain approval in due form, and for print advertisements to incorporate the Code approval number in the advertisement, exposes the offender to sanction. The statements of administrative and complaint procedure which form part of each Code include provisions to this effect.
8.5 The international context
| i | Material before the Tribunal included published reports and commentaries on procedures adopted for the regulation of advertising in other countries. It is apparent that there is some form of self regulation by the advertising industry in many market economies; including the major countries of Europe and North America. It is apparent also that these countries have from time to time modified these regulatory arrangements, at t imes with increasing sophistication, in the light of experience and changing perceptions of the needs to be served. |
| i | |
| I |
| 8.5.1. | Self regulation in other countries |
United Kingdom procedures were stated in evidence to be the model for the Australian system. Codes of advertising practice are developed, publicized and from time to time reviewed and revised. The Codes are administered by an industry body called the Codes of Advertising Practice Committee ( "the CAPC" ) . Unlike Australia, where the governing industry committee, the Media Council, is entirely controlled by the media, the CAPC is a mixed industry body which includes advertisers and advertising agencies. This Committee also handles complaints about advertisements from competitors.
The Advertising Standards Authority ("the ASA") funded by a levy on advertising revenues, has a role closely analogous to that of the ASC in Australia as it is primarily concerned with the assessment of complaints from consumers. It consists of a minority of "advertising" members and a majority of "public interest" members appointed by the independent Chairman with regard to due "balance" of the Authority and to their capacity to contribute credibly and to work compatibly with other members. Members are appointed for overlapping three year terms. Neither government nor consumer organizations are formally represented in the CAPC or the ASA.
Laws and regulations also constrain advertising in the United Kingdom, as in Australia. The Trade Descriptions Act 1968 prohibits misleading advertising. Advertising standards for television and radio in the United Kingdom are regulated by the Independent Television Authority.
Published commentaries state that the United Kingdom system works well; it is noted that the selection of suitable "public interest" members of the ASA is crucial to the performance of the system. Although in late 1986, a European Community directive came into effect under which the United Kingdom Government is required to provide a supplementary legal process to remedy misleading advertising beyond the procedures of the self regulation system.
European self regulation systems exhibit predictable variety. The most notable differences for present purposes concern the participation of persons outside the advertising industry in the development of standards and in the adjudication of complaints. Such participation has become the rule although involvement in procedures is either advisory or substantive; while consumer interests are represented only in some instances.
Canada applies a self regulation system with certain similarities to Australia. It is notable that, because of distances and language differences, complaints can be adjudicated regionally. The Canadian system has included consumer representatives in units to develop advertising codes for advertising to children, feminine hygiene products and sex stereotypes in advertising.
The United States of America has a very limited self regulation system which reflects both the free speech requirements of the First Amendment of the Constitution and the Federal anti-trust laws. Under the anti-trust laws, private regulation of advertising, through industry or co-operative advertising codes and standards, may constitute an illegal restraint
of trade. On the other hand, public regulation is explicitly sanctioned under the Federal Trade Commission Act 1914 under which the Federal Trade Commission ("the FTC") is authorized to challenge "unfair or deceptive acts or practices" as part of its consumer protection mandate. The FTC's jurisdiction over "truth in advertising" is shared with other specialized Federal agencies and with State Government agencies which enforce legislation that parallels and supplements the federal act. Private law suits under the state acts are a significant ingredient of the American scheme.
The National Advertising Review Board ("the NARB") rules upon complaints regarding truth and accuracy referred to it by the public or the business sector; but it has no power to enforce its determinations, nor does it administer its own codes. Advertisers and advertising agencies dominate membership of the NARB. Ten of its forty members represent the public and other interests. Comprehensive information on the NARB codes and on law and regulation governing advertising is issued by the Council of Better Business Bureaux for the information of advertisers. The NARB's determinations are respected and commonly adopted voluntarily but where this is not the case, government enforcement agencies are informed.
8.5.2 Remarks
In our opinion an advertising industry's self regulation system, pitched so as to complement the laws of this country, can in principle be effective and well accepted.
The international material alerts us to some unusual or distinctive features (albeit not necessarily unique) of the Australian scheme: the wide ambit of the Codes and their application to virtually all media advertising, including that of non-associated independent advertisers; the development and implementation of the Code system by the media rather than by some tri-partite industry body; and the limited involvement of the general public. We shall comment in more detail on these features in subsequent sections.
We noted that self regulation systems in other countries, as in Australia, have evolved significantly in form and detail to meet new requirements and expectations and cannot sensibly be examined as if they are constant in their substance and effect. We note also indications that overseas systems have faced common problems in resolving certain issues including the issue of responding suitably to new fields of public concern about advertising and the issue of devising the best procedures to gain continuing access to outside advice in such matters.
