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JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT debate -
Wednesday, 17 Dec 2008

Ethical Advertising: Discussion with Advertising Standards Authority of Ireland.

We are discussing ethical advertising. I apologise to Mr. Frank Goodman, chief executive, Mr. Edward McCumiskey, chairman, and Ms Orla Twomey, assistant chief executive of the Advertising Standards Authority of Ireland for the delay. I thank them for their attendance, forbearance and patience. We were a little longer than we thought we would be. With the week that is in it, the agenda was overflowing. Given their line of business, they themselves would know that.

I draw attention to the fact that while members of the joint committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside of the Houses or an official, either by name or in such a way as to make him or her identifiable. The usual format is that following a short presentation, it is in the interchange and question and answer session involving my colleagues that most information is gleaned.

Mr. Edward McCumiskey

The topic of ethics in advertising has exercised the advertising industry for many years, well before I ever came to the business. In fact, most of the standards and codes in operation nowadays go way back and are based on codes of the International Chamber of Commerce dating back to the 1930s.

From the beginning the principal aims were to ensure that commercial advertising met certain principles of a strict ethical nature. There are really four or five of them. First, all advertising must be legal — a sine qua non but nonetheless the very bedrock on which the other principles must be based. They should be decent in the normal sense of the word; in other words, they should not be considered offensive. They must be honest, meaning roughly that they should be what they appear to be and not misrepresent themselves as being something else. Perhaps most important, they should be truthful, by which we mean not being misleading. They also should have a sense of responsibility to consumers and society, and that has been developed in many ways in the meantime. Finally, they should subscribe to the principles of fair competition between each other.

Once these principles were made back in the 1930s, they had to be fleshed out. This was done in a number of ways. First and most important, mechanisms had to be devised to implement them, otherwise the principles meant nothing. These developed in most European countries into independent bodies such as the Advertising Standards Authority of Ireland, ASAI, funded by the local national advertising industry. These bodies then devised codes in turn based on the fundamental ethical principles I outlined. The bodies are structured in such a way as to ensure they can implement the codes in an independent and impartial manner and that they are given authority to impose their judgments on advertisers and on the industry.

The second major development since the beginning has been the natural evolution of the principles in the light of political and social concerns and, of course, consumer concerns. While the ethical principles remain exactly the same, their interpretation must vary over time as societies become more sophisticated, hence the fleshing out of codes at various times to reflect concerns about matters such as alcohol advertising, advertising to children, advertising concerning the environment, etc.

Over time, too, some additional principles of varying importance were added such as that our code is applied in the spirit as well as in the letter, which gives us a flexibility of interpretation, advertising should not bring advertising itself into disrepute, and also the primary responsibility for observing the codes rests with advertisers, which is important as there is usually a string of people involved in producing advertising campaigns such as the advertising agencies, the media buying companies and the media.

Our code of advertising standards represents the Irish interpretation of those basic ethical principles formulated in the context of our own legal, political and social concerns. We review the code every five years or so and make interim ad hoc amendments. It is one of the advantages we have over legislation, that we can do so quickly. We consult widely when revising the code with Departments, statutory agencies, the industry and the public at large. These codes, although they are industry codes, are done not in a vacuum but follow widespread consultation.

The application of the code is extremely wide. It applies to practically all marketing communications — as we call advertising nowadays — in most Irish media and also sales promotions. The principal exceptions are that we do not deal with advertising of a non-commercial character such as religious or political advertising.

The scope of the code is expansive. In addition to the general rules, there are rules about children, distance selling, alcohol, food and other beverages, health and beauty, slimming, financial services, environment etc. These have grown up over the years in response to demands. No other advertising code in the country has anything near the breadth of its scope and application when the rules are put together. This is very important nowadays when advertising campaigns can appear over several media all at once.

How do we work? In summary, we deal with complaints from all sources about advertising and then we check the advertisement against our code. If there is a prima facie concern, we put it to our independent complaints committee, which has a majority of non-industry people. If the committee finds that the code had been breached, the advertisement must be pulled or amended. The media, all of whom are members of the ASAI, will enforce the adjudication for us. It should be emphasised that the media members include RTE, TV3, the national and regional newspapers, magazines, poster companies, cinema, etc. In addition, ASAI also operates a monitoring system where it checks on advertisements on its own initiative and takes whatever action it considers necessary.

