Explanatory Memorandum to COM(2021)731 - Transparency and targeting of political advertising

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dossier COM(2021)731 - Transparency and targeting of political advertising.
source COM(2021)731 EN
date 25-11-2021



1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

This proposal aims first and foremost to contribute to the proper functioning of the internal market for political advertising by laying down harmonised rules for a high level of transparency of political advertising and related services. These rules will apply to providers of political advertising services.

It also aims to protect natural persons with regard to the processing of personal data by laying down rules on the use of targeting and amplification techniques in the context of political advertising. These rules will apply to all controllers -i.e., beyond providers of political advertising services, making use of such targeting and amplification techniques.

Given that it is normally provided against remuneration, advertising, including political advertising, constitutes a service activity under Article 57 of the Treaty on the Functioning of the European Union (‘TFEU’). This also applies to different activities related to political advertising, including the preparation of content and campaigns, its placement with a distribution medium and its publication and dissemination. As a result, EU natural and legal persons providing those services across borders enjoy the fundamental freedoms, in particular the freedom of establishment and the free movement of services, which are among the fundamental principles of the EU legal order. The cross-border provision of services entails the freedom to offer and provide the services into another Member State than the Member State of establishment. It also entails the freedom to receive services across borders. Free movement of service encompasses not only situations where the provider or the recipient moves across borders, but also situations where the service is provided across borders. The provision of advertising services is regulated in different ways in the various Member States according to the media used to publish or disseminate an advertisement (e.g. print, audiovisual, online platforms, etc.) and the purposes pursued by the applicable rules (e.g. consumer protection). Political advertising services are subject to additional specific rules imposing obligations on the sponsors – in particular political actors – and service providers.

Political advertising services in the EU are developing. The overall growth and particularly significant increase in relevant online services, in a context of unevenly enforced and fragmented regulation, has prompted concerns that the internal market is not currently equipped to provide political advertising to a high standard of transparency to ensure a fair and open democratic process in all Member States. Such concerns at regulatory gaps and insufficient transparency have already prompted some Member States to intervene with measures, and others are planning to intervene, but action at national level cannot close gaps in cross-border enforcement.

National regulation of political advertising imposes obligations on providers of political advertising services which condition the availability of political advertising and determine elements of its content to provide specific transparency. Such national rules aim, inter alia, to ensure accountability and the overall organisation of a fair and open political process, including by supporting the monitoring of the compliance of political actors with relevant obligations. These national rules are significantly fragmented, including as regards relevant definitions and the nature of obligations.

Fragmented definitions of political advertising across Member States pose challenges when it comes to establishing whether advertising qualifies as political. There are substantial differences in the scope and substance of the transparency obligations applicable to service providers providing services connected to political advertising within Member States and between Member States, depending on the means and the national political traditions, leading to fragmentation. Some Member States only forbid anonymous political advertising, others require specific information on funding or on the identity of the sponsor to be displayed on the advertisement and some Member States have requirements on the labelling of political advertisements or for there to be a clear separation between advertising and editorial content.

Technological changes – in particular in the online environment, which has enabled a proliferation of different new media and methods of funding, preparation, placement, promotion, publishing and dissemination of political advertising – have made the fragmented situation, and the issues connected to monitoring and enforcement, more complex. Sometimes it is not clear if requirements, which may be established by general rules contained in electoral laws, apply to all media including in the online environment, which is a source of further legal uncertainty for providers of political advertising services.

This fragmentation will increase as Member States develop new rules to address the need to ensure transparency of political advertisements, in particular in the context of technological developments. New ad hoc national rules will likely increase the fragmentation of the essential transparency elements, such as on the information needed to be published and its format, and of the scope of application these requirements. This is also likely to further decrease legal certainty, both for providers of political advertising services and the sponsors of the advertisements.

