New Advertising Law Sets Out New Framework For Marketing Everything From Pharmaceuticals To Securities

July saw the entry into force of the majority of provisions of the long awaited and much discussed new Federal Law No. 38-FZ "On Advertising" (the "New Advertising Law"), a significantly improved law which alters the legal framework regulating advertising activities in Russia. Set forth below are some of the major changes introduced:

I. Definitions. The New Advertising Law is more specific as to what falls within the definition of "advertisement" and what does not. For instance, announcements made by the authorities, information regarding goods and the manufacturer placed on the package, and signboards and analytical materials, which do not have a primary purpose of promoting any products, do not fall within the definition of the word for the purposes of regulation by the New Advertising Law.

II. Techniques. The New Advertising Law outlines, for the first time, the requirements for the advertisement of goods marketed by distant selling methods, advertising through telecommunications networks, and promotions involving "stimulating activities," such as lotteries or other games of chance. Also the New Advertising Law seeks to address possible attempts by advertisers to circumvent statutory restrictions, by, among other things, banning so-called "umbrella" advertising — where alcohol and tobacco products, which are covered by restrictions in advertising are promoted through the advertisement of mineral water, candies and other "harmless" products with similar trademarks.

III. Requirements. The New Advertising Law sets forth detailed requirements for different types of advertisements, such as:

A. Medical/Biological. Under the New Advertising Law, the advertisement of bioactive food additives is now regulated. Advertisements for pharmaceutical products are not permitted to make reference to concrete cases of recovery (i. e., to mention that a particular individual, for instance, a celebrity, has benefited from taking a certain medicine), affirm that a consumer has a specific disease, or show people’s gratitude for the medication. All pharmaceutical advertisements must contain a message warning consumers on the use and side effects of the medication.

B. Alcohol/Tobacco. The restrictions imposed on tobacco advertisements apply also to all smoking paraphernalia, such as pipes, cigarette papers, and lighters. The advertisement for tobacco and alcohol is forbidden outdoors, in all types of transport, radio, TV programs, motion pictures, on the first and the last pages of newspapers and on the cover of magazines.

C. Financial Services/Investment. The New Advertising Law sets out more detailed requirements on the advertisement of financial services, including banking and insurance, and on the advertisement of securities.

Whereas previously financial services could be advertised by one party but then provided by another person or entity, now advertisements for financial services must contain the name of the person or legal entity actually providing the services. Similarly, advertisement relating to the attraction of funds for share participation in real estate development (dolevoe stroitelstvo ) must contain information on where and how to obtain the project declaration and is permitted only after (i) the receipt of a construction permit, (ii) publication of the project declaration, and (iii) state registration of the title or the lease rights to the relevant land plot.

Securities may be advertised only if they are able to be offered to an unlimited number of persons. Moreover, the advertisement of securities must include information on the person or legal entity responsible for performing the obligations under the securities (e.g., the obligations of a bond issuer), the name of the securities’ issuer, and the source of information to be disclosed in accordance with Russian law. Advertising issued securities is not permitted before state registration of the relevant prospectus if such registration is required for public placement or public circulation of the issued securities.

Currently, a working group of the Council of the Federation is developing certain amendments to the New Advertising Law, including amendments relating to the prohibition of advertisement during TV programs for children. The Ministry of Internal Affairs has also suggested that outdoor advertisements should be moved beyond the so-called "red lines," which are defined by architects as conventional borders between the street and the construction area of the building. However, there is no unanimous opinion on how these "red lines" are to be defined with regard to outdoor advertisement.

While the New Advertising Law will surely increase the burden on many companies in some spheres, the greater clarity in the law will provide more certainty to companies engaging in commercial activities in Russia.