Where do we fit in to the scheme of things? The ASAI is a self-regulatory organisation. By that we mean that we are distinguishable from State regulation, whether by law or by any of the many regulatory bodies established under statute which operate in the area of advertising regulation. However, we work closely with these organisations. In one particular case, the National Consumer Agency, formerly the Director of Consumer Affairs, nominates four representatives to our complaints committee. The BCI is also represented in the person of its chief executive. We try not to duplicate what these organisations do and, given that they are statutory bodies, we bow to their authority. In practice, however, members of the public come to us in greater numbers than to the statutory bodies and we deal with a fair amount of the important minutiae that others do not wish to or simply cannot deal with. As stated, ours is the only body which deals with issues of both decency and truthfulness in advertisements in all media.

The ASAI is also a member of the European Advertising Standards Alliance, which is principally involved in setting best practice recommendations for self-regulatory bodies throughout Europe. The European Commission has always shown a keen interest in the benefits of self-regulation and has recently been supporting it in several ways. For example, specific reference was made to it in the AVMS directive.

I recognise that self-regulation per se has not had a good name in recent times, mainly due to the way it was conducted in certain of the professions or areas. This presents our organisation with a certain difficulty with regard to perception. However, advertising self-regulation has developed differently from other forms. First, there is no single advertising profession as such; it is spread over many disciplines and professions. It depends daily on consumer confidence and cannot afford to constantly mislead or offend the public. Second, it has evolved sound ethical principles the application of which is constantly adapted to changing circumstances and concerns. Third, it has devised structures within the various self-regulatory bodies in order to ensure equity and independence in deciding on complaints and effective mechanisms for the implementation of its adjudications.

The ASAI offers a service to the public that is friendly, free, speedy, equitable and effective. This is done at no cost to the Exchequer.

I welcome our guests. Will Mr. McCumiskey indicate how his organisation is funded? Is its funding industry or State-related? With regard to the review of the code, surely a five-year period is quite long when one considers advancements in technology in the areas of Internet advertising, direct mail, etc. Should the review not be carried out on a biannual basis?

I thank our guests for coming before the committee. What form does the connection between the ASAI and Internet advertisers take?

Mr. Edward McCumiskey

As stated, our service is provided at no cost to the Exchequer. The ASAI is funded entirely by the advertising industry. The main source of our income is a levy of 0.02% on the media costs of advertising. This levy is collected through the advertising agencies. We also receive fees from our media members and these are paid en bloc.

We have found the five-year period relating to the review to be reasonably adequate because the code is extremely comprehensive. We change the code when the need arises. It can be changed readily. It is easier for us to change the code than it is for legislation to be steered through the Houses of the Oireachtas.

Mr. Edward McCumiskey

I feel safe in saying that.

I will refer briefly to Internet advertising but I would also like Ms Twomey to comment on it because this is a new area for us. As a result of the universal nature of this type of media advertising, we have worked closely with the European Advertising Standards Alliance which is trying to deal with this matter on a Europe-wide and, possibly, even broader basis. The alliance has drawn up recommendations for self-regulatory bodies such as the ASAI and we are in the process of implementing them.

Ms Orla Twomey

Until recently, our remit in respect of the Internet only related to paid-for advertising, sales promotions and e-mails. Through the European Advertising Standards Alliance, we have drawn up a best practice recommendation which has been adopted by the ASAI board. This recommendation will allow us to examine claims of a promotional nature on advertisers' own websites. We have received complaints from consumers who access advertisers' websites in order to obtain information regarding the products they wish to purchase.

As regards our connection with Internet advertisers, it is our experience that most advertisers who advertise in the traditional media also have a presence on the Internet. We do not, therefore, see that our relationship with them should be any different. We expect them to apply the same standards on-line as they apply off-line.

I welcome our guests. This subject of ethics in advertising is fascinating and we could well debate exactly what is meant by ethics. I welcome the new guidelines introduced by the Minister for Communications, Energy and Natural Resources, Deputy Ryan, in respect of limiting the advertising of junk food to children. I am particularly interested in what is happening vis-à-vis the targeting of children who watch daytime television. Do brochures which advertise toys and which are put through people’s letter-boxes in the run-up to Christmas come within the remit of the ASAI? I understand that this type of advertising is known in the trade as “pester power”. Any mother with young children knows the power of advertising, either through the medium of television or in the form of brochures such as those to which I refer.