This fragmentation of transparency requirements creates barriers to the provision of services. It entails specific compliance costs for service providers which need to invest in determining the applicable standards and adapting advertising to the different jurisdictions while also being a source of legal uncertainty on the transparency requirements that apply to political advertising. This fragmentation also limits the possibility for service providers who could offer their political-advertising-related services in different Member States from entering the market in other Member States or to develop new services. It thus also restricts the possibilities for the recipients of services in the internal market and restricts the possibilities and choice for cross-border campaigning. Small and Medium-Sized Enterprises (‘SMEs’) in particular may lack the capacity to cope with determining and adapting to all the different national requirements and procedures. Concerns about to these barriers have been expressed by providers of political advertising services during the consultation carried out in preparation of this proposal.

This also has an impact on citizens and competent authorities, as the political advertising publishers and related services providers can be located in other Member State from those where citizens encountering the political advertising are, with specific oversight related issues.

The rapid technological change, increasingly fragmented and problematic regulatory context, and the increasing amounts being spent on political advertising demonstrate the need to act at the EU level to ensure the free movement of political advertising services across the Union while ensuring the high standard of transparency which makes electoral processes in the EU more open and fair.

The measures proposed are based on the analysis of existing or planned legislation of Member States in the field of political advertising.

In light of the context just described, this proposal should provide for harmonised transparency requirement applicable to economic actors providing political advertising and related services (that is activities that are normally provided for remuneration), related to the preparation, placement, promotion, publication and dissemination of political advertising, or to advertising directed to citizens in a Member State.

This proposal also aims to protect natural persons with regard to the processing of personal data by laying down rules on the use of targeting in the context of the dissemination of political advertising.

Personal data collected directly from citizens or derived through their online activity and behavioural profiling and other analysis are used to target political messages to citizens by directing advertisements to groups and to amplify their impact and circulation by tailoring the content and its dissemination on the basis of characteristics determined through the processing of these personal data and their analysis. The processing of personal data for such purposes, particularly data considered sensitive under Regulation (EU) 2016/679 and Regulation (EU) 2018/1725, has been observed to have specific negative effects on citizens’ rights including their freedoms of opinion and of information, to make political decisions and exercise their voting rights. Some Member States have also attempted or are considering intervention with respect to targeting. In a context where rules on the protection of natural persons with regard to the processing of their personal data and on the free movement of such data is harmonised, action at the Union level is needed and appropriate to ensure specific additional protection of personal data when it is used in the context of targeting political advertising.

Therefore, this proposal should also address the use of targeting and amplification techniques in the context of the publication, dissemination or promotion of political advertising that involve the processing of personal data by all controllers -i.e., beyond providers of political advertising services.

The need to deal with these issues was announced in the political guidelines of the President of the Commission and is in line with the European Democracy Action Plan 1 (‘EDAP’) presented by the Commission in December 2020. The Action Plan recognised the need for more transparency in political advertising and communication, and the commercial activities surrounding it, in order for citizens, civil society and responsible authorities to clearly see the source and purpose of such advertising.

It is necessary to put these measures in place in 2023 in order for them to be effective ahead of the 2024 elections to the European Parliament.

• Consistency with existing policy provisions in the policy area

This proposal complements the proposal for the Digital Services Act (‘DSA’) 2 , which includes certain general transparency obligations for online intermediaries as regards the transparency of online advertising, and the wider EU framework for the digital services market 3 . It will cover both online and offline activities. Compared to the DSA, it expands the categories of information to be disclosed in the context of political advertising, as well as the scope of the relevant service providers concerned. While the DSA imposes transparency requirements on online platforms, this initiative covers the entire spectrum of political advertising publishers, as well as other relevant service providers involved in the preparation, placement, promotion, publication and dissemination of political advertising. There is complementarity and synergies with the requirement under the DSA to have assessments of systemic risks by very large online platforms stemming from the functioning and use of systems for selecting and displaying advertisement, with actual or foreseeable effects related to electoral processes.

