French lessons for law-makers

SBHD: As the French newspaper and magazine market has shown, restrictive legislation puts companies out of business and restricts consumer choice.

The potential threat of restrictive legislation to the European advertising industry has by no means evaporated.

The destructive consequences of restrictive laws is clearly discernible in the French market, where newspapers and magazines have suffered badly during the present recession. They have also faced the growing strength of commercial TV and changing media consumption patterns.

But most damaging of all has arguably been the combined impact of restrictive legislation in the form of the Loi Evin and the Loi Sapin. During the past few months, evidence of the detrimental effect of these two laws has steadily built up. It provides a stark and compelling warning of how legislation, whether it be against advertisers’ rights to commercial freedom of speech or industry operating practices, can undermine the econ- omies of an industry and destroy the livelihood of those it seeks to help.

It is estim-ated, for example, that anti-alcohol and anti-tobacco legislation in France has cost the magazine Actuel FF25m (£3m) in lost advertising income over the last three years. There can be no doubt this has been a key factor in causing its closure after 25 years in circulation.

Another high profile casualty has been Globe Hebdo – Pierre Bergés ambitious attempt to challenge weekly news magazines such as Le Point and L’Express.

Women’s magazines have suffered too. The monthly title Glamour foundered through lack of advertising revenue, while a similar title, FrouFrou, lasted only six issues before closing.

Other titles remain in a perilous state. The costly relaunch of the newspaper Libéation has so far failed to achieve its ambitious aims. And it remains to be seen whether the magazine L’Evänement du Jeudi will be saved.

Compounding the effects of the Loi Evin, the well-intentioned Loi Sapin – was designed to eliminate hidden intermediary discounting and differential discriminatory terms offered to different advertisers – has unwittingly led to the concentration of ad budgets among leading publications and on TV. This shift makes it difficult for smaller publications to compete and survive, thereby restricting editorial diversity and consumer choice.

There is speculation that the Loi Sapin may be replicated in other European markets, and continuing evidence that the desire to further restrict advertisers’ freedom of speech across a range of product categories remains high on the agenda of many European law-makers.

The French example clearly proves that such measures invariably do far more harm than good. They have put companies out of business, people out of work and restricted consumer choice. If they are applied elsewhere in Europe the results are likely to be no less damaging.

John Shannon is president of Grey International.