Review of changes in advertising law and clarifications from the FAS of Russia: July 2015

1. Sound level in TV and radio advertisements limited

Restated Articles 14 and 15 of the Advertising Law, effective starting May 25, 2015, specify provisions related to limitation of the sound level when broadcasting advertisements and the announcement messages that precede them. The volume of advertisements must not exceed the average volume of the interrupted TV or radio show. The correlation between the volume of an advertisement and that of the interrupted TV program will be determined based on the sound level measurement procedure approved by the antitrust authority.

A draft text of the procedure has already been developed, but not approved yet by the Federal Antitrust Service (FAS) of Russia. The document meets the requirements of international standards aimed at ruling out the subjective perception of the volume of an advertisement. In particular, it provides for measurement of pre-advertisement, advertisement and post-advertisement fragments during broadcasting. An advertisement with volume exceeding the volume of non-advertisement fragments by 50% or more will be deemed a violation, resulting in a fine from 10,000 to 20,000 rubles for officials and from 200,000 to 500,000 rubles for legal entities.

2. Clarifications from the FAS of Russia dated May 28, 20115 on certain issues of applying Federal Law “On advertising”

2.1.  The FAS of Russia specified what “special training” means in terms of advertising medical goods and services.[1] Persons with special training are specialists with a degree in medicine or pharmaceuticals, irrespective of its level (higher or special).

Considering the clarification given by the antitrust service, advertising of medical items requiring higher or special medical/pharmaceutical education must meet special requirements applicable to advertising of medical services.

2.2.  In the event an advertising distributor cannot be identified within 1 month (or, as an exception, within 3 months), the case on violation of the advertising law is to be dismissed. This rule is applied by the FAS of Russia even when the antitrust authority has proof of the violation.

The antitrust authority takes such an approach due to difficulties in identifying advertising distributors of illegal ads, including illegal installation of advertising structures.

2.3.  Unlawful use of intellectual property in advertising does not violate advertising law and does not fall within the competence of the FAS of Russia.

In accordance with the clarifications of the antitrust authority, exclusive rights are to be protected by the entity or person holding such rights, as generally prescribed by civil law.

It should be noted that an advertisement containing incorrect or misleading information (including information on exclusive rights) is deemed to be incorrect and inconsistent with the requirements of the advertising law. Such violation leads to a fine from 4,000 to 20,000 rubles for officials and from 100,000 to 500,000 rubles for legal entities.

2.4.  In the event a sign on the same post with a traffic sign and reflecting information on any entity meets rules of the State Standards (GOSTs) and is approved by the State Traffic Safety Inspectorate (GIBDD) for being placed as a traffic sign (or there is a report issued by the GIBDD that such placement is legitimate), such information is not subject to examination by the antitrust authority as to its classification as an advertisement.

However, if such a sign is placed and does not meet the requirements, the information is subject to examination as to whether it contains elements of an advertisement.

3. Stricter liability for violations in advertising financial services

Since July 11, 2015, administrative liability for credit institutions for violating the advertising law when advertising credit- or loan-related services has been increased.

Liability is provided for distributing advertisement that contains at least one, but not all, conditions affecting and determining the full cost of a credit or a loan for a borrower. The fine is from 20,000 to 50,000 rubles for officials and from 300,000  to 800,000  rubles for legal entities.[2]

Nevertheless, such liability will be imposed only on credit institutions. The fine for other entities that committed such a violation (e.g. microfinance organizations) remains the same and constitutes from 4,000  to 20,000 rubles for officials and from 100,000  to 500,000 rubles for legal entities.

It should be noted that the innovation applies only to violations in advertisements distributed after July 11, 2015.

Irina Akimova  Of Counsel                                Moscow   iakimova@cls.ru  Tel.: +7 (495) 970 1090

Dmitry Gavrilenko     Associate                Moscow       Tel.: +7 (495) 970 1090

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Irina Akimova or Dmitry Gavrilenko, Moscow Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.