The proposal is in line with the election package presented in September 2018 including the Recommendation on election cooperation networks, online transparency, protection against cybersecurity incidents and fighting disinformation campaigns 4 which promotes cooperation among competent authorities at national and Union level to protect election and contains specific recommendations aiming at fostering the transparency of political communication as well as the guidance on the application of Union data protection law supporting compliance with Regulation (EU) 2016/679.

Regulation (EU) 2016/679 and other Union rules on protection of personal data and privacy of communications (including Regulation (EU) 2018/1725 and Directive 2002/58/EC) already apply to the processing of personal data in the context of political advertising. This proposed Regulation builds upon and complements the provisions applicable to the processing of personal data in the context of political advertising contained in Regulation (EU) 2016/679 and Regulation (EU) 2018/1725. It codifies elements of the guidance provided by the European Data Protection Board by making mandatory in the context of political advertising information to be provided to the data subject (source of the data and logic involved) 5 .

It also builds upon the EU Code of Practice on Disinformation, which sets out commitments by online platforms with respect to the transparency of political advertising and issue-based advertising and which is presently under revision by the Code’s existing signatories and prospective signatories, in line with the Commission’s Guidance on Strengthening the Code of Practice 6 . Commitments and actions taken under the Code of Practice should build a bridge towards the present legislation with industry-led practical solutions. Once the present legislation is adopted, the Code’s signatories should implement and complement its rules also within the framework of the Code of Practice.

To the extent that such obligations fall within the remit of regulators designated within these existing frameworks, they should be monitored and enforced by the same bodies, and coordinated among the relevant existing and envisaged European cooperation structures, including the European Data Protection Board. The European Cooperation Network on Elections established in 2018 and bringing together the contact points of national elections networks composed of different authorities with competence in the subject area should provide a framework to support enhanced coordination and exchange of best practice between competent authorities in the context of political advertisement.

• Consistency with other Union policy

This proposal is also closely related to the work being done on the other initiatives in the transparency and democracy package of the Commission Work Programme. 7

The European Democracy Action Plan includes a number of initiatives to help protect election integrity and promote democratic participation. It builds among others upon the experience gathered in the context of the implementation Commission’s 2018 Electoral Package 8 and the work of the European Cooperation Network on Elections.

This proposal is also complementary to the proposal to amend Regulation (EU) 1141/2014 on the statute and funding of European Political Parties and Foundations. The amendment to this Regulation presented by the Commission contains specific rules aiming at guaranteeing that European Political Parties comply with high transparency standards when disseminating political advertisements.

Finally, this proposal is in synergy with the efforts led by the EU externally, in the field of election observation (EU Election Observation Missions and their follow-up). Election observation missions (EOMs) assess online political advertising during election campaigns and may recommend measures to improve their regulatory framework during an electoral process. The European Union then advises and supports partner countries in implementing these recommendations, together with international partners. Common guidelines on observation of the online campaign have been developed in the context of the Declaration of Principles (DoP) for International Election Observation endorsed by the UN.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The legal basis for the proposal is in the first place Article 114 of the Treaty on the Functioning of the European Union (‘TFEU’), which provides for the adoption of measures to ensure the establishment and functioning of the internal market. This provision enables measures for the approximation of the provisions laid down by law, regulation or administrative action in the Member States which have as their object the establishment and functioning of the internal market. It is the appropriate legal basis for an intervention covering service providers in the internal market and addressing differences between Member States’ provisions which obstruct the fundamental freedoms and have a direct effect on the functioning of the internal market.

Differences in national laws exist and are developing, given that some Member States have legislated or intend to legislate on transparency requirements applicable to political advertisement services. This situation creates regulatory fragmentation insofar as the rules addressing transparency of political advertising services diverge in the specific elements of transparency that they require (the information to be disclosed with an advertisement and its format) and their scope (the types of advertisement considered political and the media addressed) and increase compliance costs for service providers operating in the internal market. Without action at Union level, this will be further aggravated with the adoption of new initiatives in some Member States, whereas in other Member States the transparency of political advertising services remain unaddressed. Harmonisation at EU level is thus necessary and Article 114 TFEU is the relevant legal basis for this initiative. This initiative will remove certain existing obstacles related to transparency and genuinely enhance the functioning of the internal market. It is not necessary to the functioning of the internal market nor appropriate in light of the competences of the Union to intervene by way of national rules which limit the availability of political advertising services to certain categories of sponsor or period, or which cap the funding or medium which may be used. Such rules are intrinsic to national electoral law and do not form part of the functioning of the internal market.