9. THE ADVERTISING INDUSTRY AND THE MARKET FOR ADVERTISING MESSAGES
9.1 Advertising and its role in societv
| "Advertising" can be defined variously. | For our purposes it |
refers to sales promotion messages that are conveyed by the media and consumed independently of the purchase of the products being promoted. Broadly these are the sales promotion messages which are subject to the Codes.
The realm of the Codes largely corresponds to "national advertising in main media"; that is, advertising in newspapers and magazines, radio and television, outdoor and cinema advertising but excluding retail advertising, amusement advertising, classified, semi-display and local advertising. Some retail advertising and some minor miscellaneous categories are also subject to the Codes.
Figures quoted to the Tribunal point to expenditure upon advertising in the main media subject to the Codes ("national" and relevant retailing and 'miscellaneous) as being in excess of two thousand million dollars ($2,000,000,000) in 1985 for the cost of space and time only. Advertising agency costs, production costs, and miscellaneous expenditure upon research and other services would be additional. It is clear that the market for advertising messages subject to the Codes has a very large value. However, a statistical measure of this kind fails to convey the importance of advertising in our society. Advertising is part of the environment of life. It is pervasive, plentiful and "free". It is part of the content of much that we read, see and hear every day.
In Section 13.4 above, the Tribunal stated its conclusion that the necessary basic understanding of public attitudes is not satisfied by the advertising industry's "collective wisdom" and that a leavening of significant and varied outside inputs and involvements is required. We are concerned about the ASC as presently constituted while readily accepting certain aspects of its membership and procedure.
In the Tribunal's view the current level of effective outside contribution to the review and revision of Codes and to the adjudications of the ASC is patently deficient and must be remedied if the Codes are to be authorized. The concluding section of this determination amplifies this conclusion.
The Tribunal has doubts as to the merits of solving these problems by the appointment of persons as strict representatives of certain organizations. Various options are available to the Media Council to modify its present rules and practices with respect to this matter. The Tribunal notes and accepts the view expressed by industry witnesses in evidence that direct representation of specific organizations could be disruptive and harmful to the smooth operation of the regulatory procedures and that alternative methods of assuring sufficient public inputs are available.
| 13.7 | The issue of the Therapeutic Advertisinq Code |
The Therapeutic Advertising Code exhibits a complex intermingling of requirements that are founded in Commonwealth or State law with other requirements that are not. The Code is founded on an established body of law and administrative practice as advised by some medical authorities and purports to be directed to the public interest by limiting therapeutic advertising claims that are dangerous, poorly justified or that may encourage treatments that are best conducted under medical supervision. The Broadcasting and Television Act (s.100) provides that no medicine shall be advertised except with the approval of the Secretary of the Commonwealth Department of Health. State legislation varies, but in substance controls the distribution and advertising of medicines and the advertising of certain therapeutic goods as prescribed by regulation from time to time.
The Therapeutic Advertising Code simplifies and extends the reach of these laws and applies a highly detailed list of prohibitions and qualified prohibitions to all medicines and other therapeutic goods and not just to medicines and certain prescribed therapeutic goods as required by law. It is this significant and often rigorous extension of the ambit of application of law through the operation of the Therapeutic Advertising Code that is of concern to the Tribunal as to its benefit and anti-competitive detriment.
The Tribunal is further troubled by evidence of the working of appeal procedures as exemplified in the case of Bionic Products Pty. Limited.
ionic Products Pty. Limited ("Bionic Products") is a Sydney
company which distributes negative ion generators. It submitted evidence claiming, in effect, that the operation of the Therapeutic Advertising Code unfairly prevents the company from advertising a product which is permitted by law to be produced and sold. It also claimed that adequate procedures for appeal from the relevant decision are not available. It advertised its product for several years until the advertising was forbidden under Rule 2.12 of the Therapeutic Advertising Code relating to testimonials which provides:
"Use of testimonials will not be approved except where exemplary evidence can be given to support them, in that the person giving the testimonial did indeed use the product over the period claimed and achieved the results so claimed, and where accepted medical evidence is not in conflict with the testimonial given."
Bionic Products sought to publish some testimonials as to its product from persons with qualifications and experience other than conventional medical qualifications. It is not the place of this Tribunal to rule as to the merits of the matter in dispute. However, the claims and the evidence adduced on behalf of the Media Council to refute them aroused some disquiet in the Tribunal relevant to the assessment of benefit and anti-competitive detriment resulting
in practice from the Therapeutic Advertising Code.
