Hungary ante portas. Hungary will access to the EU next year, and this fact has influenced the Hungarian legislation for several years.
The Hungarian Act on Advertising (Act No. LVIII of 1997 - hereinafter referred to as: Act) has been amended significantly in 2001, according to which the rules on advertising of tobacco products became rather strict - stricter than the EU plans (Proposal for a Directive on the approximation of the laws relating to the advertising and sponsorship of tobacco products COM/2001/0283 final - COD 2001/0119 Official Journal C 270 E , 25/09/2001 P. 0097 - 0100), or than the WHO Framework Convention on Tobacco Control prescribes. As these rules are relatively new, the interpretation and application of the same have not been formed clearly yet. Recently the courts have passed two relevant judgments, which can significantly modify the way of advertising and appearance of tobacco products throughout their distribution and sale in Hungary .
The Act interprets "advertisement" rather broadly, whereby practically all information shall qualify as economic advertisement which promotes - even if indirectly only - the sale of a product, service, right and obligation or making use of it in any other way and which contain the propagation of the name, logo or activity of a company, furthermore the familiarizing of a product or brand.
According to the Act there are a number of particular bans and restrictions regarding certain products, among others serious restrictions on advertising of tobacco products.
What can you do lawfully for advertising of tobacco products - as exceptions to the general prohibition - are the following:
The prohibition also covers the indirect advertisement of tobacco product. The prohibition does not cover those names, marks or brands, which were bona fide and jointly used both relating to tobacco and other product(s) prior to entering the respective amendment into force, supposed that the way of use of name, mark or brand can clearly be distinguished from the use regarding to tobacco products.
Such name, mark or brand, which is used for another product, cannot be applied regarding to tobacco product, except that the respective tobacco product has already been marketed with this name, mark or brand prior to entering the prohibition into force.
Regarding to products other than tobacco products marketed after the prohibition entered into force, a name, mark, brand cannot be used, which is already being used regarding to tobacco products, except that the way of use can be clearly distinguished from the use regarding to the tobacco products.
The Act defines the rules of the liability of advertisers and contains provisions on the procedure of the Consumer Protection Authority (hereinafter referred to as: Authority) and the Economic Competition Office in their respective competence. A procedure can start at both organs ex officio or on request. Possible sanctions are the following:
Under the current Act the advertiser, the service provider and the publisher of the advertisement are jointly and severally liable.
According to the Act No XLII of 1999 on the Protection of Non-Smokers and on Certain Rules of Consuming and Distribution of Tobacco Products tobacco products shall not be distributed as sample product. This provision is important as "sampling of cigarettes" has been a usual way of promotion in Hungary and it is considered as distribution, too.
The Decree of the Minister of Economics No 16 of 2001 makes it possible by way of individual exemption to advertise tobacco products at motor-sport races (such as Formula-1).
The Association of Hungarian Advertisers issued a Code of Ethics. Its latest version came into force in 2001 after the modification of the Act. In its current version the Code of Ethics does not contain any particular reference to tobacco products.
The largest Hungarian tobacco manufacturers concluded a self restricting Agreement on advertising of tobacco products in 1997, after the passing of the Act. Due to the significant modification of the Act thereafter, a great number of provisions of the Agreement became unlawful and inapplicable, respectively. The manufacturers have neither concluded a new Agreement, nor modified the same until now.
The Recommendation of the Self Regulating Advertising Committee contains detailed rules. This Recommendation is not a legal instrument, therefore it is not mandatory, however being the single document which specifies the prohibited activities as well as the exceptions from the general ban, accordingly it has served practically as a valuable source of interpretation also for legal practitioners.
The Recommendation contains detailed rules for all kinds of place of selling (POS), too, where can tobacco advertisements be placed, e.g. "at catering places: on the outside front, in the shop-window and on its glass surface".
An anti-smoking association initiated an advertisement supervision procedure at the Authority because of a neon light tobacco advertising board on a restaurant. The restaurant has not been operating since 1997. The Authority rejected the claim.
The Metropolitan Court annulled the decision and obliged the authority to conduct new proceedings. The Court came to the conclusion that a restaurant, which is not operating, cannot be considered as place of selling of tobacco products.
On the occasion of this case the Court established moreover that on the outer surface of a POS, or at a place, even within the POS, that can be seen from the street, no tobacco advertisement shall be placed/displayed.
Although the judgment is partly well founded indeed as the restaurant had not been operating for a long time as a POS, the above additional interpretation of the relevant exception for POS on the one hand provides significantly narrower possibilities for advertising of tobacco products, and on the other hand is contrary to the otherwise non-binding Recommendation of the Self Regulating Advertisement Committee, the provisions of which were practically not disputed until now.
Smoking a Cigar by Charlie
The same anti-smoking association initiated another advertisement supervision procedure at the Authority in connection with an advertisement of a music CD showing the local singer called 'Charlie' smoking. Neither the advertisement has connection to any respective tobacco product, nor the cigar could be identified, nor did tobacco manufacturer sponsor the CD or the advertisement.
The authority rejected the claim, as in his view brand name, marking of goods, or trademark was not indicated, thus it did not propagate or promote any tobacco product.
The Court annulled the decision of the authority and obliged the first instance authority to conduct new proceedings.
The Court based its judgment formally on the Act, according to which "tobacco products may not be advertised if it portrays people smoking" (emphasis added), refusing the argumentation that in this case no tobacco product was advertised at all since the advertising of the respective CD of the musician Charlie contained neither any reference to a specific tobacco product nor to its brand.
It is clear that the above argumentation of the Court would result in absurd consequences. Following this interpretation (and taking into consideration the broad definition of the Advertising Act) all films etc. showing smoking persons should be qualified as "advertisement", and therefore prohibited. The clear mistake of the justification of the judgment is the neglecting of the lack of identification of any respective tobacco product and of any advertising character regarding tobacco products.
It can be seen that the Hungarian anti-smoking organizations became rather active, and they use all means to attack tobacco manufacturers and the sale of tobacco products. Among others the initiation of advertising supervision procedures at court seems to be very effective in this fight.
On the other hand the approach of the courts shows clearly a wide interpretation
of the prohibition, and a narrow interpretation of the exceptions. Obviously
the next few judgments and the passing of the respective EU Directive referred
above as well as its Hungarian implementation may change the present situation
in Hungary .