In addition, considering that this proposal contains certain specific rules on the protection of individuals with regard to the processing of personal data, notably restrictions of targeting techniques considered to negatively affect rights when used in the context of political advertising, it is appropriate to base this regulation, in as far as those specific rules are concerned, on Article 16 TFEU.

• Subsidiarity (for non-exclusive competence)

According to the principle of subsidiarity laid down in Article 5(3) of the Treaty on European Union (TEU), action at EU level should be taken only when the aims envisaged cannot be achieved sufficiently by Member States alone and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the EU.

Several Member States have legislated or intend to legislate in the field of transparency of political advertising. As these rules diverge in their scope, content and effect, a patchy framework of national rules is appearing and risks becoming more fragmented. This undermines the effective exercise of the freedom of establishment and the freedom to provide services in the Union.

Furthermore, the cross-border nature of some of the activities, including in the online environment, creates significant challenges to purely national regulation in this domain. It is unlikely that Member States acting independently would be able to effectively address the identified problems. Moreover, the distinction between purely domestic and potentially cross-border situations is in practice difficult.

The need for EU action was also demonstrated by the action of certain providers of political advertising services and of the political actors making use of them. During the last European elections, some large online platforms took steps to address the challenge presented by legal uncertainty and fragmentation of the internal market which resulted in partitioning it. This proved a significant issue for sponsors of political advertising i.e. political parties seeking to publish and disseminate political advertising EU-wide.

EU common high transparency standards for political advertising and related services would bring enhanced legal certainty especially for service providers. The incremental compliance costs of delivering a service across borders would be removed, and the non-compliance risk reduced. This in turn would remove the incentive for providers of political advertising services to partition the internal market, provide a fresh incentive for the provision of cross-border services and for the development of new ones.

In contrast, the effects of any action taken under national law would be limited to a single Member State and would risk being circumvented or difficult to oversee in relation to service providers from other Member States, and could conflict with the free movement within the internal market. This would also not address the EU-wide problems identified and can also exacerbate the effects of fragmentation. An EU system would also help competent authorities in their oversight functions, other stakeholders to exercise their role in the democratic process and increase the overall resilience of the EU to information manipulation and interference in electoral processes, including disinformation.

The proposed Regulation does not go beyond what is necessary and in particular does not address other issues related to political advertising beyond transparency and the use of targeting techniques. It does not interfere with other aspects regulated at national level like the legality of the content of political advertisement and the periods during which advertisements are permitted, or the nature of participants in the democratic process.

This proposed Regulation does not necessarily provide for the creation of any additional authorities or bodies at Member State level. It entrusts the supervision and enforcement of its provisions to relevant competent national authorities, including those with designated tasks under existing related Union legislation. Member States may therefore appoint and draw upon the expertise of existing sectorial authorities who will also be entrusted with the powers to monitor and enforce the provisions of this Regulation. Member States will be responsible to ensure that these authorities have the necessary capacity to ensure the protection of citizens’ rights in the context of transparent political advertising.

Member States will rely on cooperation structure designated at Union level. They will have to designate the authorities under the Regulation (EU) 2016/679 to monitor compliance with the provisions on targeting established by this regulation. The European Data Protection Board and the consistency mechanism established under that Regulation will apply accordingly.

This regulation will support national competent authorities to perform their tasks more efficiently, especially regarding online and cross-border advertising, by requiring the provision of information about political advertising services.

Cooperation between competent authorities to perform their tasks will be essential. National elections networks established on the basis of Recommendation C(2018) 5949 final provide for a structure for such a cooperation between authorities at national level while respecting the competence of each authority part of this network.

