December 4, 2023

Children’s food advertising law damages economy in the billions

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Markenverband publishes economic report by Prof. Dr. Justus Haucap

The German economy is at risk of billions in damage if the planned Children’s Food Advertising Act (KLWG) is applied in the present draft form. This is the result of the economic report by the economic economist Prof. Dr. Justus Haucap, Dr. Ina Loebert and Dr. Susanne Thorwarth on behalf of the brand association. The KLWG not only fails in its intended effect of helping to improve children’s health, but would also massively endanger Germany as a food and media location.

The Markenverband analyzed the economic impact of the Children’s Food Advertising Act (KLWG) by a team of authors led by Prof. Dr. Justus Haucap from the Düsseldorf Competition Economics Institute. The consequences would be of enormous proportions for the German market. As a result, the report attests that there is no empirically sound basis for a ban on advertising food to help improve children’s health. Rather, it can be assumed that gross advertising losses would amount to almost 3 billion euros with fatal effects on the food and advertising industry as a whole.

Christian Köhler, General Manager of the Markenverband, finds clear words: “The report clearly shows that the KLWG is a sham and will miss its goal with a bang. What frightens me most is the way in which the Federal Ministry of Food is trying to push through a draft law that knowingly ignores the empirical facts. This form of purely ideologically motivated style of politics has to stop!”

The planned law would not only ban food advertising aimed at children, but would also ban advertising for the majority of all foods. In addition to the privately financed media, the food industry would also be affected. The advertising restrictions would be so severe that companies would lose the incentive to bring innovations to market. “Brands are dying and Germany is losing its competitiveness internationally as a business location,” summarizes Köhler.

The brand association has been promoting a holistic, multi-stakeholder approach for a long time, which combats the real causes of malnutrition and obesity in children and young people, such as insufficient parental education or a massive lack of exercise. The companies of the German brand economy want to start an effective initiative for our children together with all relevant actors such as educators, nutritional physiologists, doctors and representatives of sports clubs: the children’s health pact for Germany.

Note: The complete report on the economic impact of the KLWG can be found under the following link.

About the author of the report: Prof. Dr. Justus Haucap is director of the Düsseldorf Institute for Competition Economics (DICE) and partner at Düsseldorf Competition Economics. From July 2006 to June 2014 he was a member of the Monopolies Commission, which advises the federal government on questions of competition policy and market regulation, and chaired it from 2008 to 2012. The Frankfurter Allgemeine Zeitung has included him in the annual list of the most influential economists in Germany since 2013 .

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