It appears to the Tribunal that the relevant appeal body within the Media Council's system chose to rely on advice from the Commonwealth Department of Health and that subsequent direct discussions between Bionic'Products and the Department were conducted as if the Department were the body determining the matter under s.100 of the Broadcasting and Television Act. A further appeal to the
Minister for Communications, as if the product were covered by the provisions of the Broadcasting and Television Act (which it plainly is not), did not advance the matter. Further reference to the Commonwealth Ombudsman elicited his conclusion that "an advertiser can be. deprived of an opportunity to advertise a product by adverse decision of the Department of Health, against which he has no effective review" and said further that "if (the Department) wishes to continue to accept responsibility to censor advertisements about goods for therapeutic use, other than medicines, it is desirable for it to seek statutory authority to do so".
In the view of the Tribunal the Bionic Products case calls seriously into question the benefit resulting from the application of the Therapeutic Advertising Code in so far as it restricts advertising claims that neither transgress the law nor offend public propriety and illustrates also the scope for anti-competitive detriment arising from its application. The capacity of the Media Council's system of private regulation to abdicate its adjudicative responsibility to a
department of government, however professional and well-advised, and without appeal for the affected advertiser except in effect to the same department, does not accord with the Tribunal's view of sound and equitable practice. We give further consideration to the issues raised by the Bionic Products experience at Section 13.8.2.
| 13.8 | The issue of impacts on the markets for advertised products |
The ACA submitted that an "unduly restrictive interpretation
of impermissible advertising claims", and "an unduly conservative
interpretation of the taste and decency constraints", can "constitute
a clog upon enterprise" and upon the entry of new firms. It was said that there was some evidence to support such fears, with particular reliance placed upon the Bionic experiences.
The Media Council and the interveners supporting its case disagreed with these submissions of the ACA and submitted:
1. While the Codes restrict the type of message an agency may create for a client, the creativity of advertising agents minimizes the practical effect of any restriction: strong rivalry between advertisers remains, albeit taking a different form.
2. There is no dampening of competitive activity by restrictions being imposed upon comparative advertising. Only unfair and misleading disparagement is prohibited.
3. The Alcohol and Cigarette Codes do not raise barriers to entry against new entrants. While, for example, in the Alcoholic Beverages Advertising Code Rule 2.3 states that "Advertisements for alcoholic beverages shall be directed only at increasing brand or beverage share of existing markets, rather than promoting any increased consumption of alcoholic beverages." This is not interpreted as preventing the entry of new beverages or brands. The Code has in fact been amended to ensure appropriate advertising of lower alcohol beverages.
4. It is true that for some products which would fall within the
Therapeutic Advertising Code, the rules do present a significant barrier to entry. But the restrictions are designed in the public interest to eliminate unsubstantiated claims and to prevent the entry of products into the market place that would be harmful or dangerous; either by their very use or by the encouragement to self medication; that is, without resort to medical advice from properly qualified medical practitioners.
5. In the case of the negative ion generator, Bionic Products was not prevented from competing as it could advertise its product; although not by publishing testamonials which were unsupported by accepted medical evidence. Bionic Products has no cause for complaint as its case was carefully reviewed by the existing appeal committees to ensure that the product was treated in accordance with Therapeutics Advertising Code Rule 2.12.
6. There is no evidence of widespread complaint by business persons, whether they be advertisers or agencies.
7. The media are motivated to implement only those restrictions upon advertising that have widespread public support.
In the Tribunal's view much of the evidence and argument that was directed to the issue of anti-competitive detriment was inappropriately directed, as too much attention was given to possible impacts upon the markets For advertised products and too little to the market for advertising messages itself. In our view, the major
anti-competitive detriment of the Codes lies in their impact upon the content or quality of advertising itself, as we discuss elsewhere. Whether or not advertisers or agencies object to the rules is then at times besides the point, as is the mere existence of rivalry between them. It is not the fact of rivalry that is important but its form; that is, the precise content of advertising messages that may be permitted.
It is true that, in so far as the Codes change advertising content, they may to a degree affect the demands of consumers for advertised products and hence the very shape of the economy. They need not necessarily raise barriers to entry to particular product markets or enhance the market power of existing participants in those markets. Thus, the Codes need not necessarily give rise to direct anti-competitive detriment in the markets for advertised products. The anti-competitive effects would then be of an indirect and flow-on character with distortions stemming from the direct impacts of the Code system upon the market for advertising messages.
Nevertheless, there is evidence of a direct anti-competitive detriment resulting from the impact of the Codes upon the markets for advertised products. We review the evidence under three headings.
| 13.8.1 | Comparative advertising and disparagement |
The ACA and some of its witnesses were inclined to argue that the Codes unduly inhibit comparative advertising and thus protect the entrenched positions of existing suppliers. We have examined the evidence on this point carefully, especially that relating to the work
of the JCDC, and find that the criticism is not supported by the
evidence.
