1. Post

   Legal Technology Improves Efficiency – But Not by Itself

   These expectations usually lead to firms not spending enough effort on integrating legal tech tools into their existing processes. As a result, lawyers often find their traditional working methods preferable and stick to them. Dumping money into the latest tools and expecting them to do the job right away is hardly a recipe for success. Instead, the firms that manage to effectively incorporate new solutions into their existing processes will have a huge advantage in the future. Properly Trained AI Allows Lawyers to Focus on the Essential AI can enable law firms to work at less cost and higher quality, but only if the technology is implemented efficiently into existing workflows. Most legal problems are complex and involve hidden risks that require comprehensive legal expertise to detect. Machine-learning algorithms have no legal expertise — they only observe patterns and regularities in data. Therefore, lawyers need to work alongside AI and develop these tools continuously, rather than relying on them straight out of the box. For instance, before algorithms can detect relevant information and raise red flags in due diligence reviews, lawyers have to identify the relevant information and train the algorithm to detect this information. When algorithms are given enough examples of red flags – say, certain types of contractual clauses – they start flagging such information automatically in future reviews. Lawyers no longer have to spend time finding the information in the due diligence materials, but can focus on how the clauses detected by the AI tool affect the transaction. Document Automation Saves Time and Helps Avoid Errors As most businesses, legal services involve manual tasks that can be removed or at least reduced by technology. For instance, when drafting documents, lawyers may spend hours modifying old templates and writing new contracts from scratch. Automating contract-drafting takes care of these steps, allowing lawyers to spend more time on analytical tasks. In document automation, various versions of a given document type – for instance, a share purchase agreement – are stored in a system, enabling the lawyers to create the template they need just by combining different choices in a user interface. Based on the choices, the system generates a valid contract including all the required elements. For instance, the automated share purchase agreement might contain different options for price mechanisms, provisions and other key clauses, and be available in several languages. Automation not only improves efficiency, but also minimises the risk of human error when contracts need to be delivered on a tight schedule. However, it serves this purpose only when any contract version acquired from the system is legally accurate. Both legal and technical issues must be taken into account, which requires cooperation between people with different skillsets. At Castrén & Snellman, document automation is based on close collaboration between our lawyers, IT department and Knowledge Management. Moreover, our firm employs people with diverse backgrounds, for example in both law and computer science, who focus mainly on legal tech, such as document automation and training algorithms. Meet Signe, the Accessible Legal Tech Solution After putting hours of legal and technical work in automating our document templates, we wanted to bring high-quality document automation within the reach of our clients. This is why we launched Signe . Signe is a platform where clients can log in and use their own automated contracts and documents through a simple user interface. It offers a way for in-house teams to adopt legal technology quickly without having to make large investments or spend resources on implementing new software. When approached realistically and strategically, legal technology goes from being pure hype to a tool enabling law firms to provide legal services faster, more effectively and at less cost.  Written by Linda Björkenheim, Legal Tech Trainee

   Published: 19.8.2019

2. Post

   Competition Rules for Trade Associations to Become Stricter – Are You Aware of the Association Memberships in Your Company?

   Taking competition law into consideration will become increasingly important in the future. Competition law concerning trade associations and their member companies will become stricter, as the ECN+ Directive, which entered into force at the beginning of this year, increases responsibilities and toughens sanctions. Companies must be aware of the associations in which their employees are involved and ensure that they know how to act right. In addition, companies must ensure that competition rules are complied with in all activity of trade associations. The ECN+ Directive Leads to Stricter Consequences The European Union enhances the powers of national competition authorities with the ECN+ Directive, which entered into force at the beginning of this year. The Member States must implement the Directive on 4 February 2021 at the latest. The Directive will harmonise the powers of competition authorities in, among other things, the investigation of competition restrictions and the imposition of sanctions. Finland has prepared for this change in the Government Programme: Competition and consumer authorities will be given more powers and resources, and the sanctions available to them will be increased. The Ministry of Economic Affairs and Employment of Finland will establish a committee to make amendments to the Competition Act. Consequences for breaches will become more severe in two ways: The euro amounts of the fines and the risks of the member companies may increase hugely. A simple example illustrates this. The turnover of a trade association is EUR 2 million, and it consists mainly of membership fees and extraordinary income. The association has 20 members the accumulated turnover of which is EUR 500 million. The board members are representatives from four different companies one of which is an international listed company and three others are small and medium-sized enterprises. The managing director of the trade association drafts a notice that states that salaries and energy costs will increase in the autumn and advises actors in the field to adjust their pricing in order to ensure their profitability. This constitutes a forbidden price recommendation and the Finnish Competition and Consumer Authority proposes to the Market Court that an appropriate penalty payment be imposed on the association. Pursuant to the current Competition Act, the penalty payment imposed on the association can be no higher than EUR 200,000. As a result of the reform, the penalty payment can be as much as EUR 50 million. The risk that the listed company ends up paying the fine is apparent. The change gives rise to challenges particularly in associations where the members  are variable in terms of its size and competition law expertise. In some cases, a company is considered to be involved in a competition infringement solely on the grounds that it has been informed of a decision restricting the competition of another organ of the association, and it has not publicly distanced itself from the decision. Companies’ requirement to act diligently will become stricter to an entirely new level, as each member must ensure that all the organs of the association comply with law, irrespective of whether the representatives of the company belongs to them or not. Awareness of the Association Memberships Reduces Risks