Mr. McCumiskey stated that the ASAI wants to ensure that advertising is honest, truthful and responsible. How does it check the claims relating to particular products? When I visit the supermarket, I find my hands stretching out towards particular items and I find myself singing the advertising jingles that accompany television advertisements relating to them. The power of advertising is so incredibly strong in our consumer-driven society.

Will our guests give their views on the recent row involving Veritas and the BCI? What happened reminded me of Martin Luther and the question of how many angels can dance on the head of a pin. In the context of the arguments put forward by Veritas and the BCI, one could ask whether it is legal to broadcast the angelus on RTE, which allows people to engage in a moment of reflection.

Mr. Edward McCumiskey

We have no involvement in the matter relating to Veritas and I cannot offer any views on it. I understand that the regulations under which the BCI operates left it with no option other than to make the decision it made. Our code does not contain that kind of provision.

Does the ASAI ever consider making recommendations in respect of matters such as that relating to Veritas? Many are of the view that what happened was completely off the wall. Would the ASAI, which deals with ethical standards, etc., be prepared to make a recommendation to the committee that the legislation in this area should be changed?

That is a good idea.

If it did so, the committee could then assess the position and make a subsequent recommendation that the legislation be changed so that the BCI would not be placed in the position Mr. McCumiskey indicated and in order that common sense would apply.

Was the ASAI asked by the Department to make a submission to the Broadcasting Bill which is before the Oireachtas?

Mr. Edward McCumiskey

Yes, of course we made a submission. The BCI is a statutory organisation. We are a self-regulatory body. I would think that the background to this rule is purely of a political nature, concerning the division between State and religion. That is not a matter on which we would feel it appropriate to comment. An advertisement of that kind does not breach any of our codes. We do not see it as an ethical matter. This is a stance that has been taken at State level, rightly or wrongly. I can assure the committee that as the chief executive of the BCI is a member of our complaints committee, he is fully aware of our people's view on that. However, I do not think it would be proper for us to express a view in that area. There are large areas in which the BCI code is very similar to our own. We would feel it imitated it to a certain extent. I think this area is beyond our remit.

On the broad question of the volume of advertising, it is not something we go into very much. One has to stand back and consider what advertising is, what it is for and what the State's view is as to whether there should be any advertising. We understand that advertisers regard it as a fundamental commercial right to advertise. Advertising obviously has an economic value. Attitudes vary from country to country as to whether Christmas advertising, for example, should not take place before a certain time of the year. Our job is to stick with the ethical principles. We do not regard the question of whether there should be more or less advertising as an ethical principle within our code.

Mr. Frank Goodman

Specifically on the point of pester power, we have a provision in our code which prohibits this and we have looked at a small number of complaints. Advertising should not in any way encourage children to put pressure on their parents. If a leaflet comes in the door and a child gets his or her hand on it, it is difficult to stop. We have had cases during the year where advertising was accidentally addressed to children. We made sure it was stopped. Family names were taken off hotel lists for advertising and so on. It a matter about which we feel very strongly. It is also a matter about which we get very few complaints.

Sometimes when we see concerns expressed in the media about particular forms of advertising and their effects on children, we look at our statistics. For instance, we looked at our statistics before coming here today. Since 2005 there have been only 190 complaints about anything to do with children. About 40 of those have been to do with things like food, while a very small number relate to toys. The complaints about children and food were mainly to do with advertisements such as that for Lucozade and the Zombies. The complaints did not refer to the effects of advertising on consumption but rather dealt with whether it was acceptable. There were also complaints about Red Bull, taste and decency. We do not receive lots of complaints from NGOs or anybody else.

Maybe that is because the parents are too busy. I can assure Mr. Goodman it is a hot topic at the school gate. People are fed up with getting these things through their letterboxes. Their children obviously love these colourful advertisements on daytime television. They are looking at gorgeous things and they know Santa Claus is coming. As a public representative, I have heard a multiplicity of complaints at the school bus, at the school gate or in the supermarket when people ask if I have seen a certain advertisement and say their child wants X, Y and Z and nothing will deflect him from getting it. This is purely pester power. This may not be within the parameters of this discussion, but it is a very strong topic in the community.