We note that the Charter of the JCDC restricts that body to adjudication on a "specific identifiable, misleading and/or unfair disparagement of a particular product or service provided by a competitor". Further, the provisions of Part V of the Trade Practices Act - offer an alternative forum which may be open to any particular advertiser who might feel aggrieved by his competitor's conduct.
We have examined the confidential record relating to twenty-four recent complaints and have been impressed by the responsible approach demonstrated therein and the robust attitude to any relative advantage that might ensue to the successful party. Of the twenty-four complaints, twelve were dismissed, five were upheld, two were resolved by the parties, four were outside the Charter and one was withdrawn in favour of legal action. We accept the contention that the JCDC is a quick and inexpensive forum for the resolution of disputes between competitors regarding fundamental honesty in advertising (that is, the prevention of misleading claims or emotive and comparative references with no factual basis). The Code rules and the Committee exist in the first instance to protect the reputable producer. However, the evidence supports the conclusion that they also operate to protect the consuming public.
| 13.8.2 | Therapeutic claims |
We are less reassured by the evidence relating to therapeutic
claims. We accept the submission of counsel for the Commission that
the Therapeutic Advertising Code operates as a significant barrier to entry for some products falling within the Code. Moreover we are not persuaded that the restrictions imposed in the non-legislated area of
, the Code are overall in the public interest.
The difficulties encountered by Rionic Products in using testamonial advertising in support of claims for which there is some scientific support, albeit an absence of conventional medical evidence, are troubling to us. We think the issues posed by Bionic Products' treatment extend beyond the question of whether the controversial advertisements offend an existing rule. There is the issue of whether the rule itself should not be changed to reflect more than conventional medical opinion. There is the more fundamental issue of whether there is a justification for the very existence of therapeutic rules extending beyond the extensive legislative requirements. There is the question of the role of the Department of Health as to whether it might not be acting beyond its statutory powers. These questions are important and concern us; but the material presently before us does not enable us to answer the questions. This absence of satisfaction on our part is a further reason why we are not persuaded that the restrictions imposed in the non-legislated area of the Code are overall in the public interest. Also, we are satisfied that the existing appeal structure is inappropriate as the TAC is entirely lacking in consumer or general public input since it is constituted by a mix of advertising industry and trade association representatives.
| 13.8.3 | The committee structure and barriers to new competition |
We summarize the structure and membership of the self regulation committees elsewhere. When we consider possible anti-competitive detriment in relation to the markets for advertised products. There are two sets of committees that require scrutiny. These are the Code formulation bodies (CASA, the ABAC, the TPAC, and the TAC and its Working Party) and the prior clearance appeal bodies (the APB Review Panel with Final Appeal to the Chairman of the ASC, the FACTS/CAD Appeals Committees, the Codes Committee of FARB, and the TAC for some types of therapeutic appeals).
What is both striking and disquietening is the almost complete lack of representation of the general consuming public or of persons standing quite apart from the system. In the whole array of committees listed above, there is only public representation at two points; the Final Appeal body against print clearance decisions (constituted by the Chairman of the ASC) and the sub-group Working party of the TAC (which includes a Department of Health member and has access to a medical adviser). There are, it is true, some industry representatives on TAC ( 4 1 , ABAC (3) and TPAC (11, but in the nature of the case these represent well-established companies and established industry structures.
The concern under this topic is with the risk, identified in Section 11.3, of the unjustified suppression of advertising claims. We see that detriment to the public may arise in two ways. First, the individual advertiser, as the ACA claimed, may be faced with an unduly restrictive interpretation of permissible advertising claims with no truly independent avenue of appeal. We think this is unjust. No safeguards have been designed into the system to prevent the arbitrary
and unfair treatment of individual persons and companies. Secondly, over and above the injustice that may arise from the treatment of individual claims, there is a certain inbuilt bias in design against the new entrant, the small advertiser and the novel product.
We do not, however, attribute to members of these committees unfair motives. What we say is that wider representation of the public could result in a fresh, less conservative approach and sharpen the awareness of the consequences that could flow from the suppression of advertisements bearing on the entry of new firms, the introduction of new products, and the growth of small and medium-sized firms. Our concern is especially directed to aspects of the Therapeutic Advertising Code. The media are motivated to maintain and expand the flow of profitable advertising, but we do not think that they will necessarily always be alert to the public interest in publication of novel claims regarding new products of smaller enterprises.
14. THE FUTURE OF THE MEDIA COUNCIL'S SELF REGULATION SYSTEM
There are obvious benefits in the rules of the Codes in so far as they reflect Australian law. We have specified those benefits earlier and need not repeat them in detail. These rules enable the broad content of the law to be expressed in plain language, readily understood by those within the Media Council system and the public and, generally speaking, they keep abreast of most of the relevant changes in the law from time to time.
