Advertising costs in ad enforcement are calculated

Xie Xuyang

       The application of Article 55, Article 57 and Article 58 of the Advertising Law in the enforcement of advertising is related to the calculation of advertising expenses, and Articles 55 and 58 of the Advertising Law are set as the pre-position penalty according to the advertising cost multiplies, and the amount of fines set directly in accordance with the law can only be imposed if the advertising cost cannot be calculated or is significantly lower;Article 57 of the Advertising Law, although the amount of fines set, but for advertising operators, advertising publishers, there is a penalty of confiscation of advertising costs, but also must check the calculation of advertising costs.And the application of the legal liability provisions of these three Advertising Law should be the most frequently used provisions in the investigation and prosecution of advertising violations, so how to correctly identify and calculate advertising costs has become the basic work of advertising enforcement.

       With regard to the calculation of advertising expenses, during the implementation of the Advertising Law of 1994, the State Administration for Industry and Commerce issued the Notice on 7 July 1995 on how to confirm the amount of advertising expenses in cases of advertising violations (Industrial and Commercial Guang word (1995) No. 168), which stipulates that:

       1. For advertisers, the advertising fee is confirmed in the full amount of the advertising fee.If additional services are provided for the accompanying ad, the service charge shall be calculated in combination with the advertising posting fee.

       2. For advertising operators, advertising fees to advertising agency fees, advertising design, production costs of the full amount of confirmation.If additional services are provided for the accompanying ad, the service charge shall be calculated in combination with the advertising agency, design and production fee.

       3. For advertisers, advertising expenses are calculated according to the total amount of advertising design, production, agency, publishing and other expenses they bear.

       4. If an advertising operator or advertising publisher has not yet received advertising fees for illegal advertisements that have been published, the advertising expenses shall be calculated in accordance with the actual situation of the advertising, and their standards shall be confirmed by the standards stipulated in the written contract signed between the advertiser and the advertising operator and the advertising publisher;If no written contract is signed, or if the contract does not reflect the amount of the charge, the advertising operator or the advertising publisher shall confirm the advertising fee standard for filing and publishing with the advertising supervision and administration organ;If it is not filed with the advertising supervision and administration organ, it shall be confirmed against the fee standard of similar advertisements of the party in violation of the law.

       5.In the case of illegal advertising investigation and punishment, if the parties violate the provisions of the Advertising Law and do not conclude a written contract between the parties and do not file the charging standards with the advertising supervision and administration organ, they shall be severely punished according to law.

       Although this normative document was invalidated on May 31, 2016 by the General Administration of Industry and Commerce on the announcement of the results of the clean-up of policy documents (Business Office Word (2016) No. 98), but from 1995 to the present, the industrial and commercial organs have been in accordance with the spirit of this document to identify and calculate advertising costs, and in fact advertisers, advertising operators, advertising publishers advertising costs are indeed as the document expressed several cost composition, but at that time has not yet been regulated advertising, Endorsement fees are not explicitly included in the advertiser's ad cost calculation.On December 28, 2015, the State Administration for Industry and Commerce, in response to the Sichuan Provincial Bureau of Industry and Commerce's "Response Opinion on how to determine the amount of advertising expenses of advertising operators in the case of investigation and prosecution of advertising violations" (Industry and Commerce, No. 221), clearly states that "for advertising operators, advertising expenses are the full amount that they should charge for engaging in advertising activities, and when investigating and prosecuting advertising violations, the responsible advertising operators shall be identified with the advertising agency fees, advertising design and production fees involved in the case," In calculating the amount of advertising expenses of advertising operators, they should not deduct the advertising publishing fees paid to the media and other expenses.”

The scope of the ad expense determination

       Therefore, in the advertising enforcement, the scope of the advertising expenses of each advertising campaign should be determined as follows:

       1. For ad publishers, the cost of the ad should be paid in full for the advertising feeconfirmation;

       2. For advertising operators, advertising expenses are the total amount they should be charged for engaging in advertising design, production, agency and other business activities, and when calculating the amount of advertising expenses of advertising operators, they should not deduct the advertising publishing fees paid to the media;

       3. For advertisers, the advertising expenses shall be calculated according to the total amount of advertising design, production, agency, publishing, hiring advertising spokesman and so on;

       4. If the advertising fee is not generated by giving away the advertising layout or advertising time, the law enforcement practice may refer to the charging standards and charging methods published by the advertising operators and advertising publishers in accordance with the law, and even the actual situation of the advertising media's similar advertising charges shall be determined.                                                                                           

Advertising costs cannot be calculated or are significantly lower

       Articles 55 and 58 of the Advertising Law stipulate that when advertising costs cannot be calculated or are significantly low, the amount of fines set by law may be discretionary in accordance with the law.Objectively speaking, all advertising design, production, agency, publishing, endorsement are cost-generated, in reality is sometimes "difficult to calculate", but "difficult to calculate" does not mean "uncalculable", strictly speaking, "difficult to calculate" is mainly the responsibility of advertising regulatory agencies, is evidence collection, proof, calculation methods."Cannot calculate" only the responsibility of the parties, such as the parties do not submit the evidence of advertising expenses in accordance with the law, or provide evidence of advertising expenses false, concealment, destruction of evidence of advertising costs, therefore, usually should be in the parties refused to provide proof of advertising costs, provide false proof of advertising costs, or conceal, destroy evidence of advertising costs, resulting in advertising costs can not be ascension, will appear incalculable circumstances.It is determined that the advertising expenses of the parties cannot be calculated, and the corresponding evidence must be supported in order to be established.