Mr. Frank Goodman

We monitor as well as receive complaints. In 2007 we looked at over 11,000 advertisements, 98% or 99% of which were compliant with our code. This year we have looked at a smaller number and we are getting the same compliance rate. I accept that at a particular time of year people may be too busy to complain. We make it as easy as possible. If anybody phones with a query, we explain about the online complaints form. We need the minimum of detail. We will source the advertising ourselves when someone gives us some indication. We are not getting the complaints and we are not seeing the problem when we monitor advertising.

I thank Mr. Goodman. I appreciate his frankness.

I thank the delegation for its presentation. Advertisers are not allowed to mislead the public. Did the authority state it did not cover political advertisements? The referendum last year comes to mind. I would imagine that it would be very busy with all the political parties, except mine. In terms of non-commercial advertising, does it feel it should have powers? Should it be within its remit? From time to time I get representations regarding bogus crisis pregnancy agencies which advertise but are not what they claim to be. Would the authority advocate for jurisdiction over non-commercial advertising? I am being light-hearted.

Mr. Edward McCumiskey

The obvious point is that it is none of our business. We try not to get into areas where we cannot enforce. We try to stick with commercial advertising where people express a view or an opinion. It is up to people whether to believe it. If advertisers are not selling goods or products, we tend not to be interested. If people are advertising a clinic which is not a clinic, they are advertising a product.

The ASAI would have jurisdiction in such cases.

Mr. Edward McCumiskey

If that is what they are doing, yes. It is sometimes put to us that non-commercial advertising is offensive. The question is whether we should deal with that. Generally we do not because it is not in our code. It is an issue at which we have looked now and again. At the end of the day we have to be reluctant to get into areas where we would be imposing on people's freedom of expression.

Mr. Edward McCumiskey

While some people might like us to do it, others would rightly take umbrage. We have enough to do in commercial advertising. Most of our business deals with misleading advertising. We get publicity when people are offended by advertisements in terms of taste and decency.

Could the ASAI give a breakdown of the main focus of its work?

Mr. Frank Goodman

Over the last two years we have had about 1,400 complaints. Top of the list each year were computers and telecommunications, followed by food and beverages in 2006. These were followed by travel and holidays, financial advertising, health and beauty, leisure and property.

The authority's job is to interpret the code. Is the code an ever-evolving code and who plays a role in setting it? I — I am sure many others also — did not realise it is an independent self-regulatory group. However, people accept its work and the high standards being applied. I do not believe it is a known fact that the authority is part of the advertising group, whose codes it is interpreting. Mr. Goodman stated there are no advertisers who do not come within the remit of the code. If an advertiser is causing problems, is it to the authority we report this and from which we seek change?

What is Mr. Goodman's position in respect of alcohol advertising? Does the authority have a role in this regard and is it an issue which it discusses on a regular basis? I believe changes are needed in that area. I believe it should be provided that for every euro spent on the promotion of alcohol another euro should be spent on advertisements showing the effects of alcohol. This would be a fair balance. I do not believe we will in the short term eliminate the advertising of alcohol. However, a balance might be achieved in terms of advertisements of the negative effects of alcohol.

Mr. Goodman referred to Veritas and the problems in respect of broadcasting interpretation. I do not believe this is a political issue but is a matter of interpretation in respect of what politicians have decided. There is on onus on us to correct this and we are seeking to have the provision concerned changed. Perhaps Mr. Goodman would pass on my comment that we believe the interpretation might be slightly over the top. We have moved on a great deal in this country and it is time we relaxed a little in terms of the grey area.

Does the authority ever receive complaints about dominance in terms of a particular company's advertising power which may prevent other advertisers getting their message out? Is that an issue with which the authority deals or does it come within the remit of the Competition Authority? Is this an issue which has crossed the authority's path given that it is an issue often raised with us? While I cannot prove this happens, I am aware that it has happened. I am sure other people are aware of this.

My last question relates to the timeframe within which the authority deals with complaints. If the authority receives a complaint today in respect of a particular advertisement — I accept the authority is not State-funded — within what timeframe will the matter be dealt with and what process is involved? I presume the advertisement continues to run until a decision has been made. What is the penalty in this regard? Is it a fine and, perhaps, a rap on the knuckles?