The Commission will support cooperation among authorities at Union level including in the frame of the European Cooperation Network on Elections.

This will support the emergence of a European regulated and innovative market for political adverting services which is trusted by citizens and which supports the integrity of the democratic process.

• Proportionality

Regarding proportionality, the content and form of the proposed action does not exceed what is necessary to achieve the goal of ensuring the proper functioning of the internal market.

The proposal builds on existing and upcoming EU legal frameworks, including Regulation (EU) 2016/679 and the Digital Services Act, and is proportionate and necessary to achieve its objectives. The envisaged measures are necessary to tackle the fragmentation of the relevant regulatory framework.

The proportionality of the transparency obligations has been carefully considered and is reflected for example in the establishment of asymmetric obligations to different types of providers of political advertising services. Other options, such as banning the provision of cross border political advertising services or the targeting for political advertising purposes in all situations, were discarded as they appeared disproportionate to attain the objectives pursued with this Regulation.

The proposal establishes limited transparency obligations for all providers of political advertising services involved in the preparation, placement, promotion, publication and dissemination of political advertising, including the keeping of records of their involvement in the specific political advertisement. Advertising publishers, which are in direct contact with the citizens, must in turn comply with specific transparency obligations, including the preparation and publication of a transparency notice for each advertisement published. SMEs are exempted from periodic reporting on political advertising and are allowed to appoint an external person as contact point for interaction with competent national authorities. The Commission intends to foster compliance efforts resulting from this Regulation by supporting training, awareness raising and other measures.

The costs incurred by operators are proportionate to the objectives achieved and the economic and reputational benefits that operators can expect from this proposal. The removal of the obstacles resulting from legal uncertainty and fragmentation will foster the development of a European industry of political advertising services based on high transparency standards, and will enable existing national enterprises to scale up.

The limitations on the targeting of political advertising are proportionate because they are strictly limited in scope to the specific targeting activities in the political context that have been identified as posing a significant risk to individual’s fundamental rights.

• Choice of the instrument

Article 114 and Article 16 TFEU grant the legislator the power to adopt regulations and directives.

A Regulation is considered to be the most appropriate legal instrument to define the framework for transparency of political advertising in the Union. The choice of a regulation as a legal instrument is justified by the need for a uniform application of the new rules, such as the definition of political advertising and the transparency obligations that providers of political advertising services must fulfil when preparing or disseminating political advertisements.

The direct applicability of a Regulation in accordance with Article 288 TFEU will reduce legal fragmentation and provide greater legal certainty by introducing high transparency standards for political advertising, which will provide legal certainty for relevant service providers and prevent divergences hampering the free provision of the relevant services within the internal market.

Nonetheless, the provisions of the proposed regulation do not impinge on national competences for the organisation of the electoral process and leave room for industry to establish standards to enable the efficient publication and transmission of information under the regulation, to streamline compliance and foster innovation.

As regards the framing of specific targeting techniques, using a Regulation is in line with Regulation (EU) 2016/679, which is itself a Regulation.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Stakeholder consultations

This proposal is the result of extensive consultation with stakeholders, in which the general principles and minimum standards for consultation of interested parties were applied by the Commission.

A consultation on the Inception Impact Assessment published on 26 January 2021 provided information to develop the problem definition and policy options. An open public consultation (OPC) took place from 22 January to 2 April 2021. The OPC was promoted through the Commission’s website, as well as through specific networks.

The Commission organised meetings with key stakeholders to gather additional evidence and data on the specific problems addressed by the initiative, as well as on the policy approach and its impact. It also conducted targeted bilateral consultations and analysed numerous position and analytical papers received especially in the context of the preparation of the initiative. The preparation of the Impact Assessment underpinning the initiative was supported by an external study. The contractor conducted a series of individual consultations with key stakeholders.

