We reported earlier this year that the Hungarian Competition Authority closed the review of the first decision on rules and obligations applicable to social media marketing. On 16 September 2019 the Authority released a new decision in a review of another category of social media activities – this time the fitness celebrity – where a fine totalling EUR 15,500 was imposed.
Based on this decision it can be expected that the Competition Authority will not be reluctant to apply fines in order to force social media influencers to refrain from unlawful practices and to send a general, preventive message to those active in the market.
This case originated back in 2016, when the Competition Authority started investigating social media marketing practices of certain dominant Hungarian influencers, including fitness celebrity Réka Rubint. Unlike in the #kaszatibi decision delivered in April, this time the Competition Authority closed the matter by imposing a fine for unfair commercial practices and non-compliance with the obligations specifically prescribed by the Authority.
As it turned out the respective companies failed to comply with the Authority’s guidelines applicable for “paid-for social media posts” i.e. that such content must be:
- communicated simply, clearly and unambiguously,
- in a way that it is emphasised, easily noticeable, and necessarily and conspicuously understood by consumers that,
- the content is not an independent, neutral opinion or offer, but it is (also) paid-for or the result of some other direct economic interest.
This means in particular that the #reklam (in English: #advertisement) hashtag must come first in the content description and not mixed with or hidden in other wordings, or added to the very end of the post. Also, that the sponsored product and/or company must be clearly indicated in the content. Here it is emphasized that the awareness of the customers must not be assumed, as social media has a significant impact on customer habits.
The reasoning of the decision (among other things) explains clearly that the Hungarian versions of the terms “advertisement”, “sponsored by …” or “sponsored content” must be applied at the same time, and with the same emphasis, as the content itself. It provides sample terms to be used in contractual relationships. It also expects market players to have an up-to-date “bio” or “impressum” referring to partners and the appearance of sponsored content.
As a reminder, “paid-for social media posts” can include any type of posts communicated by an influencer, irrespective of the type of consideration received.
About the fine
Fines are imposed by the Competition Authority in cases of non-compliance with the obligations set out by the Authority.
The maximum amount of the fine according to the Act on Unfair Competition is 10% of the annual turnover of the respective company or group of companies. Nevertheless, the Competition Authority takes all circumstances of the case into consideration when calculating the applicable fines.
It is important to note that the Authority is open about having a general preventive goal when applying fines, which also means that more dominant influencers or marketing/PR companies may face a heftier amount for non-compliance in the future.
Takeaways from this decision
The most straightforward step is to simply do your homework. Companies and influencers should be careful and keep good track of their activities. Here are some tips:
- Keep track of all partnerships, cooperation etc. including the contractual terms as well as the actual social media activity that took place (with regular screenshots, links etc.).
- Proactively include and apply the specific contractual terms recommended by the Authority.
- Use the “sponsored content” tags and options available on social media platforms (You Tube, Facebook, Instagram etc.).
- Update the “bio/impressum” section with relevant information on sponsored content.
- Last, but not least put #reklam/#advertisement first!
It seems the Competition Authority is keeping a close eye on social media marketing and is taking active steps to enforce its guidelines on the use of hashtags and sponsored content. Upon investigation, the Authority may request a complete collection of the above information and assess these meticulously.