There is a great debate taking place in respect of the food industry and country of origin of products. I am not sure whether this is relevant to the authority. It is an issue that has arisen again in the past few days in regard to the crisis in the pork and bacon sector. Irish secondary processors are using Irish labels on foreign produce packaging. Does the authority have any role in this area? I accept the issue may not be relevant to the authority.

We are aware that State agencies such as Bord Bia have requested secondary processors to place serial numbers on the packaging of those products it has refused to stand over. Following announcements in respect of this crisis there was Dutch, Danish and other foreign produce on our shelves. It is obvious the produce concerned was already in stock in many stores. Does the authority have any role in respect of the labelling of food?

Mr. Edward McCumiskey

There are approximately six themes involved in that round of questions.

This is a diverse committee which covers all issues relating to enterprise, trade and employment.

It is an important issue.

It certainly is.

I accept it may not be an issue for the authority. This is the silly season.

No, it is a significant issue and the Deputy has not asked a silly question.

Mr. Edward McCumiskey

The first question related to the codes and how often or if they can be changed. We conduct a formal and widespread review of the code. It is an industry code which is put together by members of the advertising industry. Our board is made up of representatives of top agencies, advertisers and media companies, including RTE, The Irish Independent and so on. A code like this is not taken out of the air but has been gradually built up over a period.

Mr. Edward McCumiskey

There is enormous consultation in respect of the code, including with all Departments that have anything to do with advertising. On the last occasion we made changes to the code they were requested by the Department of Health and Children. Requests which are in any way compatible with our principles are accepted. The code is updated on an ongoing basis.

Advertising of alcohol has been a huge issue for us, though it has quietened down a great deal. We put a great deal of work into controls in respect of alcohol advertising owing to the concerns about alcohol advertising. In short, we have tightened up our code on the matter. Work on this issue is ongoing between the industry and the Department of Health and Children. For instance, there is a supervisory body in respect of this area and separate codes of conduct for the alcohol industry. Our role in this regard is mainly to act as secretariat for the supervisory body. Our brief in respect of alcohol is wide.

A separate unit was set up to ensure all advertisements for alcohol, prior to broadcast on the media, go through a self-regulatory body which works off our code. In short, the result has been far fewer complaints. I believe the scene in this regard has changed radically. My colleagues can elaborate further on the matter if members wish.

On the Veritas issue, we will certainly pass on the committee's views in that regard. We are not in a position to tell a statutory body how it must interpret legislation.

On the dominant position issue, there are two aspects to this. The first relates to the volume of advertising over which we do not exercise any real control. People are free to advertise as far as we are concerned. However, the code includes provisions in terms of respect for fair competition between companies.

Up to 10% of our business relates to complaints from one advertiser against another. Often such complaints relate to two very equal players and at other times to a big and a small player, one of whom is claiming unfair advertising. There are rules to ensure one advertiser does not slag off another in a pointed way. There are safeguards in place in this regard.

The advertising industry has a particular interest in this aspect. One of the reasons the codes were first set up was to prevent unfair competition in advertising between players.

Do big advertisers seek to keep small advertisers out of the market?

Mr. Edward McCumiskey

Advertising alone would not do that. I presume an advertiser with a more dominant position in the market——

I am referring in particular to advertising space. Has the authority received complaints in respect of a big advertising company trying to prevent a small company from obtaining advertising space?

Mr. Edward McCumiskey

Advertisers must meet the standards of the code. At the end of the day, the bigger advertiser will tend to have more money to spend. That is part of commercial reality, unfortunately.

I will ask my colleague, Mr. Goodman, to respond on the question in respect of the timeframe within which complaints are dealt with. I am not involved in day-to-day cases.