       Advertisers set up their own websites from the media to publish illegal advertising, the General Administration of Industry and Commerce Advertising Division interpretation that in this case, advertising costs are difficult to calculate, should be based on advertising costs can not be calculated.In essence, there are costs in this case, but advertisers design and produce their own release, the cost is very limited, advertising costs are obviously very low, when the actual cost of advertising according to the cost incurred by advertisers to implement administrative penalties, obviously not enough to punish their advertising violations, so it is also included in the advertising costs can not be calculated.In the same way, commodity packaging advertising should also be the same, although commodity packaging is price, but commodity packaging advertising is often only part of the information on the packaging of goods in line with the characteristics of commercial advertising, and the cost of goods packaging paid for the entire commodity packaging, which conforms to the characteristics of commercial advertising packaging information can not be separately calculated costs.

       Advertising costs are obviously low, usually refers to the parties to account for the advertising costs significantly lower than the normal price, or significantly lower than the normal price of the same industry, and there is no reasonable reason.Article 19 of the Interpretation of the Supreme People's Court on the Application of Certain Questions of the Contract Law of the People's Republic of China (2) stipulates that "the people's court shall, in the light of the judgment of the general operator of the transaction, make reference to the price department guide price or the market transaction price at the time of the transaction, taking into account other relevant factors."""If the transfer price does not reach the guide price of the place of trading or 70 percent of the market transaction price, it can generally be regarded as a significantly unreasonable low price;"This judicial interpretation can be used as a reference for determining "significantly lower advertising costs" in advertising enforcement.

Recommendations for calculating advertising costs

       The calculation of advertising expenses in ad enforcement can be based on the advertising usage and payment of advertising expenses in the following ways:

       1. If the advertisement has been published and the advertising expenses have actually been paid, the calculation shall be calculated according to the actual advertising expenses paid;

      2. Advertising has been published, advertising costs have not been paid at all, in accordance with the contract agreement, the price of the magazine, published advertising fee price calculation advertising costs, now common traditional media actually perform the advertising fee price is lower than the published price of the publication, if you can make a reasonable explanation, and provide the corresponding evidence, should be accepted;

      3. If the advertising expenses have been partially paid, and the advertising publishing has exceeded the prepaid advertising expenses at the time of investigation, the advertising expenses shall be calculated in accordance with the actual number of advertisements published and the advertising publishing fees stipulated in the contract;

      4. If the advertising expenses have been partially paid, and the amount of advertising published at the time of investigation and punishment does not reach the amount of the prepaid advertising expenses, the advertising expenses shall be determined according to the actual amount paid, but the penalties shall be lightly reduced when the fine is decided, on the grounds that:

       1, after the illegal investigation of advertising, illegal advertising will usually stop publishing, but if the actual number of ads published to calculate the cost of advertising, it will lead to the actual amount of advertising expenses paid for the publication of illegal advertising because of the investigation and the need to return the remaining amount of advertising costs to advertisers, which fundamentally violates the "no one can benefit from illegal acts" legal proverb.

       2, the criminal law provides that for the attempted offender, can be compared to the usual crime from the light or reduced punishment.Advertising violations are administrative violations, which are less harmful to society than criminal offences, weightlifting is light, since the attempt to commit a crime can be compared with the light, reduced punishment, administrative violations are more so.In this case, although the advertising expenses are based on the spirit that "no one shall benefit from illegal acts" and in accordance with the actual amount of advertising expenses should be published advertising has not been completed, that is, some administrative violations have not actually been implemented, should be compared with the criminal law for the principle of punishment for attempted offenders to be light, reduced punishment.

       V. The same illegal advertisement is published in the outdoor, traditional media, Internet and self-media respectively, outdoor, traditional media, Internet advertising expenses to pay for computable advertising costs, since the media do not have advertising expenses to pay can not calculate advertising costs.When deciding on the amount of fines, simply according to the media advertising costs can not calculate 200,000 penalties, or according to the outdoor, traditional media, the Internet advertising costs multiplied penalties, there may be the problem of punishment is too light and heavy, then should be in accordance with the practice and theoretical circles jointly recognized the principle of selecting a heavy responsibility, comprehensive consideration of advertising costs can calculate part of the case and can not calculate part of the circumstances, and refer to the Supreme People's Court "the legal person of god" to determine the amount of the penalty.