   Published: 15.8.2019

3. Post

   The Idea of Finland

   Finland’s new government has taken the position that politics must provide people security and hope for a better tomorrow in a rapidly changing world. Politics and the public sector are important building blocks of a good world, but they are not the only ones. I persistently believe in the ability of individuals, communities and companies to face up to and solve problems. The solution can be found in every one of us—including as consumers. The state’s job is to provide a dynamic and fair legal environment to support this development.  I have been happy to see how the Finnish business community has tackled the challenges of the day—whether in the form of biofuels, hybrid engines for cargo ships or green bonds. This change was not dictated by legislation or regulation, but had its start in companies and investors themselves seeing that reform is inevitable and also creates business opportunities. We have also re-examined our own societal contributions at Castrén & Snellman. Sustainable and responsible business practices, such as caring for our employees and our environment, form one of the pillars of our firm.  Another pillar concerns our role as a corporate citizen. As a member of the Finnish Bar Association, we contribute to the rule of law and good legislation and engage in pro bono work in projects that benefit society as a whole. Our third pillar—where our impact is the greatest—involves our clients: we help our clients meet the requirements of corporate responsibility in their businesses and to renew themselves sustainably. This is something we are focusing on more and more in all of the advice we provide. Finland cannot solve global problems alone, but we can blaze a trail and be a responsible example for others. Disagreements are acceptable and to be expected, but we do need to find a shared way forward and put our trust both in ourselves and in each another. We need education, innovation, risk-taking, an international mind-set and, above all, hard work to ensure that Finland's success story continues. Maybe that could be the idea of Finland.

   Published: 12.6.2019

4. Post

   Is Procurement Law Broken?

   As an adviser to bidders, we regularly run into situations where the contracting entity is trying, for example, to push the risk of demand entirely onto the bidders. Bidders are expected to provide fixed prices despite the fact that the contracting entity refuses to commit to fixed volumes. The conditions of the request for bids often don’t allow for any flexibility in the fixed price if the volumes or standards change. The problem here is not with procurement law, but with contracting entities. Public procurements are often take-it-or-leave-it situations for bidders—you either bid on the contracting entity’s terms or not at all. Success can often prove elusive if the contracting entity is looking only to secure its own position and pushes the risks onto the bidders. At the same time, we are seeing a drive for procurement to have more strategic impact. Low-carbon construction, prevention of social marginalisation, higher employment rates and other kinds of outcomes-based procurement projects have found their way onto the wish list, and all of this is already possible  under current procurement legislation. Contracting entities still have a great deal of room for improvement, though the KEINO Competence Centre  is doing good work on this front. Procurement legislation is a good tool, provided you know how to use it. In order to inject some much-needed competition into tendering, we need more dialogue between contracting entities and bidders. Normal agreements always seek to create a win-win situation for the parties. Why would public contracts be any different?

   Published: 30.4.2019

5. Post

   Could We Interest You in Some Results?

