The Italian Competition Authority closes first case on micro-influencer marketing and hidden advertising

On February 25, 2020, the Italian Competition Authority (“AGCM”) closed its proceedings against the Italian food giant Barilla G. e R. Fratelli Società per Azioni (“Barilla”) and nine micro-influencers concerning unfair commercial practices due to unrecognizable advertising on social media. The AGCM closed the proceedings by accepting the professionals’ undertakings considered as “adequate to provide consumers with a complete and accurate informational background about the nature of their communications.

On the commercial practice

By request of the consumers’ association “Unione Nazionale Consumatori” the proceeding began on June 5, 2019, when the AGCM notified Barilla and Mr. Andrea Cerrone (owner of the Instagram profile under the screen name “insanitypage”) of alleged infringement of the general provisions on unfair and misleading commercial practices as described in the Consumers’ Code (Legislative Decree No. 206/2005) and specifically the provision considering unfair per se the practice of “using editorial content in the media to promote a product, where the costs of such promotion have been borne by the professional without this being apparent from the content or images or sounds clearly identifiable to the consumer” (respectively, Section 20, Paragraph 2, Section 22, Paragraph 2 and Section 23, Paragraph 1, Letter m) of the Consumers’ Code). Later, on September 24, 2019, the AGCM extended the proceeding to include nine micro-influencers.

In particular, the contested practice consisted of disseminating posts reproducing Barilla’s products and referencing the “Pan di Stelle” line on the Instagram profiles of micro-influencers. The contested practice falls within the scope of the influencer marketing phenomenon, which today is a well-established method of communication that consists of disseminating through blogs, vlogs, and social networks pictures, videos, and comments by bloggers and influencers that endorse certain brands, producing an advertising effect. As pointed out by the AGCM, this method of communication was initially used only by known influencers, but currently it is spreading to a considerable number of users, including some who do not have a particularly large number of followers.

Following the investigation phase of the proceedings, with reference to the posts published under “insanitypage,” the AGCM found that the alleged posts are spontaneous content published on the web, as shown both by a report from an advertising agency sent to Barilla and by the receipts for Barilla products entered by Mr. Cerrone during the proceedings. It therefore dropped the charges vis-à-vis Mr. Cerrone. However, the objections involving Barilla, as well as the nine micro-influencers, remained in place. To avoid sanctions, the parties presented binding undertakings to the AGCM to implement self-regulation in their future conduct on social networks.

On the undertakings proposed by the Parties and accepted by the AGCM

The binding undertakings presented by Barilla can be summarized as follows:

  • The company’s top management shall publish guidelines on influencer marketing, taking into account the key principles of the obligation of transparency of advertising (including the relevant hashtags to be used in connection with sponsored posts), as detailed both in the Digital Chart issued by the Italian Self-Regulatory Advertising Body and in the previous case-law and moral suasion letters sent by the AGCM to influencers. The purpose of this undertaking is to ensure that all corporate personnel involved in influencer marketing are familiar with the rules to which influencers, whether engaged directly by the company or indirectly through agencies, must adhere.
  • If Barilla directly engages influencers, the agreement regulating the contractual relationship between the parties shall include: (a) an obligation to comply rigorously with the guidelines on influencers published by the company’s top management; and (b) standard contractual clauses providing sanctions in case of non-compliance with the obligation under point (a).
  • If Barilla relies on agencies to engage influencers, the agreement regulating the contractual relationship between Barilla and those agencies shall include: (i) clauses aimed at ensuring that the agencies properly monitor influencer conduct; and (ii) standard contractual clauses providing sanctions in case of non-compliance with the obligation under point (i).

The binding undertakings presented by the micro-influencers can be summarized as follows:

  • If they post content related to products received as gifts from companies, the posts will include hashtags like #suppliedbybrand, #brandgift, #fornitodabrand, or any similar hashtags that inform consumers/users that the products were provided or given as a gift by the company that owns the brand.
  • If they post content related to a certain brand by virtue of a specific agreement, the post will include hashtags like #pubblicitàbrand, #sponsorizzatodabrand, #advertisingbrand, or #inserzioneapagamentobrand.
  • They will not re-post content authorized or selected by companies unless the agreement expressly requires them to do so.
  • They will disclose the values of correct and transparent advertising to safeguard consumers by publishing two posts each on their Instagram profiles within the next 12 months relating to the importance of transparency in advertising and compliance with the relevant consumer protection rules.

As stated above, the AGCM deemed the binding undertakings proposed by Barilla and the micro-influencers suitable to ensure compliance with the rules on transparency that constitute a basis for influencer marketing practices. In light of the above, the AGCM decided to close the proceedings without charging any infringement.

On previous AGCM case-law

This is not the first ruling by the AGCM on influencer marketing and unfair commercial practices. Indeed, the AGCM previously closed a proceeding vis-à-vis Alitalia, Aeffe (owner of the Alberta Ferretti brand), and several influencers in case No. 11270 of May 22, 2019. The challenged conduct was the same, as was the conclusion, namely that AGCM accepted undertakings proposed by the operators without charging any infringement. The primary and key difference between the two proceedings is that the Alitalia ruling targeted advertising practices undertaken by influencers (meaning users with large numbers of followers), whereas the more recent ruling targets micro-influencers with only a few hundred followers each. This difference clearly demonstrates that when dealing with influencer marketing practices the AGCM does not consider the number of followers a parameter to be used to decide whether to pursue a ruling on the infringement of advertising rules. Therefore, the only objective parameter the AGCM uses to decide whether to pursue rulings on alleged infringements is whether or not the practices undertaken by a social media user fall under advertising practice.

The undertakings of the micro-influencers are similar to those in the Alitalia ruling. Among others, they have committed themselves to promoting advertising values through their social media profiles, an undertaking that only Alessia Marcuzzi proposed in the previous case and that was singled out for praise by the AGCM. Interestingly, with only one exception, the micro-influencers pledged to uphold the undertaking initially proposed by Alessia Marcuzzi, and the AGCM expressed appreciation for that decision.

The full text of the AGCM ruling is available here

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