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Retail Academy: what's on the horizon?

Posted on 11 July 2023

Advertising Reforms

There are several upcoming advertising reforms that will affect the retail sector. These range from new rules about promoting products high in fat, sugar and salt, to revised guidance about making green claims, to tackling online advertising harms. We explore some of these reforms below.

1. Food promotion rules and (2) HFSS advertising rules

In order to help reduce obesity in the country, in 2021 the Government introduced the Food (Promotion and Placement) (England) Regulations 2021 with the aim of restricting price promotions and placement of products high in fat, sugar and salt (HFSS products) in England and Wales.

With regards to placement, the new rules came into force in October last year and prohibit affected businesses from placing HFSS products in noticeable locations in stores (e.g. checkouts and entrances), and promoting such products on certain locations online (e.g. on home pages, whilst searching for different products or via pop up pages).

For price promotions, the new rules were due to come into effect at the same time as the placement rules but have been delayed and will now come into effect in October 2025 due to the cost of living crisis. These rules will prohibit affected businesses offering HFSS products as part of volume price promotions (e.g. "buy one get one free") and offering free refills of sugary soft drinks.

Additionally, measures restricting the advertising of HFSS products on TV and online have also been delayed and will now take effect from 1 October 2025. The new advertising rules were added to the Communications Act 2003 by the Health and Care Act 2022, and aim to reduce children's exposure to advertising of unhealthy food and drink products. This will be achieved by introducing a ban on TV advertising of HFSS products from 5.30am to 9pm and a ban on paid-for advertising of such products online. The Government recently consulted on draft secondary legislation regarding the ban, the consultation closed on 31st March 2023.

2. Digital Markets, Competition and Consumers Bill

Early this year, the Government introduced the Digital Markets, Competition and Consumers Bill. This proposes enhanced powers for the Competition and Markets Authority (CMA) to directly enforce consumer law without lengthy court processes. The penalties for breaching consumer law will be up to 10% of a company's global turnover (depending on the type and severity of the breach).

Advertising in the UK is governed by, amongst other things, the Consumer Protection from Unfair Trading Regulations 2008. The Bill will revoke these regulations and recreate the legal effect of their provisions with minor changes. It also proposes that businesses should take reasonable steps to verify the authenticity of reviewers to tackle fake reviews and allowing the courts and the CMA to require businesses to provide evidence to substantiate claims in advertising (such as environmental claims). The Bill is currently in the Committee stage in the House of Commons. You can read more about the Bill in our article here.

3. New rules on greenwashing

Both the UK Government and the European Commission have proposed new rules to tackle businesses making misleading green claims about their products and services. This includes the Green Transition Directive and Green Claims Directive in the EU which propose new measures governing how green claims should be substantiated, communicated, and independently verified.

In the UK, CAP and BCAP updated their guidance on the use of carbon neutral and net zero claims in advertising earlier this year. These changes are based on the CMA's Green Claims Code and you can read more about the updated advertising guidance in our article here. The CMA is also carrying out investigations into greenwashing and we are expecting the outcome of one of these investigations into the fashion sector later this year. As discussed above, the Government has proposed new powers for the CMA in the upcoming Digital Markets, Competition and Consumers Bill, which may enhance its capacity to enforce greenwashing in the future.

To read more about these greenwashing developments, please read our article "Retail Academy: What's on the Horizon? Green Reforms".

4. Online Safety Bill

The Online Safety Bill (the OSB) aims to protect children and adults online. It will apply to search engines and to "user to user" services i.e. an internet service which allows users to generate, upload or share content (user-generated content or UGC) which may be encountered by others on that service. This will include not only social media companies, but also potentially retailers that offer an online forum function. To read more about which businesses are in scope, please read our article here.

The OSB proposes imposing various duties on such businesses to protect users, including a duty on large search engines and user to user services (e.g. Facebook, Twitter) to tackle paid-for fraudulent advertising and scams. The large user to user services will be required to introduce systems and procedures to prevent individuals from encountering fraudulent adverts, minimise the length of time for which fraudulent adverts are present, and swiftly take such adverts down when the service has become aware of them. Search engines will need to use proportionate systems and processes to minimise the risk of individuals encountering fraudulent adverts in or via search results.

Whilst this duty will only apply to the largest services, all companies in scope of the OSB will need to take action to tackle fraud where it is facilitated through user-generated content or via search results. The Bill will give Ofcom enforcement powers including the ability to issue fines of up to £18 million or 10% global annual turnover (whichever is greater). The OSB has passed through the House of Commons. It had its second reading in the House of Lords in February 2023, and is currently in its Committee stage.

5. Online Advertising Programme

Online advertising includes paid-for listings in search results, paid-for ads on social media, banner ads on news websites and games apps, paid-for influencer marketing (including payment in-kind) and sponsored content.

At present, online advertising is not subject to the same level of regulation as other media such as TV or radio. However, online adverts can contain harmful content (such as misinformation and non-identified ads), and their targeting and placement can also be harmful (for example age-restricted ads served to inappropriate audiences). The Government launched a consultation on the Online Advertising Programme last year to set out its understanding of the online advertising ecosystem and highlight areas of concern, which closed on 8 June 2022. It is now in the process of considering responses to the consultation, through which it aims to review the regulatory framework of paid-for advertisements online and issues regarding lack of transparency and accountability across all actors in the supply chain, including brands which direct the content of a message within an online ad, directly or indirectly, to influence choice, opinion, or behaviour.

Whilst the Online Safety Bill will tackle fraudulent advertising for in scope companies, the Online Advertising Programme is designed to complement this by looking specifically at paid-for online advertising in other paid-for space online to ensure that organisations across the supply chain play a role in reducing online advertising harms.

In the EU, the Digital Services Act and the Digital Markets Act, recently came into force which, amongst other things, also seek to address online advertising harms for those offering online services in the EU.

6. Data Protection and Digital Information (no.2) Bill

Following Brexit, the Government has been reviewing the data protection regime in the UK and has produced some proposals to diverge from the EU GDPR. In March this year, a revised version of the  was published and it is currently making its way through the legislative process. Of interest to retail in particular are provisions in the Bill to; (i) reduce the amount of information which should be contained in record of processing activities; (ii) remove the current obligation on some controllers to appoint a data protection officer; (iii) potentially make it easier to refuse unmeritorious data subject access requests; and (iv) allow companies to collect basic website analytics through use of cookies without seeking users' consent. The bill is currently in the report stage at the House of Commons.

To find out more information about legal issues affecting the retail sector, please visit our Retail Academy page, where you can also sign up for the latest new updates. 

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