   Social impact is relatively straightforward to implement in procurement. Part of the price of the service can be tied to results and the reaching of targets. In contracts with several service providers, an option period can be reserved for the service provider that had the best results. The energy efficiency of public buildings can be improved, and CO2 emissions indirectly reduced, through ESCO projects, in which the investment is financed using the savings brought by energy efficiency. In school construction projects carried out using the PPP model, the contractor can be paid only for the days when the school buildings are fit for use. In the employment service business, agencies can be paid a part of their fees based on how well the job-seekers within the scope of the service find employment. All of these models are already in use. Impact Investing Gaining Ground Social impact considerations have been taken the furthest in impact investing projects where private investors bear the financial risk and the public sector pays for the results. This model originates in the UK, which has a much longer history of impact financing and social impact bonds (SIBs). The Finnish Innovation Fund Sitra has had a major role in developing impact investment models for Finland’s needs. The are a number of models and structures that can be applied to impact investing. The projects that have been implemented in Finland to date have followed the following model: the contracting entity or central purchasing body puts out the role of project fund manager to tender as a public procurement. In the tender process between the project fund managers, the service providers are subcontractors to the managers. The project fund manager establishes a fund and procures investors for it. The fund pays the service providers for the services that they provide to the end customers. Meters are agreed in advance for measuring the results, and if the targets are met and society saves money, the investors receive part of the savings as reasonable profit. The impact investing model works best in projects where early intervention can prevent problems. This is the underlying intent in, for example, a recent SIB project for the prevention of marginalisation of children and youths. Bringing at-risk pre-schoolers into the scope of preventative services can significantly reduce the need for child welfare services later on. Fewer children are taken into custody, the future prospects for these children can be significantly improved and society as a whole can save a great deal. Private investors are able to make an impact, and if the project succeeds, a reasonable profit. In Finland, the impact investing model is currently being used to promote employment among immigrants and the long-term unemployed. There are also projects in the preparatory stages to prevent type 2 diabetes and maintain the ability of senior citizens to function as well as an environmental impact investment project. In international debate, the SIB model is seen as a major opportunity to promote the UN’s sustainable development goals using private financing. From Careful Preparation to Results and Benefits In order to succeed, impact investing projects need careful preparation and a great deal of background information on the social issue in question, the costs it causes and feasible models for addressing it. The preparation phase requires expertise from a wide range of fields and careful design of the basis for payment and the meters for success. When preparing the competitive tender process, it is vital to ensure that the model is in compliance with the Procurement Act. It is well worth consulting experts and service providers in the early stages of planning. Managing the stack of agreements relating to service production and investments also requires its own experts. Though these kinds of projects come with fairly large transaction costs, at best they can achieve major results and savings and lead to a genuine win-win situation for everyone involved. 

   Published: 23.4.2019

6. Post

   Sense Prevails in Virtual Currency Taxation

   The Supreme Administrative Court’s decision overturned a decision of the Central Tax Board in which the profit from the divestment of virtual currency was deemed to be other capital gains. To date, the Finnish Tax Administration has treated virtual currencies in a variety of different ways, so this Supreme Administrative Court Decision brings consistency and puts tax treatment on a better course. Previous Tax Treatment of Virtual Currency Distorted Current legislation is silent on virtual currencies and the taxation thereof, so many unanswered questions still remain. The Finnish Tax Administration and the Helsinki Administrative Court have issued guidelines on the taxation of virtual currencies, but they are partially contradictory and unclear. The Finnish Tax Administration’s guidelines are not binding, but they do guide taxation in practice. Based on the Finnish Tax Administration’s guidelines, virtual currencies are not considered either cash or securities in taxation. In its overturned decision, the Central Tax Board also deemed units of virtual currencies to be payment instruments similar to fungibles. The Central Tax Board held that exchanging virtual currencies for euros, dollars or other official currencies is not a divestment of assets as referred to in section 45(1) of the Income Tax Act, but the increase in value formed in the exchange would be deemed an accrual of assets in the form of other capital gains. A second nuisance relating to the taxation of virtual currencies has been that losses have not been deductible in taxation. As early as in 2013, the Finnish Tax Administration issued guidelines on the taxation of virtual currencies in which it stated that the principles applicable to CFDs would be applicable to the deduction of losses incurred from virtual currencies. This meant that such losses would not be deductible from personal income sources. The Finnish Tax Administration has kept to this position in later guidelines. The Central Tax Board’s decision also indicated that losses were not deductible, as the tax provisions concerning capital gains were not applied to capital gains from virtual currencies. However, taxation should be balanced. In a symmetrical tax system, it is natural that taxable income is mirrored by deductible losses. What Changed? According to the Supreme Administrative Court’s reasoning, virtual currencies are not official currencies, but they do have a monetary value. Virtual currency is an asset that can be deemed taxable under the Capital Tax Act. Thus, virtual currency can be an asset as referred to in the Income Tax Act, particularly given that the Income Tax Act does not include its own definition of assets. In other words, the Supreme Administrative Court took the position that profit from the divestment of virtual currencies are not deemed, for example, profit from exchange rates or other running income from capital in accordance with the Income Tax Act. This means that the Income Tax Act’s provisions on calculating capital gains can now be applied to the divestment of virtual currencies. The Supreme Administrative Court’s decision also means that losses from the sale of virtual currencies are, as a rule, deductible in taxation. Losses from the divestment of assets are deductible from income tax, which is comparable to the final loss of value of securities. The Supreme Administrative Court did not take a position on taxation in situations where one virtual currency is exchanged for another. The Helsinki Administrative Court has issued a decision on this question, which became final following the Supreme Administrative Court not granting leave to appeal. Following this decision, exchanging one virtual currency for another (of for any other asset) is treated the same way in taxation as the divestment of a virtual currency for an official currency. Virtual currencies are a new phenomenon, and regulation is still taking shape. In situations that are open to interpretation, it is wise to confirm tax treatment in advance, for example, through a preliminary ruling or preliminary discussion. In particular, loss-making divestments of virtual currencies from earlier years may be a good reason to apply for an amendment of one’s taxation.

