Fines are on the horizon for social media influencers not aligning their practice as set out by the Hungarian Competition Authority.

We reported earlier this year that the Hungarian Competition Authority closed the review of the first decision on rules and obligations applicable for social media marketing. On 16 September 2019 the Authority released a new decision on another review of social media activities – this time relating to a fitness celebrity ¬– where a fine of EUR 15,500 was imposed on the respective companies.

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 market players.

The decision

This case also roots back to 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 practises 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” 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 wording, or added to the very end of the post. It also means 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 inter alia explains clearly that the Hungarian versions of the terms “advertisement”, “sponsored by …” or “sponsored content” must be applied, at the same time, with the same emphasis as of the content itself, depending on the nature of the cooperation. It provides sample terms to be used in contractual relationships. Further it 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” include any 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. Non-compliance includes full or partial default as well as late compliance.

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 of this decision

The most straightforward step is to simply do your homework. Companies and influencers should take good care and keep track of their activities. Here are some tips:

- Keep track of all partnerships, co-operations 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 that the Competition Authority keeps a close eye on social media marketing and is expected to take active steps in enforcing 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 this meticulously.