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Lord Naseby: I am grateful to the proposer of the Bill for having listened to the contributions that were made. I thought that he might make a comment about the Channel Islands, given his stance on the previous occasion that we discussed the matter, but he resisted that this morning and I am grateful for that. As I say,
I am grateful for the way he has listened to the contributions and for the contributions from the Minister who tried to be helpful and recognised that UK airlines must compete on a level playing field. At an appropriate point we shall take the view of the Committee on the two amendments which the promoter of the Bill wishes to accept. I beg leave to withdraw the amendment.Amendment, by leave, withdrawn.
The Principal Deputy Chairman of Committees: I should point out that if Amendment No. 23 is accepted, I cannot call Amendment No. 24.
Lord Faulkner of Worcester moved Amendment No. 23:
- Page 2, line 22, leave out paragraph (d).
On Question, amendment agreed to.
Earl Howe moved Amendment No. 25:
- Page 2, line 23, at end insert X, or
The noble Earl said: We come now to one of the more thorny issues created by the Bill, that of brand sharing or brand diversification. In moving Amendment No. 25, I shall speak also to Amendments Nos. 66, 67, 68 and 70. Brand diversification is the practice of taking a brand name that is already well established for a particular product or service and using it on another quite unrelated product or service with the aim of business diversification.
The concept is considered especially useful when a company wishes to enter a new competitive market because the brand name significantly improves the probability of success. The name XVirgin" is a good example of that. As we know, it has been applied to records, an airline, soft drinks and a whole range of other goods and services. There are many others like it. The question that arises from the Bill, and especially from Clause 11, is whether there are reasonable and legal grounds on which restrictions on brand diversification advertising can be imposed through legislation that is designed to regulate tobacco advertising.
I have perhaps two main concerns in that context. The first concern is that the impact of any regulation on brand diversification is likely to be disproportionate to the main objective of the legislation, which is to reduce smoking. I do not know of any evidence—perhaps the noble Lord, Lord Clement-Jones, can enlighten me—which shows that brand diversification advertising has the effect of encouraging people to smoke.
The second concern I have is that to restrict brand diversification advertising by this means is a disproportionate infringement of freedom of speech and specifically the freedom of speech guaranteed by Article 10 of the European convention. That is a view that has recently been expressed by Advocate General Fennelly to the European Court of Justice in the case brought by Germany against the EU tobacco advertising directive. That directive, as we all know, was annulled by the ECJ in October 2000.
The ECJ did not rule on the brand diversification provisions in the directive. However, we can reach some conclusions about this issue from the directive itself. The directive was negotiated over quite a number of years before being adopted in 1998. It aimed explicitly to regulate what it termed Xindirect tobacco advertising" but recognised that brand diversification advertising is legitimate and could therefore be allowed to continue provided that certain safeguards were met. Those safeguards were that companies should act in good faith and that branding should be clearly distinct from tobacco branding.
Unfortunately, the Bill adopts a fairly blanket approach to these matters. The Explanatory Notes make it clear that the advertising provisions are designed to apply to brand diversification products. However, the way in which the Bill is worded means that only a court could judge whether an advertisement had the purpose or effect of promoting a tobacco product. Clause 11 allows the Government to bring forward secondary legislation to regulate brand diversification products.
On the first Committee day I mentioned my concern about legal uncertainties in the Bill, and we had a number of exchanges on that topic. But this matter provides another example because essentially we are being asked to sign up to the unknown. The Government can make Xbrand-sharing" mean whatever they want it to mean. We are not being given a clear statement of the circumstances in which exceptions will be granted.
I have been in touch with a company called Worldwide Brands Incorporated—a business established some 20 years ago specialising in fashion goods such as clothing, footwear, watches and bags. WBI is the owner of the Camel brand name. Its goods are sold throughout the world and last year its turnover exceeded 600 million US dollars. As a consequence of the European directive, WBI has repositioned its business and has adopted a single new brand name—Camel Active—which applies to all its product lines. Camel Active has a new logo and symbol which are clearly distinct from the logo and symbol of Camel cigarettes.
