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The Earl of Northesk: I rise to support the endeavours of my noble friend Lord Skelmersdale in respect of the three amendments. My noble friend explained the thinking behind them far more eloquently than I could, but at the risk of trying the patience of the Committee, perhaps even the noble Lord, Lord Clement-Jones, I revert to the theme of accurate transposition of the EC directive.
In passing, I merely suggest to the noble Lord, Lord Clement-Jones, that there is a divergence of view as to whether the provisions on the face of the Bill are consistent with the relevant directive. I am certainly not convinced on the point and my understanding is that the ISPA is equally unconvinced.
I repeat that we should not underestimate how important it is that legislative measures in respect of the Internet are consistent with the directive and thereby throughout the single market. To my mind, these amendments serve that purpose. For that reason, as well as the convincing argument of my noble friend, I welcome the amendments.
Lord Lucas: If the Minister chooses to address my Amendment No. 54 at the same time, I shall be content.
Lord Filkin: I am grateful to the noble Lord, Lord Skelmersdale, for explaining to the Committee what lies behind the amendments because we were scratching our heads to try to ensure that we understood them. I shall respond to why the Bill is currently drafted as it is and acknowledge the important point of ensuring that any legislation is compliant with European legislation which will pre-date the Bill were it to pass.
Lord Skelmersdale: Does the Minister realise that the score is now 1:2 on that front?
Lord Filkin: I did not sit down or give way and I have therefore not granted the point! I am seeking to be courteous and to grant that the amendment is worth inspecting.
The amendments address provisions in the Bill which make it clear that it does not have extra-territorial effect. We do not want it to do so and we have sought to make it clear in that respect. It keeps out of its jurisdiction people who do not carry on business in this country but who are involved in the transmission of tobacco advertisements by electronic means, which is seen here.
Our concern about the amendment is that it seeks to replace the clear and easily understood phrase "carry on business" in the United Kingdom with a less satisfactory alternative. What is meant by "a place of establishment"? A person may have more than one place of establishment and even if he is established on one place only outside the United Kingdom, he might trade here in addition to his country of establishment. In that case, the Government would clearly want to ensure that he was caught by the prohibition on tobacco advertising.
I now turn to Amendment No. 54. We believe that it is unnecessary. While we are sympathetic to the intention, the phrase,
- "carry on business in the United Kingdom",
As regards what would amount to the carrying on of the business here, the courts have held that a person carries on business in England where it has a branch only here. Furthermore, one could say that a person or body would be carrying on business in the United Kingdom whether it had its main office or only a branch in this country. The wording of the Bill makes clear that an undertaking which does not carry on business in the UK will not be guilty of an offence even if, for example, the website is accessed and the prices of tobacco products are displayed here.
Finally, the Government are consulting on the European directive and in due course will bring forward regulations. The Government expect these provisions to be fully compatible with the directive.
2.45 p.m.
Lord Clement-Jones: I do not seek to argue with the position as stated by the Minister. I was interested in the observations of the noble Earl, Lord Northesk, about the divergence of view in the industry as to whether the Bill complied. I have looked at this matter quite carefully. I am aware that certainly in the world of e-commerce there are some difficult thickets, not least the application of some of the conventions as well as the directive. I believe that the wording of the Bill is entirely consistent with the principle of the country of origin set out in the e-commerce directive, and that is entirely as it should be. That is the argument put forward by the Government for the wording in their
original Bill. If anything, it is a rather more precise use of words than in the e-commerce directive and is preferable in some ways, because use may well be made of multiple websites which are related much more to where business is done rather than the technical place of establishment. That is probably closer to the intention of the e-commerce directive than the place of establishment. The very least that can be said about the arguments made in this regard so far is that the case is unproven.
Lord Skelmersdale: I am grateful for the comments of both noble Lords and my noble friend Lord Northesk. I would have thought that the place of establishment of a business was well understood in law. I have a business established in my home. That business has a registration number and all the rest of it, and its place of establishment is quite clear. If I had a business in Caen, for example, under French law no doubt I would need a registered business address as in the United Kingdom. I do not believe that the place of establishment is likely to cause any problems. I well understand why the EU directive uses the phrase "the place of establishment".
As far as concerns the Internet, I begin to worry when the Minister and the noble Lord, Lord Clement-Jones, say that this will do for the moment; there may well be new laws round the corner and we just have to cope as best we can for the moment. We shall arrive at that particular moment a little later, but it does not appear to me to be a very satisfactory arrangement. However, I have heard the remarks of the Minister and the noble Lord, Lord Clement-Jones. I did not quite understand the noble Lord's argument which I shall read in Hansard very carefully. I hope that I do not need to return to the subject at Report stage. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Advertising: newspapers, periodicals etc]:
[Amendments Nos. 14 to 16 not moved.]