Overall, there is a general agreement amongst stakeholders on a need for action at Union level. A large majority of stakeholders agree that legislative gaps exist or that new legislation is needed. A limited amount voiced concerns referring to electoral matters as a national prerogative.

The OPC shows that the majority of citizens believe that publishers of political advertising should retain certain basic information from those placing such advertisements.

Providers of political advertising services have asked in particular for a common EU definition that allow them to determine which advertisement are political advertisement and a common approach to provide for proportionate requirements to label sponsored political advertisement, including as regards the identity of the sponsor of the advertisement. Providers pointed to uncertainty and costs related to identifying and complying with relevant transparency obligations when offering political advertising services across borders or in multiple Member States.

Civil society organizations supported especially high transparency around political advertisement including which advertisements are shown to whom, why, and who has paid for them. They considered that soft measures were not sufficient in this perspective. They also requested the issue of targeting to be addressed beyond transparency.

Member States welcomed the initiative and agreed with the need to regulate at EU level political advertising. Member States also supported measures that will enhance access by researchers to more information on political advertising. Member States underlined the existence of regulatory and enforcement gaps when political advertising services are provided across borders.

European Political Parties pointed out that labelling measures that help citizens identify when they are being exposed to a political advertisement will contribute to strengthen European democracy. They were particularly concerned about how the policy implemented by some very large platforms online during the previous elections to the European Parliament negatively affected their activities at EU/cross border level.

• Collection and use of expertise

The Commission has relied on a wide array of expertise for the preparation of this proposal.

Relevant work in the Council (including in the competent working parties) and in the European Parliament (including in the Committees in charge of Constitutional Affairs, Legal Affairs; Civil Liberties, Internal Market and Consumer Protection, Justice and Home Affairs and the Special Committee on Foreign Interference) has provided significant input to this process.

In addition to the OPC, described above, the Commission has engaged in several stakeholders meetings, with questions tailored for each category.

On 18 March 2021, the Commission discussed the initiative with Member Sates’ expert in a dedicated meeting of the Rapid Alert System. Representatives of Member States and of the European Regulators Group for Audiovisual Media Services were present. Member States’ experts were also consulted on 25 March 2021, in the framework of the European Cooperation Network on Elections. Information was also obtained from the input of Member States in previous meetings of this network since 2019, including in the preparation of an extensive mapping of relevant national laws and procedures.

Finally, the study supporting the Impact Assessment integrates a literature review which shows that there is an emerging academic consensus on the need for specific transparency for political advertising and controls on the use of personal data in connection with political advertising (in particular online).

Guidance from international standard setting bodies such as the Council of Europe also call for specific transparency of political advertising, including in particular on sponsor and funding, and where online, on the mechanism for delivery (e.g. algorithms, data).

• Impact Assessment

In line with its “Better Regulation” policy, the Commission conducted an Impact Assessment for this proposal examined by the Commission's Regulatory Scrutiny Board. A meeting with the Regulatory Scrutiny Board was held on 29 September 2021, which was followed by a positive opinion with reservations. The Impact Assessment was further revised to accommodate the reservations of the Regulatory Scrutiny Board.

The Commission examined different policy options to achieve the general objective of the proposal, which is to ensure the proper functioning of the single market by setting out rules for a high level of transparency for political advertising and related services and rules on the use of targeting in the context of the dissemination of political advertising.

1.

Two policy options of different degrees of regulatory intervention were assessed:


·Option 1: Limited measures to promote transparency and to address issues with targeting;

·Option 2: Measures to harmonise transparency and to address issues with targeting. This Option included two sub-options concerning targeting.

According to the Commission's established methodology, each policy option was evaluated against economic, fundamental rights and societal impacts. The preferred option were option 2 and sub option 2 for the use of targeting, as these best meet the general objectives of the intervention and would establish a coherent and proportionate framework for political advertising in the EU.

