Misleading advertising

Over the past months I have received several complaints from Maltese businesses who have fallen victim to misleading advertising at the hands of a Spanish-based company operating under the trade name "European City Guide".

This company appears to rely on misleading advertising giving companies the impression that it will enter their company details, free of charge, into its guide or business directory.

Subsequently, however, on the basis of the "small print", the European City Guide exacts payments in the region of 1,000 for the inclusion in, as well as a copy of, its business directory.

Several businesses in Malta, particularly small businesses and sole traders, have signed up to this "offer" thinking that they would benefit from free advertising in this guide - only to find out soon after that it was not free at all.

It also appears that Maltese businesses are not the only ones to have been targeted by this misleading advertising and that the same has also happened in other EU countries such as the United Kingdom and France.

Although I know that the European Commission has often been called upon to look into the matter, I recently submitted a Parliamentary Question to the Commission to put renewed pressure in this issue as it appears that the scam is continuing unabated - at the expense of several small businesses.

I asked the Commission what it was doing about this issue.

In his reply to my question, the EU Commissioner responible for consumer protection, Markos Kyprianou, confirmed that the Commission received a number of complaints relating to the practices of the European City Guide.

He said that these practices amount to misleading advertising and is in breach of EU law. EU law on misleading and comparative advertising provides a tool to combat scams of this sort.

This law has been transposed into all member states' national legal systems and should therefore apply in all EU countries including Spain, the country from where the European City Guide operates. The law provides for the use of cessation orders or other legal proceedings to prohibit the continued use of misleading advertising. The Commissioner pointed out that, as such, the Commission has no power to enforce the law directly against individual companies as this is the competence of national enforcement authorities in the countries from which such schemes operate. It is for the competent law courts and/or public enforcement authorities of the member states to decide in each case whether a commercial communication is to be considered misleading and to take appropriate enforcement actions.

The Commission could only start infringement proceedings against member states if it became evident that they are not applying the directive.

He added that although the Commission is not able to take direct action against companies such as the European City Guide, it nonetheless closely follows the activities of national authorities. In the case of the European City Guide, the Commission has been informed that the Catalan authorities have taken several measures against the company, including a decision in 2003 to close it down and impose a fine of €300,000. However, this decision has been appealed and it appears that the European City Guide has, in the meantime, moved its activities from Barcelona to Valencia.

Against this background, and within the limits of Community competence in this case, the Commissioner told me that he has decided to directly contact the Spanish authorities in order for them to look into this case and to take the appropriate measures.

The Commissioner is writing to his Spanish counterpart drawing attention to this matter.

On my part, I will follow up this matter closely, if necessary with further parliamentary questions, in order to ensure that the Commission is fully satisfied that Spain is taking all the appropriate action against European City Guide and that its abusive practice is stopped once and for all. If this does not happen, I shall insist that the Commission open infringement proceedings against Spain for its failure to enforce EU law.

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