The real difficulty lies with the other rules, especially
rules in the "soft" Codes which are primarily the Cigarette
Advertising Code, Alcoholic Beverages Advertising Codes and the Advertising Code of Ethics. Rules which restate in language of the layman the effect of the law and nothing more are readily susceptible to the element of public benefit. The Codes, however, go beyond this because they (especially the "soft" Codes) represent to a large extent
a conglomeration of rules reflecting the law and rules reflecting the
paternalistic, no doubt sometimes benevolent, attitudes of the Media Council, its instrumentalities, organizations and associations. They enter the field of judgement in respect of social mores, morals and ethics. They determine what advertisements, in the opinion of the relevant authorities within the system, each of us in the Australian community should read, hear and see. The law tends to reflect community attitudes and it was not so very long ago that the law imposed severe censorial constraints upon what people in the community could read, hear and see. The liberalization of thought and the development of democracy has diminished government intervention in these matters. Yet, there still is a fairly large area of government control or regulation in this area.
It is in the field of electronic media that government intervention is at its highest, and this is embodied particularly in the Broadcasting and Television Act, as well as in the rules, regulations, directives and standards of the Australian Broadcasting Tribunal. Literature has been less prone to government intervention.
Why should committees or bodies of men and women constituting the ASC or the other bodies of the Media Council system tell us what it is right for us to read, hear and see? These considerations are at the heart of the subject matters of this proceeding.
There is, we think, a powerful argument to support the view that there is no room for intervention of a voluntary system in the control of advertising matter beyond that which the law prohibits. If this view were accepted it would follow that a considerable content of the Codes before us for review would fail to meet the statutory tests prescribed by the Act. However, this very observation is itself controversial in our society. There are those who believe in no censorship, those who believe in strict control and those, probably most people, who believe in some balance between the two extremes. It was said by counsel for the Media Council that, to the extent that the Codes prohibit or restrict conduct beyond that which is proscribed by law, all they do is prevent the advertising of material which all Australians or the great majority of us would regard as offensive or harmful. Some of the rules or parts of rules do prohibit the advertising of matter which we think all or most people would regard as legitimately the subject of restraint. For example, advertising matter which stresses extreme violence or unduly plays upon superstition or fear (Advertising Code of Ethics, Rule 2.8). Rut the interpretation and enforcement of rules, even of this kind, rests to a degree upon the judgement of various bodies within the Media Council system; especially the ASC and CASA.
T o the extent that Code rules truly reflect prevailing community attitudes to which few, if any, would take exception we think they are capable of being for the public good provided the machinery adopted by the Media Council's system properly creates them, alters them from time to time as the need arises and effectively interprets, administers and enforces them.
There is another class of rules which in our view cannot be supported. They are rules which suffer from uncertainty, ambiguity, internal inconsistency or are on their face unable to work properly in the public interest.
There are rules which are capable of ready interpretation and which probably reflect the views of most members of Australian society. Some of these rules may also reflect in part laws of the community. An example is in the general Advertising Code of Ethics, Rule 2.9 which states:
"Scientific, statistical or other research data quoted in advertisements shall be neither misleading nor irrelevant."
There are some rules which, although on their face reflecting views which most Australians would probably endorse, depend for their interpretation and application upon judgemental considerations. They ultimately rest on formation of judgement or opinion of the relevant committees within the Media Council's system. Rules of this kind are, in our view, essentially in the public interest provided the Media Council's system of formulation, interpretation and enforcement of the rules works properly and effectively. Examples of rules of this kind are Rules 2.4, 2.7, 2.13 and 2.15 of the Advertising Code of Ethics, Rules 2.4, 2.7, 2.9 and 2.10 of the Cigarette Advertising Code, Rules 2.2, 2.4, 2.5, 2.8 or 2.10 of the Alcoholic Beverages Advertising Code, Rules 2.10 and 2.13 of the Slimming Advertising Code, and Rules 2.1.1.3, 2.1.1.4 and 2.6.1.3 of the Therapeutic Advertising Code.
We dealt in earlier sections with the Therapeutic Advertising
Code. To the extent that it reflects the law it is in principle desirable. Some of its rules suffer from the defects of rules in other Codes to which we have referred. The Therapeutic Advertising Code, by the very nature of the products with which it is concerned, requires representation on relevant Code formulation, interpretation and enforcement bodies of persons with particular specialized knowledge and experience. We deal with this question a little later.
The Tribunal is conscious of the need for close control of the advertising of goods for therapeutic use. The Therapeutic Advertising Code prohibits absolutely certain statements or references to large numbers of specified diseases, ailments, defects or injuries in persons: see Rule 2.2.2 and Rule 2.5.13. It prohibits, with some exceptions, certain statements or references to other specified diseases, ailments, defects or injuries in persons: see Rule 2.3 and Rule 2.4.