By clarifying and harmonising the rules on the retention and provision of information in political advertising for the purposes of oversight and accountability, it would remove the key driver of compliance costs in multi-Member State and cross-border service provision. In addition, it would add legal predictability for intermediary services active in several Member States, contributing to the good functioning of the internal market. This would also improve regulatory outcomes, removing the justification for national market segmentation, thereby increasing opportunities for cross-border services to develop. The advantage derived from regulatory fragmentation by providers of political advertising services for online ads compared to offline media would reduce. The impact on SMEs is limited by a tailored obligation on periodic reporting on political advertising and by allowing them to appoint an external person as contact point for interaction with competent national authorities.

The measures on targeting would address the problematic targeting techniques while also providing for its use in a manner which incentivises good practice.

Sub option 2 contemplated a conditional ban on targeting, but it was envisaged that the suboptions could be combined. A non-conditional prohibition on targeting on the basis of special categories of personal data has been deemed to be more effective and has thus been included in this proposal. The prohibition of targeting on the basis of special categories of personal data also counts with the support of stakeholders consulted during the preparation of the Impact assessment.

Tailored restrictions would limit the availability of targeting services in the context of the dissemination of political advertising. This would be outweighed by opportunities for providers of political advertising services resulting from increased trust among citizens and regulators in the technique and from greater legal certainty of compliance in its use in the political context.

Harmonised transparency and specific limits will reduce the scope of problematic targeting tactics such as the inauthentic amplification of certain ads, or those uncovered in the Cambridge Analytica scandal. These measures should enhance trust in the use of political ads, and more generally in the political debate and the integrity of the electoral process. It would contribute to a higher resilience of the EU electoral system to information manipulation and interference.

• Regulatory fitness and simplification

The benefit of harmonising the rules on the transparency around political advertising is notably that it will bring EU-wide legal certainty, remove the incremental compliance costs of delivering a service across borders, and reduce the non-compliance risk. All providers of political advertising services are expected to derive cost efficiencies when offering services through a common framing of political advertising.

SMEs would benefit from the proposed measures as they will be able to offer their services more easily in the internal market. The proposal contains specific derogations for SMEs to reduce their compliance costs.

The proposal contains a common set of rules that will not discriminate between online and off line and address issues resulting from the current situation where existing rules are tailored to off line activities with gaps and loopholes resulting from this. The Regulation will ensure that the requirements to provide high transparency apply to off line and on line means of disseminating political lines on the same way.

• Fundamental rights

All measures envisaged under this proposal have a positive impact on fundamental rights, and are not expected to have significant negative impact on fundamental rights.

Fundamental freedoms and fundamental rights can be restricted only where it is justified by the pursuit of a legitimate public interest and only under the condition that the restriction is proportionate to the objective pursued. The guarantee of transparency, fairness and equal opportunities in political in the electoral process and the fundamental right to be informed in an objective, transparent and pluralistic way constitute an overriding reason of public interest.

This proposal imposes limited restrictions on the freedom of expression and information (Article 11 of the Charter of Fundamental Rights of the European Union), the right to private life (Article 7) and right to the protection of personal data (Article 8). Those restrictions are proportionate and limited to the minimum necessary.

As for freedom of expression, the decision regarding publication and dissemination of political advertisements as such, and their content, remain regulated on the basis of relevant national and EU law. Beyond the requirements for transparency, the initiative does not interfere with the substantive content of political messages. While a limitation of targeting techniques could impact freedom of expression, this impact would be proportionate if limited in scope and balanced by positive impacts on other fundamental rights, including as linked to reducing the possibility of manipulation of the democratic debate and the right to be informed in an objective, transparent and pluralistic way. The enhanced transparency, conditions and restrictions on targeting should benefit the right to data protection and privacy of persons targeted with such advertising. Measures which would identify a natural person as the sponsor of a political advertisement and the amount of money spent on and the value of other benefits received in part or full exchange for an advertisement impact the protection of personal data and have to be proportionate to the policy aim sought: to ensure that individuals engaged in the political debate use political advertising transparently. The impact on these rights is justified by the overall positive effect on democracy and electoral rights.