   Published: 15.4.2019

7. Post

   Corporate Social Responsibility Act–The Next Step in CSR Regulation?

   The regulation of corporate social responsibility has traditionally been voluntary-based, and the related legislation focused on reporting and monitoring obligations. While it is true that soft-law mechanisms, such as voluntary frameworks, certificates and reporting serve to educate the public and provide responsible actors with welcome exposure, these approaches are often criticised as being toothless—and with good reason. One solution to this could be an EU-wide corporate social responsibility act. With a binding act in place, it would no longer solely be up to consumers and investors to make good and ethical choices—companies themselves would have to genuinely shoulder their responsibility. Liability for damages along with civil and criminal sanctions would give the law some heft, and public trials would serve as a deterrent to bad actors and encourage parties injured by irresponsible behaviour to seek legal remedies. Profit from Social Responsibility? One of the issues that has come up in the Finnish corporate social responsibility debate is whether responsible behaviour is in conflict with the profit-seeking goal set in the Finnish Companies Act. Listening to the arguments presented, a narrow, quarterly approach to business and a short-term goals have started to feel old-fashioned: modern and successful companies take a long view of profit-seeking and see corporate social responsibility as an added-value feature, not a cost item. These companies make social responsibility a part of their valuation alongside traditional performance indicators. These companies also see corporate social responsibility as risk management in the sense that neglecting environmental issues or social obligations could ruin their entire business. Once lost, a reputation can be impossible to regain, and the consequences of bankruptcy affect every stakeholder group, from employees to investors and, ultimately, the economy as a whole. This same rising trend can also be seen in new responsible investment products, such as green bonds, and in the increasing popularity of social impact investing. The French Example The French have sought to solve the corporate social responsibility problem by enacting a ‘due diligence act’ ( loi sur le devoir de vigilance ) in 2017. This year is an interesting time in France, as the first reports required by the new act are being completed. It is an ambitious act, as it not only sets forth binding duties of care, but also provides for complaint and monitoring mechanisms, sanctions and damages. The act is built around a core of human rights and supply chain monitoring. A Challenge for Finland’s Presidency NGOs have been lobbying the EU for corporate social responsibility legislation for years. In Finland, this demand has come up, for example, in the Ykkösketjuun campaign, which is fronted by a large number of prominent companies, NGOs and trade unions. The Finnish Ministry of Economic Affairs and Employment has a Committee on Corporate Social Responsibility, but there are no actual legislative initiatives relating to corporate social responsibility in the works. Finland now has the opportunity to roll up its sleeves and put an EU-wide, binding corporate social responsibility act on the agenda of its EU presidency. As a model country of equality, openness and abiding by the law, this role would be a perfect fit for Finland. We can hope that the new Parliament about to be elected will find room for this on its own agenda, as well.   This blog was first published in Finnish on Finsif’s website on 27 March 2019 at https://www.finsif.fi/yritysvastuulaki-vastuullisuussaantelyn-seuraava-askel/  

