REGULATORY SCRUTINY BOARD OPINION Proposal for a Regulation of the European Parliament and of the Council on the transparency and targeting of political advertising

EUROPEAN COMMISSION
Brussels, 1.10.2021
SEC(2021) 575 final
REGULATORY SCRUTINY BOARD OPINION
Proposal for a Regulation of the European Parliament and of the
Council on the transparency and targeting of political advertising
{COM(2021) 731}
{SWD(2021) 355 }
{SWD(2021) 356 }
Offentligt
KOM (2021) 0731 - SEK-dokument
Europaudvalget 2021
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This opinion concerns a draft impact assessment which may differ from the final version.
Commission européenne, B-1049 Bruxelles - Belgium. Office: BERL 08/010. E-mail: regulatory-scrutiny-board@ec.europa.eu
EUROPEAN COMMISSION
Regulatory Scrutiny Board
Brussels,
RSB
Opinion
Title: Impact assessment / Transparency of political advertising
Overall opinion: POSITIVE WITH RESERVATIONS
(A) Policy context
This initiative concerns advertisements placed by or on behalf of political actors. Political
advertisements are used in political campaigns. More generally, they shape opinion and
contribute to the political debate. The initiative aims to increase transparency of political
advertisements. It aims to support the functioning of the internal market for the provision
of advertising services.
The Transparency of political advertising initiative was announced in the 2020 European
Democracy Action Plan. It has clear links with the General Data Protection Regulation, the
Digital Services Act and the Digital Markets Act, as political ads are often disseminated
through digital platforms.
(B) Summary of findings
The Board notes the useful additional information provided in advance of the
meeting and commitments to make changes to the report.
However, the report still contains significant shortcomings. The Board gives a
positive opinion with reservations because it expects the DG to rectify the following
aspects:
(1) The report does not sufficiently present the magnitude and evidence of the
internal market and transparency problems. It does not clearly explain the
specific problem of online targeting in the political advertisements market.
(2) The report does not clearly explain the link between the legal basis and the scope
of this initiative. It does not clearly explain the legislative gap that it aims to fill.
(3) The report does not sufficiently quantify costs and benefits and highlight data
limitations and assumptions. It is not clear on the impacts on SMEs. It does not
sufficiently justify how the initiative is proportionate.
(C) What to improve
Ref. Ares(2021)5978547 - 01/10/2021
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(1) The report should provide a clear understanding of exactly what problem this initiative
aims to address. It should objectively define and analyse the problem rather than focussing
on political commitments. It should provide in-depth analysis of the context relating to
transparency and online targeting. It should better explain how and why targeting in this
area is a problem (and not in others), outline the issues on targeting currently not regulated,
and illustrate the differences between offline and online targeting. The problem section
should describe better the exact nature, scope and scale of the internal market problems. It
should demonstrate that this initiative tackles the most prominent obstacles to the internal
market. It should also explain better how the identified problems fit in the context of the
broader ads market and its regulation.
(2) The report should better explain how transparency and targeting issues are linked with
the internal market legal basis. In addition, it needs to ensure the coherence between this
initiative and current and proposed legislation. The report should clarify what legislative
gap it aims to cover, especially in relation to the proposed Digital Services Act and the
revision of the Regulation on the Statute and Funding of European Political Parties and
Foundations (EUPP/F). It should explain how its focus on transparency and accountability
is compatible with the proposed extension of membership and funding of EUPP/F to non-
EU states that are identified as hostile actors.
(3) The report should strengthen the presentation of the options and provide a clear picture
of the possible combinations. In particular, it should justify the specific selection of
transparency measures, such as the information requirements and targeting measures. The
options should include possible mitigation measures for SMEs. The report should not
discard options because of earlier political orientations in the Democracy Action Plan.
(4) The report should quantify further the costs and benefits of the initiative to be able to
assess its overall proportionality and net economic impact. When doing this, it should
discuss relevant data limitations and assumptions and, in the case of lack of quantification,
better justify the conclusion that the benefits will outweigh the costs. The analysis should
pay due attention to costs for businesses, in particular SMEs. The report should also clearly
explain the trade-off between the exemptions for SMEs and the effectiveness of the
transparency measures, given the role played by SMEs like Cambridge Analytica.
(5) As the initiative only addresses selected barriers to the single market, the report should
assess the impacts on the creation of a single market in a more nuanced way. It should
clarify to what extent new obligations might deter actors from entering the political ads
market.