This Code contains other rules, for example, Rules relating to Claims (2.91, Treatment (2.10), Professional Recommendation (2.11), Testimonials (2.12), Advertising Phrases (2.131, Disparagement (2.14) and Samples (2.15). Many of these are prohibitory in character and are based on assumptions that advertisements of certain kinds are undesirable. Some of the rules prohibiting, absolutely or partially, advertising of goods for therapeutic use or claims with respect to them are plainly desirable in the public interest; the benefit is self-evident. Others are not so evident or not evident at all. Some of the rules are plainly contentious in our community.
W e are not satisfied in all the circumstances that the
requisite degree of public benefit exists with respect to the Therapeutic Code except in so far as its rules reflect the law. As we propose to adjourn this proceeding our lack of satisfaction may (or may not) be removed by further evidence. It is possible that many of our reservations would disappear if the relevant bodies within the Media Council's system relating to this Code are restructured to include wider representation than they presently do.
Thus, some Code rules should be abandoned, while others require reformulation. Some Codes as a whole require critical re-examination; namely, the Cigarette and Therapeutic Advertising Codes.
In earlier sections we expressed misgivings about various components of the Media Council's system including its committees and councils. This is a critical aspect of our review. There is a need for wider public input (both as to participation and consultation) into the work of the Codes' formulation and complaint and appeal bodies within the system: the ASC, CASA, TAC, ABAC, TPAC, AMAA, appeal bodies and the Media Council itself. The representation of the media on the various bodies is disproportionate to other vital interests including advertisers, advertising agents and the public. There is a need for greater involvement within the Media Council's system of advertisers and advertising agencies. There is a real need for input from bodies concerned with consumer affairs and the welfare of children and adolescents and a need for an input from health authorities over the whole range of Codes. Advertising vitally concerns and affects all people in the community, yet public representation is plainly inadequate. Public confidence must exist in
a system of regulation that so vitally appeals to the public.
There is a clear need for the Media Council and its constituent and affiliated organizations to look closely at the Code system and restructure its various committees and councils.
The membership of these bodies within the Media Council's system should reflect the diversity of Australian society in matters such as age, sex, background, ethnic origins, colour and regionalism. We refer to regionalism because Sydney appears to be the predominant influence on the Media Council's bodies. Doubtless this reflects the fact that until recently Sydney was the headquarters of the major media interests. This is no longer the case. We refer to two of these bodies only.
The Advertising Standards Council. There are, at present, industry and public members of the ASC. The public members are in the majority. Although we have not heard from the AANA in this matter serious consideration should be given to whether the interests of advertisers are sufficiently represented on the ASC. Without, in any way, seeking to detract from the quality, ability or integrity of the members oE the ASC, the manner in which public members are selected (that is by the Chairman), without the necessity for any conditions of eligibility of membership, will not be productive of public confidence. In the regulation of an industry that so vitally affects consumers, where the regulation is done largely by the industry itself and purports to serve the community as a whole, public confidence in the system must exist.
| I | The vigorous complaints that have been launched agaidst the |
| I | system by the ACA and supported by others suggests to us tGat the |
| I | |
| 1 | Media Council should itself, together with its affiliated bodies, look |
| i | |
| I | closely at the constitution of the ASC and reshape it and its r"les so that, so far as public members are concerned, they includ~e some persons knowledgeable of the interests of the public; including the |
| 1 | |
| I | young. |
| One point we see as important in any restructuring 'of the ASC's membership is that properly to reflect changing community attitudes temporal limits should be placed upon membership of the ASC thus ensuring limited duration of office. Whether this is done by amendment to the ASC's Constitution to provide for rotation of membership or by some other amendment is not a matter which we propose to consider. The ASC and other relevant bodies should attend to that. | |
| Whether appointment of the ASC's members should be by its Chairman, the ASC itself or others is not a subject on which we propose to express any views. The appointing person or body should at least consult, and be required by its rules to consult, appropriate public interest bodies including those concerned with public health, consumer affairs and the welfare of young children and adolescents. | |
| We would add that we see considerable benefit in the Chairman of the ASC being a person with legal training and experience such as the present Chairman and his predecessor. | |
| The Codes and Standards Authority. We generally make the same comments with respect to CASA and its Advisory Councils as we |
have with the ASC. In addition, serious attention should be given to increasing the degree of consultation on questions of revising and implementing the MCA's Codes between CASA and representatives of appropriate health and consumer organizations and bodies concerned with the welfare of children and adolescents. We see considerable force in the suggestion of the ACA that CASA should furnish to the Commission a report to be placed on its public register which describes the consultations to which we have just referred and their results.