   Published: 8.4.2019

8. Post

   Regulation of Crypto - Fostering an Emerging Industry Through Legacy Frameworks

   This post provides an overview of the technology and serves as an introduction to the regulatory developments within the crypto space. Blockchains are data structures that allow data to be stored in a transparent and decentralised manner. This post purposely excludes enterprise/private blockchains, and focuses on open blockchain networks (crypto networks) that are not controlled by any central authority. The Regulator’s Dilemma With crypto, regulators globally are yet again faced by the challenge of regulating a global, fast-paced industry - this Regulator’s Dilemma is a consequence of high-growth technology companies being built in an environment of slow-to-change legacy frameworks. We have previously witnessed the clash of these two extremes, e.g. when ride sharing and data gathering were introduced as novel business models. Often, in cases of groundbreaking innovation, the approach of regulators is to either (i) remain neutral, (ii) apply existing and/or new legislation, or (iii) ban the activity related to the new technology. The Regulator’s Dilemma stems from the trade-off between permitting and promoting innovation while simultaneously ensuring fair markets, protecting consumers, and preventing criminal activity. Moreover, the global nature of a technology puts pressure on regulators of economically and politically influential markets, as the rest of the world waits for them to introduce harmonised industry-wide standards. [1] Initially, the very same attributes that raise the interest of early adopters of a novel innovation (anonymity, digital cash, fundraising on steroids etc.), also attract fraudulent actors who are able to benefit from the immaturity and unregulated nature of the industry. This regulatory uncertainty is often mitigated by the fact that forward-looking stakeholders have incentives to collaborate and issue self-regulation [2] and best practices, in order to stand out from fraudulent actors. Eventually, these best practices develop into industry-wide standards. What and Who Are We Regulating? Stateless vs. Stateful Protocols In order to meaningfully regulate an emerging industry, it is essential to understand the core tenets of its underlying technology. Crypto networks are protocols that represent the next generation of internet protocols. A protocol sets a standard for communication between computers. The internet as we know it is made up of a suite of stateless protocols .  By being stateless, a protocol is only able to transmit data but not store it - this immediately presents a problem for usability, as you are only able to send copies over the internet. The reason all messages are copies is because stateless protocols cannot record the activity happening in the protocol - they cannot detect whether the same message has been sent multiple times. Take the SMTP (Simple Mail Transfer Protocol) for example, it provides the communication standard for computers wishing to exchange email messages. Without a user-facing application being built on top of the SMTP protocol (such as Gmail), it would be impossible for the user to keep track of what has been sent to whom and when. That is to say, stateless protocols require stateful applications, with proprietary databases, to be built on top of them. These applications store a record of all user activity on their platforms - such as likes, shares, messages, etc. It is this history of user interactions that enables companies like Google and Facebook to provide their users an order of magnitude better user experience (UX). It is also this history of user interactions that has made these companies incredibly valuable. Crypto protocols, however, differ from early web protocols in that they are stateful , which means that they are able to both transmit and store data. This new data storing capability enables crypto protocols to capture much of the value previously captured by companies like Google and Facebook. Take the Bitcoin protocol as an example. It enables the exchange of unique messages. This means that a transaction in the Bitcoin protocol cannot be double-spent, as all transactions are recorded in the Bitcoin protocol and, therefore, duplicate transactions are automatically deemed invalid as already spent. It is this uniqueness that enables these protocols to transmit value, and as that value is now transmitted in the form of digital messages, it can also be programmed. [3] These messages can be made arbitrarily complex. They can be encoded to contain much of the exact same business logic or transaction workflow (‘if A, then B, else C’) previously provided and monetised by applications built on top of stateless protocols. Companies Become ‘Lighter’ The execution of business logic is coordinated more efficiently by a protocol than a single company. As a result, the execution of business logic migrates from applications to their underlying crypto protocols. Since it is this same business logic that the large incumbent tech companies have previously monetised on, much of the value capture will likewise move from the applications to the underlying crypto protocols. In order to access this value creation, one needs to purchase and own tokens native to these crypto protocols. The ownership (which is not possible for our current internet protocols) of crypto protocols is represented through their native tokens. Additionally, these tokens serve as the incentive and coordination mechanism for the development and maintenance of these protocols. As much of the value capturing activity is moved down to the protocol level, the business model for user-facing companies or applications will shift to focus even more on improving the UX for their end users. Companies will eventually become lighter UI clients that tap into the functions and liquidity provided by the underlying crypto protocols . Who Should We Regulate? A crypto protocol is developed by a decentralised community of contributors. In the early stages of a protocol’s lifecycle, it is owned and maintained by the core developers and a small group of early adopters. As the protocol develops, it should attract participants globally. From a regulator’s point of view, identifying the participants who should be held legally responsible for the activity of the crypto protocol becomes more difficult over time. When a protocol is up and running and governed by a global and decentralised community of contributors, it encompasses multiple jurisdictions and stakeholders, making it a nightmare for regulators. It is partly for this reason that the regulators in the US have been of the opinion that as long as a crypto protocol is dependent of a dedicated core team in the development of the protocol, its tokens should be subject to customary securities laws. Once the protocol passes a certain level of decentralisation, its tokens should no longer be deemed as securities and become freely tradable on the open market. Although, it is still too early to say that this line of reasoning would be broadly applicable to all crypto protocols. The classification of different crypto protocol tokens is something I will touch upon more thoroughly in my next blog post. Companies that build their businesses on top of crypto protocols (see graph above) are subject to customary regulation as corporations. They are traditional companies registered with some local jurisdiction and have opted to replace their proprietary databases with crypto protocols. This category comprises plain UI companies, but also exchanges and custodians of crypto assets. These exchanges and custodians are responsible for implementing sufficient AML & KYC standards and processes, and depending on their jurisdiction, are obliged to obtain licenses or permits for their operations. As is evident from this division, the companies or applications themselves are not the problem for regulators. Instead, it is the crypto protocols that cause extreme headache for regulators and policy makers around the world. Regulating a phenomenon that enables value transfer across the internet is hard, especially since this activity is no longer governed by a clearly identifiable third-party but rather by a global and decentralised community of contributors. Recent Developments and Future Outlook Crypto is increasingly catching the interest of regulators globally. As more and more legacy institutions, such as Goldman Sachs , Intercontinental Exchange , and Fidelity are entering the space, we have witnessed a push for increased regulatory transparency and certainty among authorities globally. Crypto as a phenomenon has not evolved in a silo. In order to fully understand the regulatory debate surrounding the industry, it is necessary to tie relevant market events to those regulatory decisions that have been made thus far:   In the US, the Securities and Exchange Commission (SEC) plays a substantial role in the public discourse around crypto. Decisions made by the SEC also actively shape the regulatory debate in the EU (and UK).  Both the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) - in addition to several member state FCAs - have finally taken a stance on crypto and are engaged in forming new regulatory initiatives to enable the development of common standards for European companies operating in the crypto space. Regardless of the uncertain and rocky road ahead, we can be certain that a unified regulatory framework, which will unleash the full potential of crypto, will become a reality - probably sooner rather than later. The increasing momentum of market forces will eventually lead to a sound and unified regulation of the crypto industry. For comments, questions or further discussion, please contact me at aleksis.tapper@castren.fi     [1] For example, US based companies decided to conduct their ICOs in jurisdictions outside the US and prohibited their offerings from being marketed to US consumers due to the lack of clear regulation of ICOs in the US.

