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Disclosure duties for newsletters and websites become more extensive

Publication

Disclosure duties for newsletters and websites become more extensive

publiziert: 
International Law Office, Media & Entertainment - Austria
Datum: 
2013, March 7
Autoren: 
Mag Martina Grama

Introduction

On July 1 2012 an amendment to the Media Act was introduced that extended the duties of disclosure for website and newsletter providers. The amendment aims to ensure "complete transparency with regard to any kind and any legal form of direct or indirect share in a media owner". However, it is more likely have the opposite effect, with information overload causing issues for affected media owners.

The extensive disclosure duties apply to all media belonging to owners based in Austria. The regulation does not apply to websites or newsletters belonging to providers that have their headquarters or registered office abroad (defined as 'foreign media' under Section 50 of the act), unless the publication is entirely or almost exclusively distributed in or directed to Austria. Websites or newsletters run by Austrian subsidiaries of foreign multinational companies are covered by the disclosure duties, as are those belonging to foreign media owners that are entirely (or almost entirely) distributed in or directed to Austria.

The main consideration in international cases is therefore determining the level of focus on Austria that will trigger application of the provisions.

Legal position

Previous law
Section 25 of the Media Act imposes extensive disclosure duties on media owners. It focused initially on disclosure of the legal (organisational), economic and content-related owners of press companies. The aim was to keep the public informed about the ownership of media companies or publications, and to highlight any hidden interests or political agenda.

Major adjustments to the act in 2005 clarified, by the explicit inclusion of the term 'periodical (recurring) electronic media', that websites and newsletters were also deemed to be 'media' within the meaning of the act. Consequently, disclosure duties were also imposed on website operators and creators of newsletters, although these were tailored to press companies and not new media. Website operators and creators of newsletters were therefore required to:

  • disclose their name and their company name, as well as their company's focus and its residential address and registered office; and
  • provide a declaration of their editorial policy.

Although the latter might be justified for press companies, it is less relevant for online media, which are mostly company websites. In addition, associations and companies were required to indicate:

  • their executive officers;
  • members of the management board and supervisory board members; and
  • shareholders with a direct or indirect shareholding of more than 25% or an indirect total shareholding of more than 50%, specifying the type and size of the shareholding.

If the shareholders were themselves companies, the major shareholders of these parent companies also had to be indicated.

These complex regulations led to confusing imprints. In addition, the E-commerce Act, which is based on the respective EU directive, as well as the distance-selling provisions and the Commercial Code had stipulated additional disclosure duties. As a result, imprints in the online field were too lengthy and far too complex to enable recipients to comprehend the relevant information.

Amended law
The July 1 2012 adjustments to the Media Act have extended the disclosure duties further, aiming to provide greater transparency. The ownership, shareholdings, shares and voting rights not only of major shareholders, but also of all direct or indirect shareholders must now be indicated, and any undisclosed shareholder or fiduciary relationships disclosed. Furthermore, all beneficiaries and shareholders of incorporated foundations and companies must be indicated.

Due to the complex regulations, the implementation of a mere imprint has become a risky, large-scale project, especially for multi-corporate enterprises - even more so as the administrative penalty for non-compliance has risen from €2,180 to €20,000. Furthermore, a relevant violation of disclosure duties is subject to omission claims under the Act Against Unfair Competition.

Exemption for small websites

However, there is a glimmer of hope for small website owners. If the publication is deemed to be a small website or newsletter under Section 25(5) of the Media Act, only limited disclosure duties apply. In such cases, it is sufficient to indicate merely the name and the company name, its object and the residential address or registered office of the owner. The exemption applies if the website or newsletter serves as a mere presentation of the media owner and its products, and does not aim to influence public opinion.

The wording of this exemption is vague, and respective administrative and court decisions are lacking. However, through explanatory remarks, the legislature has given the following example:

  • If the owner of a market garden uses his or her website to present the shop and its products, the website is deemed to be 'small'.
     
  • If the website also contains articles written by the owner or a third party criticising global warming or focusing on other ecological topics, it could be seen to influence public opinion and the privilege of limited disclosure duties will no longer apply.
     

Thus, operators of websites or newsletters should restrict themselves to presenting their business and services, and refrain from making general political statements.

Besides the ambiguous wording of the exemption and the reluctance of the legislature to interpret it, many international companies have been reluctant to have their internet presence classified as a small website for both marketing and psychological reasons. Therefore, in practice, only a limited number of companies have relied on the exemption for small websites. However, this is likely to change, as the additional requirements will prove especially cumbersome to subsidiaries of international companies that do not wish to disclose all the information in relation to their shareholders.

Comment

The recent amendment to the Media Act has further increased disclosure duties, intensifying the problem of information overload. The substantial increases in the maximum penalty and the respective risk for claims under the Act Against Unfair Competition make non-compliance risky. This is likely to lead to an increasing number of companies relying on the exception for small websites and newsletters.

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