The Bill would leave WBI in a most uncertain legal position. The company does not believe that the advertising of its products comes within the scope of Clause 2. It takes that view because, first, the advertising is not intended to promote a tobacco product and, secondly, it does not believe that its advertising, especially with a new branding, can have the effect of promoting a tobacco product. Hence the
Amendment No. 25 is designed to rectify what may be an inconsistency between Clauses 2 and 11. As the drafting stands, any advertising of fashion products undertaken by WBI could be the subject of criminal prosecution under Clause 2, even though the products themselves were permitted to be marketed under the regulations.
Amendments Nos. 66 and 70 are designed to create consistency between the Bill and the previous UK regulations dating from 1999, whose purpose was to implement the European directive. The basis of these amendments is the proposition that the approach to brand-sharing should be one of principle addressed in the Bill and not left to regulations.
I hope that the noble Lord, Lord Clement-Jones, will agree to consider these proposals on their merits. They are matters of considerable concern to WBI and to other such reputable concerns which have attempted genuine diversification and whose desire is to promote products that are wholly unrelated to tobacco. They believe that their right to do so should not be interfered with by this legislation. I beg to move.
Lord Avebury: Perhaps I may ask the noble Earl why WBI selected the name XCamel Active" to describe its new range of products. Why did it not choose a different animal from the camel as the first part of that name?
Earl Howe: Although that is an understandable question, I do not believe that it is relevant to this matter. Anyone can choose a brand name of any type. I think in particular of Alfred Dunhill. That company has manufactured luxury goods for more than 100 years. It has written to me to ask why on earth its legitimate marketing should be interfered with by the fact that another company manufactures and produces Dunhill cigarettes. I believe that it is a matter of proportion. I understand the noble Lord's question. I do not know the answer to it, but I do not believe that it is relevant to the matter that I have raised.
Lord Naseby: Before my noble friend sits down, perhaps I may help him. First, I believe that he is absolutely right that that matter is not terribly relevant to the Bill, and we want to concentrate on the Bill today. Secondly, it could well be that Camel was registered as a trade mark some years ago and is therefore an existing trade mark. My belief is that one would be very unlikely to be able to register a camel or, indeed, any other animal as a trade mark today under trade mark legislation. Therefore, given that the company presumably already had XCamel" as a trade mark, it would seem entirely logical that it should continue with it.
Earl Howe: I emphasise that the trade mark is not Camel but Camel Active and that it has a totally
Baroness Jay of Paddington: I hesitate even to suggest this to the noble Earl, but is he not being a trifle disingenuous when one looks back at the history of, in particular, the Camel company? I have in front of me a reference to the time when the company adopted a cartoon character called XJoe Camel". The noble Earl asked at the beginning of his remarks on the amendments whether brand diversification, and so on, had an impact in terms of advertising on the consumption of tobacco. It is interesting that one study shows that nearly one-third of three year-olds matched the Joe Camel character, who was obviously designed indirectly to promote cigarettes, with cigarettes. By the age of six, children were as familiar with him as with the Mickey Mouse logo on the Disney Channel. It is suggested by the company's own research that the cartoon camel catapulted Camel cigarettes from being a brand smoked by fewer than 1 per cent of US smokers under the age of 18 to a brand with a one-third share of the youth market.
I apologise to the noble Lord, Lord Naseby, for introducing broader points. But I believe that, in the context of the history of the Camel company, one must be slightly suspicious of its extraordinary devotion to market purity in terms of the adoption of this slightly different perspective.
( ) if it is an advertisement—
(i) whose purpose is to promote a service or product (other than a tobacco product) in connection with which the use of a name emblem or other feature is not prohibited by regulations made pursuant to section 10, or
(ii) whose effect is to do so"
11.45 a.m.
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