   Published: 15.3.2019

9. Post

   Avoid Public Procurement Pitfalls and Grow Your Business

   Focus on Responsibility Requirements Responsibility issues are particularly important in public procurement. The use of ‘discretionary exclusion grounds’ has become very common, and an increasing number of contracting entities require that companies have an impeccable record. A company can be excluded from public tendering processes, for example, due to a serious error in professional activities or due to a violation of employment or competition law. You can avoid exclusion by presenting the contracting entity with persuasive evidence that any past omissions have been effectively rectified. Get to Know the Electronic Procurement System in Advance Electronic procurement systems give many companies headaches during their first tenders. Starting to fill out the tender in the electronic system too late can often be fatal. Sometimes a completed tender fails to be sent on time due to a technical issue—not a situation anyone wants to find themselves in. Seize the Opportunities Provided by Market Consultations You should seize opportunities to engage contracting entities in a dialogue. A market consultation carried out by a contracting entity is a chance for you to bring what you can offer to their attention and describe how you think a tender process should be organised to make best use of developments on the market. This makes it possible for tender processes to take the latest innovations into account and benefit from the market’s true potential. In practice, this always leads to higher quality procurements and, thus, benefits society as a whole. Precision Advice is the Key to Success We want to help our clients build new success stories. In public procurements, this is a particularly pleasant task, as we get to help companies win many tender processes and grow their business. In addition to advice in individual tender processes, a tailored workshop for your sales team could be the right tool to make sure you win your next tender. Contact us if you’d like us to plan a training session for your company.