(6) The report should present, in a balanced and nuanced way, the views of different
stakeholder groups, including the political parties on the different problems and measures.
The Board notes the estimated costs and benefits of the preferred option in this initiative,
as summarised in the attached quantification tables.
Some more technical comments have been sent directly to the author DG.
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(D) Conclusion
The DG must revise the report in accordance with the Board’s findings before
launching the interservice consultation.
If there are any changes in the choice or design of the preferred option in the final
version of the report, the DG may need to further adjust the attached quantification
tables to reflect this.
Full title Transparency of political advertising - Proposal for an initiative
on greater transparency in sponsored political content (‘political
advertising’), and other supporting measures
Reference number PLAN/2020/8647
Submitted to RSB on 2 September 2021
Date of RSB meeting 29 September 2021
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ANNEX: Quantification tables extracted from the draft impact assessment report
The following tables contain information on the costs and benefits of the initiative on
which the Board has given its opinion, as presented above.
If the draft report has been revised in line with the Board’s recommendations, the content
of these tables may be different from those in the final version of the impact assessment
report, as published by the Commission.
I. Overview of Benefits (total for all provisions) – Preferred Option
Description Amount Comments
Direct benefits
Reduced legal fragmentation costs Removal of barriers and obstacles
Increased legal certainty Cost reductions of around 1 FTE per
economic actor per cross-border
campaign.
Applies to agencies and ad
publishers when providing
political ads across
borders or in more than
one Member State.
More transparency in political ads Increased accountability and
improved oversight. Reduced
opportunities to mislead citizens
Improved trust in political ads
More uniform and effective
monitoring and enforcement of
regulation of political ads
Simplification of regulatory
oversight
Reduced circumvention of rules and
reduced non-regulated political ads
in circulation
Reduced impact on fundamental rights
and democratic processes of the use of
targeting in political ads
Reduced opportunities to mislead
citizens
Improved trust in political ads
Dissuades misuse of targeting and of
personal data in targeting
Increased transparency in the use of
political ads by national political
parties
Political parties have greater
certainty and clarity about their use
of political ads
Improved opportunities for
multinational campaigning on
European issues
Reduction of incentives for
restrictive private sector policies
Better regulation of campaigning
organised by European political parties
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Indirect benefits
Increased opportunities for cross-
border political ads services
Reduced opportunities for interference
in elections
Improved protection of democratic
principles and more resilient
democratic processes
II. Overview of costs – Preferred option
Citizens/Consumers Businesses Administrations
One-off Recurrent One-off Recurrent One-off Recurrent
Common
framing of
political ads
Direct
costs
Adaptation
of ad
purchasing
policies for
political
actors
Training and
process
adjustment to
adapt to
common
framing
Training
and
capacity
building
Indirect
costs
Passive
obligation to
retain
information
about
political ads
Direct
costs
Training and
process
adjustment to
adapt to
common
framing
Indirect
costs
Obligation to
provide
adequate
information
Direct
costs
Data
handling and
process
adaptation
Variable
costs of data
acquisition
and
publication.
Repository
adaptation
costs
Indirect
costs
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Obligation to
cooperate
with
competent
authorities
Direct
costs
Provision
against
information
requests, and
upstream
where not
automated
Costs would
vary
according to
the number
of requests –
potentially
0.5-1 FTE
per political
ad campaign.
Indirect
costs
Conditional
limits to
targeting Direct
costs
Training and
process
adaptation.
GDPR
certification
costs
Indirect
costs
Powers for
national
authorities to
request
information
Direct
costs
Indirect
costs
Framework
to enable
exchange of
information
Direct
costs
Developing
necessary
APIs and
other
technical
solutions
Indirect
costs
Further
support for
capacity
building
Direct
costs
Indirect
costs
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Elaborated
rules for
EUPPS
Direct
costs
Data
handling
and
process
adaptation
Additional
audit
requirement
s estimated
at around
EUR 75,000
to 150,000
annually
Training
for EP
staff to
oversee
additional
audit
Indirect
costs
Empowering
the Authority
for EUPPS
Direct
costs
1FTE per
party for ~6
months
campaign
period to
make
disclosures
Staff
training
Disclosur
e platform
design/pro
curement
1FTE
additional
permanent
staff.
Monitoring
compliance
transparenc
y and
targeting
obligations
Indirect
costs
Recommenda
tions to
Member
States for
their national
political
parties
Direct
costs
Indirect
costs
Electronically signed on 01/10/2021 11:13 (UTC+02) in accordance with article 11 of Commission Decision C(2020) 4482