Where this initiative requires very large online platforms to facilitate data access by interested actors, such measures would not provide for any derogations from the EU data protection acquis. Only relevant data should be made accessible to stakeholders including to conduct research on practices affecting the democratic debate and elections or referendums.

This initiative will support the exercise of electoral rights and will support free and fair elections and a fair democratic debate, by facilitating transparent cross-border political advertising which guaranteeing a high level of protection of rights, including as regards the protection of personal data and ensuring that citizens are able to make informed political choices without manipulation or coercion. Furthermore, the limitations to targeting practices are coherent with, and have a positive impact on electoral rights as protected by international standards.

Finally, this proposal will also support provider of political advertising services in the exercise of their freedom to conduct a business under Article 16 of the Charter.

4. BUDGETARY IMPLICATIONS

No budgetary implications are expected for this initiative.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The Commission will assess the implementation of the initiative following each European Parliamentary election based on specific data collection conducted by a specialised contractor. Within two years after each election to the European Parliament, the Commission should publish a report evaluating the implementation of this Regulation including aspects that go beyond elections to the European Parliament.

• Detailed explanation of the specific provisions of the proposal (check cross references)

Chapter I sets out the general provisions, including the subject matter and scope (Article 1), the definitions of key terms used in the Regulation (Article 2) and the level of harmonisation of such measures (Article 3).

Chapter II contains provisions on the transparency obligations applicable to paid political advertising. It establishes measures applicable to all providers of political advertising services involved in the preparation, placement, promotion, publication or dissemination of political advertising. In particular, it provides for transparency in political advertising (Article 4), an obligation to identify political advertisements (Article 5), and an obligation to keep records and transmit information to advertising publishers (Article 6).

Furthermore, this Chapter also establishes obligations applicable only to advertising publishers, additional to those in Articles 4, 5 and 6. Advertising publishers shall include in each advertisement a clear statement to the effect that it is of a political nature, indicate the name of the sponsor, and make available information to enable the wider context of the political advertisement and its aims to be understood (Article 7). Advertising publishers shall publish annually information on the amounts or the value of other benefits received in part or full exchange for the services they have provided connected to political advertisements (Article 8). They shall put in place user-friendly mechanisms to enable citizens to notify them of advertisements that do not comply with the obligations established in this Regulation (Article 9).

Providers of political advertising services shall transmit the relevant information to competent authorities (Article 10) and to other interested entities (Article 11).

Chapter III regulates the use of targeting or amplification techniques involving the processing of personal data for political advertising purposes. When sensitive data are at stake, a prohibition applies accompanied by specific exemptions. Further, controllers making use of these techniques for political advertising purposes shall adopt and implement an internal policy, keep records, and provide information to allow individuals to understand the logic involved and main parameters of the targeting used, and the involvement of third-party data and additional analytical techniques (Article 12). Article 12 provides further requirements for advertising publishers. Controllers within the scope of Article 13 shall take the appropriate measures to be able to transmit the information to interested entities (Article 13).

Chapter IV lays down the provisions concerning the supervision and enforcement of this Regulation. It lays down an obligation for providers of political advertising services not established in the Union to appoint a legal representative in one of the Member States where they provide their services (Article 14); it lays down which authorities are entrusted with the supervision and enforcement of specific the measures set out in this Regulation; it requests Member States to ensure cooperation among the relevant competent authorities; it asks for the designation of contact points for the purposes of this Regulation and mandates Member States to take appropriate measures to ensure the exchange of information among them (Article 15). Member States are to lay down rules on sanctions applicable to breaches of the obligations established in this Regulation (Article 16). This Chapter also establishes an obligation for Member States to publish the dates of national electoral periods in an easily accessible place (Article 17).

Chapter V provides further final provisions, such as the evaluation and review clause (Article 18) and the possibility to adopt delegated acts (Article 19). Finally, the remaining provision in this Chapter is the specification of the entry into force and date of application of the Regulation (Article 20).