Self-regulation is the way to go

Who knows better what works, and what does not work when it comes to industry-specific topics than the industry itself? With strategic planning and adequate business cooperation, it is possible to avoid Government interference and establish self-regulatory tools in its place. There are several success stories implementing this strategy already in place in Lithuania.

Food industry pledge

Back in 2017 there was a strong political will to introduce a sugar tax in Lithuania. The idea had been a popular one for some time, both in Europe and in South America. The reasoning behind the tax was to encourage food reformulation – incentivise food and beverage companies to reduce the sugar content of their products. Therefore, there was a window of opportunity to suggest a voluntary pledge instead of mandatory regulation.

As of today, there are over 20 local and international companies which have made pledges on food improvement which have been signed with the Ministry of Health. There is already a wide range of commitments in place. The companies reduce their portion sizes, introduce new healthier options, and cut the amount of sugar, salt, or fat in their regular products. This solution has allowed us to prevent the introduction of a new tax, while also changing the food we consume for the better.

Energy Drink Code

In 2013 the Lithuanian Parliament approved several energy drink related restrictions. One of these restrictions was the obligation to use the warning message “Not to be consumed with alcoholic beverages” on all energy drink advertisements. However, at that time, the law on advertising did not oblige any institution to lay down the precise requirements for the usage of this warning. Instead, the largest beverage companies took this opportunity to introduce a self-regulatory Code on Energy Drink Advertising and Marketing. This regulatory code was signed in 2014.

In 2018 the Law on Advertising was amended by obliging the Government to introduce the rules on the presentation of a warning sign. At first, the Ministry responsible intended to copy the provisions which already applied to pharmaceutical advertising rules. However, the industry’s Code worked as a great argument against this idea. The final Government rules mostly repeated the provisions of that Code. The pro-active steps taken 4 years earlier meant that the energy drink industry did not have to change the manner in which they advertise.

Vilnius e-scooter agreement

In early 2019 the e-scooter rental industry was booming worldwide. With this growth in popularity a whole raft of e-scooter parking and safety issues became a growing and urgent issue.

At that time, in the Lithuanian capital Vilnius, there were 5 micro-mobility companies harbouring preliminary plans to launch in spring. Fearing that the country, or the city, could introduce some unmeasured market restrictions there was an idea to sign a memorandum of cooperation. Both the industry, and the municipality were in favour and the memorandum was signed in February 2019. This agreement remains as a useful benchmark to this day. At least in the city of Vilnius, the e-scooter industry has an important say regarding any discussions on its further regulation.  

Ridesharing services appeared on the Lithuanian market in 2015; at that time, the service operated in a grey-zone worldwide. Lithuania’s State Tax Inspectorate was also highly skeptical of the newcomer to the market.

However, the authority’s attitude shifted significantly as the company suggested signing a memorandum of understanding (MoU), and thereby laying the groundwork for cooperation. It foresaw voluntary data sharing of the drivers’ income, directly with the inspectorate, and generated via the ridesharing platform. The purpose of this strategy was to openly facilitate the fulfillment of their tax compliance, while ensuring a level of transparency previously unseen in the passenger transportation sector.

Ridesharing memorandum

Ridesharing services appeared on the Lithuanian market in 2015; at that time, the service operated in a grey-zone worldwide. Lithuania’s State Tax Inspectorate was also highly skeptical of the newcomer to the market.

However, the authority’s attitude shifted significantly as the company suggested signing a memorandum of understanding (MoU), and thereby laying the groundwork for cooperation. It foresaw voluntary data sharing of the drivers’ income, directly with the inspectorate, and generated via the ridesharing platform. The purpose of this strategy was to openly facilitate the fulfillment of their tax compliance, while ensuring a level of transparency previously unseen in the passenger transportation sector.

The MoU was signed in 2016 making Lithuania the first country worldwide whose tax administrator had such an agreement with a ridesharing company.

What is next?

The revised Audiovisual Media Services Directive encourages self-regulatory measures limiting the exposure of children to the advertising of foods and beverages that do not fit general nutritional guidelines. In particular; foods and beverages that are high in salt, sugars, fat, saturated fats, or trans-fatty acids. Even though the priority is to have self-regulatory codes in place, the Member States are also left with the possibility of introducing a set of compulsory rules – in case the self-regulatory approach fails. 

This situation creates an urgent need for a joint-effort from media companies, marketing agencies, and food producers. By taking the EU pledge on the subject of marketing to children as an example, there is a window of opportunity to approve a similar local code of conduct. This would become a highly effective tool, by creating a unified advertising environment for all, while at the same time avoiding unnecessary regulatory debates.