   Published: 14.3.2019

10. Post

    Responsible Influencer Marketing is Your Calling Card

      ‘We’re Just Sending Review Products–That’s Not Marketing, Is It?’ Sending products to an Instragram influencer, YouTuber or blogger in the hopes that they will mention the product on their channel counts as marketing, even if no commercial cooperation has actually been agreed—the requirements that marketing be identifiable still apply. From the perspective of the Consumer Protection Act, all activities that seek to influence consumers commercially are essentially marketing.  Influence can be direct or indirect, but it can never be hidden. Consumers Have the Right to Know When Someone Is Attempting to Influence them Commercially The Consumer Protection Act’s requirement for the identification of marketing has two dimensions. First, marketing must clearly show its commercial purpose and on whose behalf it is. The purpose of the identification requirement is that consumers can see when and on whose behalf someone is attempting to influence them commercially. This requirement applies to all marketing regardless of method. The identification of marketing has given rise to a great deal of debate both in Finland and abroad. The Council of Ethics in Advertising of the Finland Chamber of Commerce has issued numerous statements on the identification of marketing on social media. Competition and Markets Authority (CMA) in Great Britain has gone so far as to publish a ‘naming and shaming’ list of influencers who do not mark commercial cooperation clearly enough, in other words, who engage in hidden advertising. Clear and Visible at First Glance One statement issued last year concerned the identification of an advertisement on the Instagram Story feature. The Story feature allows influencers to post pictures, text and short videos to Instagram that are visible for 24 hours. The Story post in question was marked as commercial cooperation by putting text in the upper corner of the post. However, this text was partially covered by the influencer’s username and profile picture. The white font of the text also partially blended in with the background, which hindered identification. The conclusion was that the advertisement published using the Story feature was not clearly identifiable as advertising to the average consumer. There are two points worth highlighting from the reasoning: The identification of advertising is always subject to an overall assessment. For example, using the Instagram Story feature emphasises the requirement for clarity, because the feature uses quickly changing pictures and videos. The fact that a post is an advertisement and the name of the advertiser must be clearly marked on advertisements published using the feature in such a way that they can be seen at a glance. Identification Requirement Emphasised on Social Media The expansion of the field of advertising can also be seen in a decision concerning a YouTube video concerning plastic surgery. According to the advertiser, the video was not made for the purposes of advertising, rather the YouTuber in question approached the advertiser to make the video. The existence of cooperation had been stated in the publication information, which could be read by clicking on ‘Show more’. This was found to be hidden advertising. The decision also separately stated that it did not matter who approached who to make the video. The Council of Ethics in Advertising noted that the identification of advertising and the mentioning of the advertiser is emphasised in social media posts that contain a great deal of editorial material. A large number of the YouTuber’s viewers were minors, which also made the advertising inappropriate. The advertiser was issued a warning. Companies Bear Liability and Brand Risk The above decisions show that advertisers have to know their environment. It is essential to know what platforms are being used for advertising and what the influencer’s target audience is like. For example, in the plastic surgery case, a large number of the viewers were minors, which meant that the marketing should have taken particular care not only with respect to identification, but also to complying with good practices and being suitable for minors. It is vital for companies to remember that they ultimately bear the legal liability and brand risk for marketing through influencers. A company can free itself from liability if it can prove that it gave the influencer sufficient instructions on how to carry out the marketing. This means that it is particularly important to draft an agreement on influencer cooperation that makes the obligations concerning the identification of advertising sufficiently clear. Responsible marketing can also be a calling card. Consumers are increasingly aware and see hidden marketing as unprofessional. Consumers remember brands that engage in good and transparent marketing as responsible and positive actors.

    Published: 11.3.2019