With Bulgaria having joined the Global Advertising Lawyers Alliance ("GALA"), the group now has 68 members in more than 85 countries around the world.
GALA’s main contact in Bulgaria is Kalina Tchakarova. We spoke with Kalina about some aspects of advertising law in Bulgaria and her firm, Djingov, Gouginski, Kyutchukov & Velichkov.
1. GALA: What types of advertising regulation are there in your country?
Kalina: Bulgarian law regulating commercial communication and, in particular, advertising and promotional activities, is modern and generally complies with the acquis communautaire. No all-embracing definition for advertisement is provided for by local laws and regulations, but rather several independent statutory acts govern different aspects of promotional activities, each of them using its own, although similar, definition for advertisement. The statutory acts regulate mostly the content of ads and the effect they have on customers and/or competitors. In addition, several special instruments provide sector specific regulations for promotional activities, for products such as alcoholic beverages, medicinal products, tobacco, gambling, etc.
Advertising is regulated via two independent routes – public enforcement and self-regulation.
2. GALA: What are some important recent developments or lawsuits involving advertising?
Kalina: The Competition Protection Commission (the "CPC") is probably the most influential public authority in Bulgaria as far as control over promotional content is concerned, due to its power to investigate and impose sanctions for infringement of the statutory prohibitions for misleading and comparative ads. The CPC is very active in pursuing unfair competition practices and already has a long record of various types of infringements. It should be noted that the CPC approach to unfair competition practices, including to misleading and comparative advertising, although rigorous in terms of enforcement, is somewhat inharmonious in terms of resolutions.
The strict approach of the authority is best evidenced by, among others, the Aron case, which related to an ad published by a furniture store which was trying to free its warehouse of unsold bedroom items and thus decided to offer a bed as a gift to every purchase of a wardrobe. The CPC found that this was a violation because the merchant was actually selling both products (a bed and a wardrobe) at separate prices, applying a discount at the invoice total, with the result that the aggregate invoice price was equal to the advertised price of the cupboard. The authority ruled that, although such practice did not qualify for unfair solicitation of customers under Art. 36 PCA, it should be regarded as a misleading advertisement under Art. 32 PCA because the message announced that the customers would receive a bed as a free gift. It was noted that the picture of the bed in the advertisement was decorated with a ribbon - a well-known symbol of a present. The CPC finally concluded that, although customers did actually receive both products on the advertised price, there was an element of confusion because the customer came to the store with the intention to receive a free gift, but in reality he had to pay for both products, regardless that the big discount was equal to the standard price of the bed. The fine imposed on the company was in the amount of BGN 76,000 (approx. EUR 38,880) representing 0.5% of the total turnover of the company.
3. GALA: What are some of the big mistakes people make when advertising in your country?
Kalina: The PCA rules regulating unfair solicitation of customers have probably the greatest effect on promotional activities in Bulgaria. Those rules impose limitations on promotional activities where a supplement is provided with the sale of a good or service without consideration. Such promotions are considered to represent a form of unfair competition because the client is induced to make a purchase not by the qualities of the principal product or service, but by the opportunity to receive something else for free. According to the existing case law, such offers distort consumer demand to the detriment of competitors.
There are several exceptions of permitted offers, namely: (i) Promotional items of negligible value – provided that the advertising undertaking is clearly identified and the value is up to 10% of the price of the principle product; (ii) Accessories – items or services which, according to commercial practices, are supplied and used together with the principal product or service bought by the customer; and (iii) Volume rebates – offering additional goods or services to induce purchasing of larger quantities.
In one of its most recent decisions1, the CPC ruled that offering a second coffee machine for free upon purchase of one coffee machine constitutes an infringement. The main argument of the authority was that the second coffee machine was not marked at all on the invoices issued by the seller – thus it was a “gift.” Relying on this guidance (stepping on previous case law), it can be concluded that the CPC considers as a “supplement” any product that is provided without consideration. The main evidence for the gratuitous nature of a supplement is the fact that the product is not marked in the sale’s receipt or invoice or the price listed there is zero or negligible compared to its real market price.
Considering the CPC enforcement record, it is clear that all kinds of messages advertising “free gifts” are treated with suspicion.
4. GALA: Tell us about your firm’s advertising practice.
Kalina: Djingov, Gouginski, Kyutchukov & Velichkov (DGKV) is one of the largest and most prominent business law firms in Bulgaria. Founded in 1994 by the four named partners, the firm employs 50 lawyers, including 15 partners.
The lawyers of the firm have deep understanding of the complicated legal issues related to advertising and promotion of products and services in Bulgaria. We provide legal advice on the specific local regulations, applicable to advertising and promotional campaigns and to direct marketing in the country. The team of lawyers advises on the licencing of rights, brand and consumer protection issues, competition law aspects and industry specific rules applicable to the activities of our client. The clients of the practice group include cable broadcasters, film producers, advertisers, individual artists, automobile producers, large store chains & medium-sized retailers, and financial institutions.
The interview was carried out by Soren Pietzcker (GALA Germany), Chair of GALA’s Membership Committee.