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Why should agencies care about EU law?

Last year in 2017, altogether 26 Directives and 249 Regulations were either adopted or amended by the European Union (EU) institutions.[1] Why does it matter for communications agencies?

If your company is based in the EU, chances are that at least some of these measures affect your business. All EU Directives are eventually transposed into national laws and Regulations are directly applicable to all parties concerned. Although there is no completely accurate or useful way of calculating the percentage of national laws based on or influenced by the EU, we should not underestimate their impact in making up the national legal order.[2] The Union has a considerable amount of law-making powers when it comes to rules concerning advertising services.

At the moment, agencies should particularly be aware of EU legislation that is relevant to their ability to provide digital services and to innovate. Having passed the infamous General Data Protection Regulation (GDPR), the EU institutions are now preparing for the next set of rules concerning data protection, namely the ePrivacy Regulation, which sets out specific rules on data confidentiality in the electronic communication sector, covering e.g. cookie banners.

The EU institutions can, furthermore, directly regulate different business players. On the one hand, under a recently published proposal, the European Commission demands online platforms to be more transparent when trading with other businesses, e.g. by laying out their main parameters for ranking and providing for redress mechanisms. Under the existing Unfair Consumer Practices Directive, on the other hand, the EU addresses advertisers and agencies by establishing a blacklist of practices and communications that are prohibited in advertising. The list might even be extended in the future given that negotiation are currently ongoing to amend the Directive.

Even if your agency is not located on EU territory, Union-level law-making could still have some implications. The EU can indirectly influence companies outside the EU if these companies are in contact with the Union’s citizens.

To illustrate the point, the General Data Protection Regulation (GDPR) catches data controllers and processors outside the EU whose processing activities relate to the offering of goods or services to, or monitoring the behavior (within the EU) of, EU data subjects. Therefore, a company outside the EU which is targeting consumers in the EU is subject to EU legislation and may need to appoint representatives in the EU and otherwise comply with the provisions of the GDPR.

Another case where non-EU-based agencies should be concerned about EU law is the European Commission’s proposal for corporate taxation of a significant digital presence. Companies outside the EU which provide digital services can be subject to tax in an EU country where they have ‘a significant digital presence’ measured in terms of their revenue and/or the number of users. The fact whether the company is legal resident of that country makes no difference. Therefore, thinking ‘we are not in the EU, we need not care’ does not really apply here.

Efficient advocacy and interest representation involves voicing agencies’ wishes and concerns at the right place at the right time. Whereas discussions with local politicians may be useful, it is equally important for all agencies to pay attention to both EU legislation that is being planned and legislation that is already in place. This way we can ensure the best possible future for the whole industry.

[1] https://eur-lex.europa.eu/statistics/legal-acts/2017/legislative-acts-statistics-by-type-of-act.html

[2] http://researchbriefings.parliament.uk/ResearchBriefing/Summary/RP10-62

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