Clause 4 [Advertising: exclusions]:
Lord Skelmersdale moved Amendment No. 17:
- Page 2, line 15, at end insert "irrespective of the means by which the communication is made available"
The noble Lord said: Clause 4(1)(a) excludes a tobacco advertisement,
- "if it is, or is contained in, a communication made for the purposes of the tobacco trade and directed"—
- "solely at persons engaged in any capacity in that trade (even if they are also engaged in another trade)".
With the exception of the words in brackets, I thought that the exclusion was quite clear. At least I thought that until I discovered that in discussions with publishers which took place during the previous Session of Parliament the department apparently said that if a trade publication, which is made for the purposes of the tobacco trade and directed at persons engaged in that trade, happens also to be available by retail sale—say, on news stands—the exclusion would not apply. That view was confirmed at the time of consideration of the Bill by Members of another place.
That interpretation of Clause 4(1)(a) is, to say the least, somewhat questionable. There is something rather different on the face of the Bill. Clause 4(1)(a) states that the inclusion is available if the tobacco advertisement is,
- "made for the purposes of the tobacco trade"—
- "and directed solely at persons engaged in any capacity in that trade".
The trade publications about which this subsection is concerned and which are directed at relevant trades and solely to persons in those trades are generally available by way of subscription or are provided free of charge by mail to persons in those trades, as happens with virtually any trade magazine. However, there are some publications which are also available by way of retail sale and are stocked generally in small quantities by retail outlets. I am told that that is for the convenience of persons in the trade who do not necessarily subscribe to the publication or whose interest is only occasional or who desire an additional copy.
The publications and their contents have no appeal to the general public and are not purchased or read by the general public; at least I would be very surprised if they were. Yet, if what has previously been said by the department were to be followed by a court, offences would be committed under Clauses 2 and 3 of the Bill by the publishers, distributors, procurers of advertisement and the sellers of any trade publication which contained a tobacco advertisement and which was available by retail sale.
The point is whether the Government's advice still stands. If so, I am sure that we need an amendment to Clause 4(1). I am given succour in this view by an analogous recent case considered by the European Court of Justice. That was also relevant to other provisions in this clause. I say analogous because it is not identical. It concerns alcohol rather than tobacco. The case is The Swedish Consumer Ombudsman v. The Gourmet International Products AB. The latter published a magazine in Sweden entitled Gourmet. It is available by subscription. Ninety per cent of its 9,300 subscribers are traders, manufacturers or retailers. Ten per cent are private individuals. The magazine is also available by retail sale.
The subscribers' edition of the magazine contained three pages of advertisements for alcoholic drinks, one for red wine and two for whisky. Quite why they were chosen I do not know. The pages did not however appear in the edition of the magazine sold in the shops and intended for the general public. The Swedish ombudsman responsible for consumer protection applied for an injunction restraining the publishers from printing an advertisement which was contrary to national provisions aimed at reducing the health risks involved in alcohol consumption. To that extent it is analogous to the Bill because we are talking about the health risks associated with the consumption of tobacco.
The Stockholm district court considered that an interpretation of the treaty provisions was necessary. It stayed the proceedings and referred the matter to the ECJ for a preliminary ruling. That caused total chaos. The publishers argued that the proceedings were based on legislation contrary to Community provisions on the freedom of movement of goods, Articles 30 to 37 of the EC treaty and the freedom to provide services under Articles 56 and 59 to 66.
In giving his opinion I am told that the advocate general's view was that a ban which extended to advertising in specialist food and drink magazines was disproportionate. He considered that those individuals who chose to read a specialist magazine were highly unlikely to be incited to drink more alcohol as a result of the advertisments that it contained. The position of someone purchasing such a magazine was likened to that of somebody who had specially requested advertising material from a producer.
The European Court of Justice subsequently found that the prohibition on advertising constituted an obstacle to trade between member states which was prohibited by Article 30 of the treaty. However, such an obstacle could possibly be justified by the protection of public health under Article 36. But the ECJ considered that, whether the prohibition on advertising was proportionate and whether the objective could be achieved by less extensive prohibitions or restrictions, it was a matter which the national court was better able to investigate. Therefore, as I have said, the original difficulties with the Swedish Act caused future chaos and neither the Minister, the noble Lord, Lord Clement-Jones, nor myself want that to happen to this Bill.
The proposed amendment therefore deals with the situation simply by making it clear that, while a publication or communication must remain one made for the purposes of the tobacco trade and be directed solely at persons engaged in any capacity in that trade, in the case of a publication such as a trade newspaper or periodical it may be made available by free distribution, subscription or other means.
I take this subject seriously. If this amendment is not acceptable—I agree that it is somewhat inelegant and I have presented it somewhat inelegantly this afternoon—I believe that some amendment to the Bill will be required. I beg to move.
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