W e mentioned in earlier sections that existing rights of appeal within the Media Council system are inadequate. The Media Council should provide a clearly expressed, we11 defined and fair appellate structure, to include membership of outsiders, within its Code system. It falls short at present.
Outdoor and cinema advertising have characteristics and effects different from other advertising. Outdoor advertising may be visible from some directions or places and not others. The impact may be momentary (e.g. visible for seconds to drivers of cars). Cinema advertising has a highly captive audience unlike some forms of advertising. Little evidence was given about these forms of advertising. When considering any revision of its Codes, the Media Council should have regard to any special or peculiar problems or needs of these two forms of advertising. For example, should a special rule exist for outdoor or cinema advertisements for cigarettes as to the health warning (presently Rule 2.5 of the Cigarette Advertising Code)? There is a strong case for saying that the health warning generally, but especially for outdoor and cinema advertising,
should be in print or writing relative, in some specified proportion,
to the size of the print or writing of the advertisement itself.
Although we are satisfied that some elements of the Codes (e.g. rules which only reflect the law), if viewed in isolation from other elements, would satisfy the statutory tests of public benefit it is ultimately impossible to sever the elements.
We are not satisfied that the Codes under review would be likely to result in overall benefit to the public. Nor are we satisfied that such benefit as does exist would outweigh the detriment to the public constituted by any lessening of competition that would be likely to result from the implementation of the Codes. The tests propounded by sub-ss. 90(6) and ( 8 1 of the Act have not been satisfied.
However, the Media Council's Code system is capable of satisfying these tests if its house is put in order. This task should be undertaken by the Media Council and its constituent and affiliated organizations in the light of our findings. It is best done, at least
| initially, in-house. | We propose to allow a reasonable time for this |
to be done and to adjourn the proceeding for this purpose.
| There is a final observation which we propose to make. | This |
is the first occasion on which the Media Council's self regulation system has been comprehensively reviewed by a public body which has taken evidence and had the benefit of argument from interested persons. The Media Council's system has now been in operation for many years and perhaps it is not surprising that as time passed the
system has shown evidence of some degree of parochialism and unresponsiveness to changes in community attitudes and values. Yet the system of self regulation has intrinsic worth; but it should be less wide and indiscriminate in its coverage. We see the role for self regulation as being smaller, although sharper. It should give particular attention to misleading and deceptive advertising, the spillover effects of advertising said to be directed to certain sections of the community and to the impact upon children and adolescents.
The central issue posed by this proceeding is whether it is possible for a private regulatory process, whose enforcement is an exercise of market power, to be sensitive to and reflective of community standards and values so that its decisions contribute to the welfare of our society. The present Code system cannot be s o characterized. Whether it is possible to amend the Code rules and the system of their implementation so as to satisfy this criterion remains to be seen. We think there is sufficient present benefit and prospect of future benefit to make the attempt very worthwhile.
When our findings have been considered by the Media Council the matter may be restored for any further hearing on the question of the imposition of conditions on authorization. It may be that the changes required to give effect to our findings are so extensive that conditional authorization would be inappropriate. In that event it may be necessary for the Media Council to seek fresh authorization to its amended Code system. However, it is to be hoped that, so far as possible, these questions may be satisfactorily resolved on a resumed hearing and, to the extent that the Tribunal is able to offer guidance
| t o t h e Media | Counci l w i th r e s p e c t | t o any proposed | changes , | we | s h a l l do |
| S O . |
SCHEDULE A
WITNESSES - OCCUPATIONS
| Allan James Asher: | Former Public Affairs Manager, Australian Consumers' Association. |
| George Patrick Auld: | Executive Director, Media Council of Australia. |
| Belinda Jan Boden: | Administrative Secretary, Advertising Standards Council. |
| Simon Fenton Chapman: | Director of Health Promotions Services, South Australian Health Commission. |
| William George Childs: | Director of Broadcast Practices, FACTS. |
| Bruce Donald Cormack: | Federal Director and Chief Executive Officer, Advertising Federation of Australia Ltd. |
