EU supervision of political advertising – compliance obligations for companies

The regulation requires providers, publishers and sponsors of political advertising to disclose a high level of information by creating a uniform framework across Europe, replacing the previous patchwork of national regulations – and at the same time putting considerable pressure on companies to adapt.

Specifically, every political advertisement must in future be clearly labelled, contain information about the election or referendum in the context of which it is being placed, and disclose whether it has been used specifically as part of targeting or ad placement procedures (Art. 11 (1)). In addition, they must disclose the following information, among other things, as part of a ‘transparency notice’ (Art. 12):

• Identity of the sponsor and information about who ultimately controls the sponsor,
• Total amount of remuneration paid for the political advertisement and other services received by the providers of political advertising services,
• Period during which the political advertisement was disseminated.

The term is broadly defined and covers:

• the preparation, placement, promotion, publication, delivery or dissemination, by any means, of a message, normally provided for remuneration or through in-house activities or as part of a political advertising campaign:
  • by, for or on behalf of a political actor, unless it is of a purely private or a purely commercial nature; or
  • which is liable and designed to influence the outcome of an election or referendum, voting behaviour or a legislative or regulatory process, at Union, national, regional or local level (Art. 3 No. 2).

The regulation applies to providers (Art. 3 No. 6), publishers (Art. 3 No. 13) and sponsors (Art. 3 No. 10) of political advertisement. The categories can best be illustrated by the following example.

If political party A commissions agency B to design and place an online advertising campaign on social network C and online search engine D, party A is considered the sponsor, agency B is considered the provider of political advertising services, and social network C and online search engine D are considered the publishers.

However, due to the broad definition of ‘political advertisement, an election call by companies/associations or NGOs could also constitute political advertisement and trigger corresponding obligations.

Each of these actors is subject to its own transparency, labelling and other obligations (see last paragraph ‘Entry into application and obligations to act'). A clear delineation of roles is crucial for the legally compliant implementation of political advertisement.

In practice, this means that all parties involved in the dissemination of political advertisement – from the financing party to the platform operator – must comply with the respective requirements of the regulation in order to avoid severe sanctions. The regulations cover the entire process of political advertisement, from its financing to its public dissemination.

The regulation significantly restricts the possibilities for processing personal data in targeting or ad placement procedures for political advertisement on the internet. In these cases, the following will apply in the future:

• The data must have been collected by the controllers themselves and the data subject must have expressly consented to the processing (Art. 18 (1)).
• The processing of personal data of persons who will not reach voting age for at least one year is prohibited (Art. 18 (2)).
• The processing of special (sensitive) categories of personal data (e.g. ethnic origin, political opinions, religious or philosophical beliefs) is prohibited.

There are additional overlaps with data protection, which has detailed requirements.

In the last three months before an election or referendum, non-European actors may no longer sponsor political advertisement unless they can prove that they are based in the EU (Art. 5 (2)).

The regulation provides for a strict sanctions regime that forces companies not to treat transparency and targeting requirements as a mere formality. Violations of the provisions of the regulation can be punished with effective, proportionate and dissuasive fines of up to six percent of revenue or global annual turnover (Art. 25 (1)). The exact amount of the financial penalties has yet to be determined by the respective Member States. The sanctions may also include other measures such as penalty payments and cease-and-desist orders by the competent authorities (Art. 25 (1) and (5)).

This poses a double risk for companies: in addition to financial penalties, there is a threat of considerable damage to their reputation. Political advertisement is a particularly sensitive issue, and public violations are punished not only by the law but also by the media. Executive boards and compliance officers should therefore ensure that internal control systems are adapted to the new requirements in good time.

The regulation highlights the extent to which geopolitics and digital regulation now overlap. In future, multinational companies will have to integrate European requirements into their global compliance structures if they disseminate or publish political advertisement in the Union or if such political advertisement is directed at Union citizens (Art. 2 (1): applicability under the specified conditions also to providers with establishments outside the EU).

This may lead to conflicts with other legal systems, particularly in markets where targeting methods are less strictly regulated. As is already the case with sustainability regulation, companies are increasingly operating in a field of tension between diverging legal frameworks and must align their strategies accordingly.

This gives management a clear mandate for action: political advertisement should no longer be considered a marginal issue, but rather part of strategic compliance and risk management decisions. This affects not only traditional advertising agencies but also all companies that offer, publish or sponsor political advertisement, such as platform operators, data analysts, media companies and businesses.