E-Reputation Law - a case study on e-reputation

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E-Reputation Law

Does e-communication count as advertising?

The aim of e-communication is first and foremost the promotion of the products and services of a company. Consequently, one must examine whether e-communication is to be considered as advertising under the relevant legal framework.

Article 2(19) of the AMPC defines ‘advertisement’ as follows:

‘any communication with the direct or indirect objective of promoting the sale of products irrespective of the place or means of communication used’ (emphasis ours)  [Note: Rough translation.
French text: "toute communication ayant comme but direct ou indirect de promouvoir la vente de produits quels que soient le lieu ou les moyens de communication mis en œuvre."
Dutch text: "iedere mededeling van een onderneming die rechtstreeks of onrechtstreeks ten doel heeft de verkoop van producten te bevorderen, ongeacht de plaats of de aangewende communicatiemiddelen."]

The word ‘products’ is moreover defined in AMPC as covering ‘goods and services, real property, rights and obligations’  [Note: Rough translation.
French text: "les biens et les services, les biens immeubles, les droits et les obligations."
Dutch text: "goederen en diensten, onroerende goederen, rechten en verplichtingen."]

The word ‘sale’ is to be understood in the broad sense, meaning that there must be a form of economic activity. If products are normally provided against remuneration, the fact that a specific product is provided free of charge will be irrelevant  [Note: See Brussels (Court of Appeal), 26 February 2008, Jaarboek Handelspraktijken & Mededinging 2008, p. 709.].

The concept of ‘communication’ must also be interpreted in a broad manner. In a judgment of 18 March 2011, the Belgian Court of cassation (Hof van Cassatie / Cour de cassation) held that even a single communication meant for one single consumer (and therefore not meant for the public in general), with the direct or indirect objective of promoting the sale of products, is to be considered as an advertisement  [Note: Cass. 18 March 2011, AR C.09.0574.N, Corcon bvba / Aquasolar bvba, Pas. 2011, liv. 3, p. 841 (view online, in Dutch).].

Consequently, most kinds of e-communication will likely have to be considered as advertising under the AMPC and will therefore have to comply with the applicable rules, whether it is meant for the public in general or only for a limited number of (potential) consumers or clients.

Do the rules of the AMPC on advertising and commercial practices apply to when e-communication concerns products or services that are offered free of charge?

There are many examples where products are offered free of charge, especially in the world of software, where distribution costs for goods can be insignificant or even nonexistent.

For instance, many companies generate revenue one way or another based on applications made free of charge on Apple’s App Store, whether through the displaying of third-party adverts within the application (e.g. through Apple’s iAd service) or through promoting other goods or services of the company (e.g. highlighting goods or services available from the company’s own website, or even ‘in-app purchases’, i.e. purchases within the application itself). Other software publishers make two versions of a same software package: a ‘lite’ version (free of charge but with limited functionality) and a ‘full’ version (all the functionality is available at a specific price).

To illustrate, Janssens-Quidam created a free iOS and Android application that allows users to add a cat hat onto photos of people, and then allows the user to easily put the reworked photo online (on Facebook, Pinterest or Janssens-Quidam’s own website).

The rules of the AMPC on advertising and commercial practices do apply to the offering of products free of charge. Indeed, companies that offer some goods and services free of charge to all consumers/web users do so normally with a view to promoting other paying goods or services. Otherwise, they will not be financially viable. In this framework, advertising in relation to a free good or service (Janssens-Quidam’s cat hat application) indirectly promotes the sale of the company’s other goods and/or services (the actual cat hat and Janssens-Quidam’s other products).

Moreover, it is worth noting that the AISS contains another definition of advertising:

‘any form of communication aiming to promote, directly or indirectly, goods, services or the image of a company […]’ (Article 2(7) AISS) (emphasis ours)  [Note: Rough translation.
French text: "toute forme de communication destinée à promouvoir, directement ou indirectement, des biens, des services ou l’image d’une entreprise […]."
Dutch text: "elke vorm van communicatie bestemd voor het direct of indirect promoten van de goederen, diensten of het imago van een onderneming […]."]

The ‘sale’ criterion does not appear in this definition.

Consequently, as soon as the e-communication aims to promote the company’s business, it is likely to be considered as advertising under the AMPC and the AISS.