Mr. Frank Goodman

The timeframe within which complaints are dealt varies dramatically between cases. Some cases are turned around in a matter of days. When we receive a complaint, we look at the advertisement, be it a broadcast or print advertisement or something advertised on the Internet and if it is clearly wrong we contact the advertiser, point out what is wrong and it is changed quickly. Our aim is to correct or have withdrawn misleading or distasteful advertising. Other cases would be taken up formally with an advertiser who is given ten days to respond. When a response is received, we again consider the matter and might seek an immediate change to an advertisement. Cases that require a more formal decision are forwarded to our complaints committee. Approximately one quarter of complaints annually are referred to the complaints committee for decision. Often it can take months to deal with many of these complaints. However, if a serious issue has arisen in respect of an advertisement there is provision in the code which allows me as chief executive to contact the advertiser and the media to have it withdrawn. I have been chief executive for just over four years and have had to do this approximately half a dozen times. We can get the national daily newspapers to pull an advertisement over night. We can get posters taken down within a couple of days. The case will then formally go to the committee for an adjudication. To be totally honest, some of the more complex intra-industry complaints, which would probably need input from a senior counsel or a lawyer of some sort, can last for months. Intra-industry cases are the more complex cases.

On the question of dominance, internally we have been conducting an audit, industry by industry, of compliance with our code. This audit is ensuring that we are aware of individual advertisers and whether they are contributing to the levy, etc. We have seen no evidence of dominance in the larger industries. We have looked at alcohol and telecommunications and are looking at the area of food and retail currently.

Deputy O'Keeffe asked about country of origin, labelling and advertising.

Mr. Frank Goodman

Country of origin is a principle when looking at media advertising. However, the real problem is labelling, but that does not come within our jurisdiction.

I notice a member of staff of Bord Bia, John McGrath, is a member of the Advertising Standards Authority of Ireland board.

Mr. Frank Goodman

Yes, he is.

Will Mr. Goodman remind him the matter is of interest to this committee?

Mr. Frank Goodman

I will.

Can the authority use any mechanism to deal with the issue? It must have some role with regard to advertising, country of origin and labelling, etc.

Mr. Frank Goodman

The National Consumer Agency is the appropriate body to deal with the matter. However, I will check whether we have a role and will send a note to the clerk of the committee on it.

I would appreciate that.

If the authority saw something advertised as Irish that it believed was not Irish, could it intervene in that case? Also, has the authority any role in the area of financial products like mortgages and annual percentage interest rates? Have people ever made complaints such as that an annual percentage rate was advertised as X%, but it turned out to be X+2%? Have there been many such complaints? I am aware the delegates outlined a hierarchy of complaints, but I cannot remember whether this area is included. Forgive me for not being as assiduous as I should be. Does the authority have a role in the area?

Mr. Goodman has said that the authority and its members are vigilant in their own way. If some day a member of the authority's board sees something advertised as Irish, but knows well it is not Irish, what would he or she do about it?

Mr. Frank Goodman

We would ask for it to be changed straightaway. We have a formal monitoring process, but we are also vigilant. Often people come in from the Luas or the DART in the morning and report an advertisement they noticed on their way. We go and search out that advertisement and try to have a copy available for what we call our post-session at 11 a.m. If somebody has any reason to suspect the claim made in the advertisement, the advertiser is required to substantiate the claim made in it. When we last reviewed the code in 2006, a number of areas were strengthened considerably, including substantiation, alcohol, food, and scientific proof as a basis for substantiation. All of those areas were strengthened. If the issue was glaringly obvious, we would not wait for a formal decision to proceed. We would ring the advertiser or the media and look for it to be changed.

On the question of financial advertising, when we were producing our code, we consulted the IFSRA and when it was producing its code, it consulted us. We had a number of meetings with it and the general agreement was that if it was a complex financial product, it would deal with the issue. However, for simple misleading information or if it was a case of taste indecency or similar, IFSRA would prefer that we deal with it, because our process is less formal.

I must leave because I am required in the Dáil as soon as the Order of Business is over.

I thank the delegates for their presentation on this interesting area. As Deputy English said, the authority has a more significant role than we anticipated. We have learned a lot this morning from the delegates and I thank them for being so frank and forthright as that is always helpful. Some of the questions we asked were outside the remit of the authority, but we have been steered in the right direction on them.

Will Mr. Goodman come back to us on the issue I raised?

Mr. Frank Goodman

I will check that out.

Thank you, and a happy Christmas.

I thank the members of the authority and wish them the best for Christmas and the new year. We are grateful for their assistance in our deliberations. Their contribution has been very informative. We look forward to seeing them again, perhaps on an annual basis.

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