| Peter Cullen: | Consultant in Government - retained by Bionic Products Pty. Ltd. |
| Michael Matthew Daube: | Executive Director of Health Promotion and Education Services, Health Department W.A.. |
| John Anthony Dollison: | Chief Executive Officer and Company Secretary, Tobacco Institute of Australia Ltd. |
| Roland George Muir | Deputy Assistant Director, |
| Everingham: | Australian Federation of Consumer Organizations. |
| Desmond Lionel Foster: | Federal Director, Federation of Australian Media Broadcasters. |
| John Michael Furlong: | Secretary, Australian Publishers' Bureau. |
| Brian George Gapes: | Advertising Administrator, Australian Cinema Advertising Council - Outdoor Advertising Association of Australia. |
| John Alfred Gilder: | Chairman, Joint Committee on Disparaging Copy. |
| Martin Joseph Hartcher: | Executive officer, Federation of Australian Radio Broadcasters. | |
| Richard Clarance Kirby: | Former president of Commonwealth Conciliation and Arbitration Commission. Former Chairman of Advertising Standards Committee. | |
| Paul Christopher Magnus: | Medical Associate to the Director, National Heart Foundation. | |
| Brian Antony Monahan: | Chairman, Monahan Daymen Adams Ltd.; Chairman, Advertising Federation of Australia. | |
| Carmel Josephine Niland: | President, Anti-Discrimination Board | |
| ||
| Maynard Rye: | Deputy Manager, Australian Consumers' Association. | |
| Garwin William Rutherford: | Chief Executive, Broadcasting Station 2SM. | |
| Brian Leonard Sallis: | Group Managing Director, Advertising Newspapers Ltd. | |
| Ruth Elizabeth Shean: | Director, Australian Council on Smoking and Health. | |
| Andrea Joy Shoebridge: | Education and Research Officer, Alcohol Advisory Council W.A. Incorporated. | |
| Paul Burcher Toose: | Former Justice of the N.S.W. Supreme Court; Chairman, Advertising Standards Council. | |
| Peter Samuel Vogel: | Director of research and development of an electronics company. | |
| Richard Ewan McDonald: | Assistant Secretary, Wilson Therapeutic Goods Compliance Branch of Dept. of Health, Canberra. | |
| Diana Hardwick Wyndham: | Member of the Women's Electoral Lobby, NSW; Head of Research and Information, Australian Film and Television School. |
SCHEDULE B
Abbreviations
| AAIC | - Australian Advertising Industry Council. |
| AANA | - Australian Association of National Advertisers. |
| ABAC | - Alcoholic Beverages Advisory Council. |
| ABT | - Australian Broadcasting Tribunal. |
| ACAC | - Australian Cinema Advertising Council. |
| AFA | - Advertising Federation of Australia Limited. |
| AFCO | - Australian Federation of Consumer Organizations. |
| AMAA | - Australian Media Accreditation Authority. |
| AM PA | - Australian Magazine Publishers Association. |
| APB | - Australian Publishers' Bureau. |
| ASC | - Advertising Standards Council. |
| CAD | - Commercials Acceptance Division (FACTS). |
| CASA | - Codes and Standards Authority. |
| CCAC | - Commercials Clearance Appeals Committee (FACTS). |
| FACTS | - Federation of Australian Commercial Television |
Stations.
| FARB | - Federation of Australian Radio Broadcasters. |
| JCDC | - Joint Committee on Disparaging Copy. |
| Media | Council - Media Council of Australia. |
| OAAA | - Outdoor Advertising Association of Australia (Inc.). |
| TAC | - Therapeutic Advertising Council. |
| TPAC | - Tobacco Products Advertising Council. |
COUNSEL AND SOLICITORS
| Counsel and Solicitors for | M. Blakeney instructed by |
| Australian Consumers' Association | Messrs. Yandells Dennis & Co . |
| Counsel and Solicitors for the | R.P. Meagher Q.C. with |
| Media Council of Australia, the | J.D. Heydon instructed by |
Federation of Australian Commercial Messrs. Dawson Waldron
Television Stations, the
Federation of Australian Media
Broadcasters, the Australian
Publishers Bureau, the Australian
Media Accredition Authority, the
Australian Cinema Advertising
Council and the Outdoor
Advertising Association of
Australia.
| Counsel and Solicitors for | P. Comans instructed by | ||
| The Trade Practices Commission | Australian Government Solicitor. | ||
| Counsel and Solicitors for the | M.J. Slattery instructed | ||
| Advertising Standards Council | Messrs. Barwick & Co. | ||
| Solicitor for the Advertising | G.Q. Taperell of | ||
| Federation of Australia | Messrs. Baker & McKenzie. | ||
| Solicitor for Rothmans of | J.W. Lees of | ||
| Pall Mall Australia Limited | Messrs. Clayton Utz. | ||
| Solicitors for Phillip Morris | J.P. Vohralik & | ||
| of Australia Limited | J.B. Pender of Messrs. Sly & Russell. | ||
| Solicitor for the Tobacco |
| ||
| Institute of Australia Limited | Messrs. Anisimoff Davenport | ||
| & Co. | |||
| Dates of Hearing: | 19, 20, 21, 22, 25, 27, 28, 29 August 1986 2, 3, 4, 5, 9, 10, 11, 12, 16 and 17 September 1986. | ||
| Date of Decision: | 31 March 1987. | ||
| I certify that this and the | |||
| preceding pages are a true copy of the Reasons for Decision of his Honour Mr. Justice Lockhart, President, Professor Dr. B.I. Aldrich. |
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