On 14 June 2015 the Hungarian Parliament adopted an amendment to Act XLVIII of 2008 on Advertisements ("Advertising Act") that may affect pharmaceutical companies that advertise their products through advertising agencies and sales houses.
The new legislation sets out rules applicable to advertising agencies and sales houses. Special restrictions apply also to advertising service providers.
Companies facilitating advertising (i.e. intermediaries between advertising customers and advertisement publishers) shall be deemed advertising agencies (excluding advertising service providers) while companies selling advertising slots on behalf of publishers shall be deemed sales-houses.
Advertising agreements shall be in writing; however, agreements concluded by electronic means are deemed to be in writing even without electronic signature.
The Advertising Act provides for a fixed fee for advertising agency services, at 15% of the advertising publication fee.
Advertising agencies and service providers are prohibited from accepting any direct or indirect bonus, rebate, gift or other gain from the publisher or anybody else. Advertising agencies may accept a discount; however, it must be reassigned to the benefit of the advertising customer and indicated on the invoice issued to the customer.
Advertising agencies may directly agree with publishers on behalf of the advertising customers, but full transparency must be provided to the advertising customer concerning both the financial terms of advertising and the publishing data.
The amendment of the Advertising Act also provides for transparency to advertising customers by imposing disclosure requirements on advertising agencies and advertising service providers if either the advertising agency or the advertising service provider or a company in which they have a qualified majority has ownership in either a company with facilities suitable for publishing advertising or in a sales house. It is also prohibited for the advertising agency to become a party to an advertising agreement if the advertising agency has ownership participation in the sales-house that contributes to the performance of said agreement, or the sale-house has direct or indirect ownership of the advertising agency.
In case of violation of the above restrictions, the Consumer Protection Authority may impose a fine is 10 times greater than the financial benefit gained from the violation.
Current agreements must be amended in order to ensure the compliance with the Advertising Act by 30 September 2015. Future agreements must be concluded in compliance with the above rules of the Advertising Act as it comes into force this month.