“We, therefore, hold that "commercial speech" is a part of the freedom of speech and expression guaranteed under Article 19(1) (a) of the constitution" – The Supreme Court of India.
H.G. Wells once famously said that advertising was legalized lying. This reflects the dilemma of advertising and its effect on consumers. In an environment of zealous competition in the foreground of a market economy, advertisements often tend to exaggerate and misrepresent facts which ultimately affect impressionable minds. That is precisely what all legal systems must seek to address. Several countries have enacted comprehensive laws that govern and control advertising. Many countries in Europe restrict domestic advertising that targets children below a certain age. In the UK, the Advertising Standards Authority lays down the standards for advertising in all kinds of media while all outdoor advertising is done with permission from the local town planning authorities. As for the US, the Federal Trade Commission is the relevant and the ultimate authority on the subject although local governments are allowed to enact their own regulations in this regard.
In India, the field of advertising is subject to a multiplicity of laws in the absence of a comprehensive statutory mechanism that would lay down ground rules in clear terms for advertising in the country.
Issues in Advertising
Deceptive Advertising- As advertisements aim to influence or persuade customers into buying products that they promote, many a time advertisements illegally use false statements and misrepresentations about their products in violation of customers’ right to know exactly what they are purchasing.
Misleading Prices- Companies often hide or fudge prices of products/ services advertised in order to attract a larger customer base. The prices they advertise often do not disclose additional charges and the overall cost to the customer. Such advertisements are commonly found in the airlines, mobile telephony industry and memberships for clubs. A common cause of such misleading pricing is the ‘end-of-season sales’ when the prices of products are often knocked down and advertised in the media in order to push up sales. But what such advertisements don’t disclose is that such knocked down/ discounted prices are actually pushed up before providing the discount so that the profit margin of the seller on such products remains intact.
Failure to maintain standards- At times companies/ sellers/ service providers cleverly bypass established standards applicable to the products by adopting a different standard which provides a sense of enhanced efficacy of the goods/ services in the mind of the customer. This also provides unfair advantages to the seller over its competitors. Such advertisements are often seen in advertisements that compare the products advertised against the products of other leading brands.
Labelling issues- Labeling on products can also be misleading. They may, at times, misrepresent or obfuscate the actual weight of the packets or adopt a different standard of measurement contrary to the generally accepted standards. The packaging of products may also use exotic high sounding words such as “organic", “eco-friendly", “natural", “mild" etc. without a proper explanation of the terms and such terms may even be used for products that have nothing to do with such concepts.
Surrogate Advertisements- Whenever the advertisements for certain products like tobacco or liquor have an adverse effect on health and are restricted or banned, the manufacturers tend to launch new products with similar brand names. A blitzkrieg of advertisements is launched in the media for such new products with an aim to reinforce or sustain the banned products/ advertisements.
The legal scenario in India
There are several laws in India that relate to advertising. A snapshot of some of these enactments is provided hereunder-
Consumer Protection Act, 1986- Section 6 of the Act grants consumers the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices. Section 2(r) of the Act, under the definition of the term "unfair trade practice", covers the gamut of false advertisements including misrepresentations or false allurements. Redress against such unfair trade practices pertaining to false advertisements may be sought under the Act ;
Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003- Section 5 of this Act, inter alia, prohibits both direct & indirect advertisement of tobacco products in all forms of audio, visual and print media;
Cable Television Networks (Regulations) Act, 1995 and Cable Television Networks (Amendment) Rules, 2006- Section 6 of the Cable Television Networks (Regulations) Act, 1995 provides that no person shall transmit or re-transmit through a cable service any advertisement unless such advertisement is in conformity with the advertisement code prescribed under the Cable Television Networks (Amendment) Rules, 2006. However, the aforesaid provision does not apply to programmes of foreign satellite channels which can be received without the use of any specialized gadgets or decoder. Rule 7 of the Cable Television Networks (Amendment) Rules, 2006 lays down the “Advertising Code" for cable services which are formulated to conform to the laws of the country and to ensure that advertisements do not offend morality, decency and religious susceptibilities of the subscribers;
Doordarshan/ All India Radio (AIR) Advertisement Code- Doordarshan and AIR, both under the control of Prasar Bharati (a statutory autonomous body established under the Prasar Bharati Act), follow a comprehensive code for commercial advertisements which control the content and nature of advertisements that can be relayed over the agencies;
Drug and Magic Remedies (Objectionable Advertisement) Act, 1954- This Act purports to regulate the advertisements of drugs in certain cases and to prohibit the advertising for certain purposes of remedies alleged to possess magic qualities and to provide for matters connected therewith;
Drugs and Cosmetics Act, 1940- Section 29 of the Act imposes a penalty upon whoever uses any report of a test or analysis made by the Central Drugs Laboratory or by a Government Analyst, or any extract from such report, for the purpose of advertising any drug. The punishment prescribed for such an offence is a fine which may extend up to five hundred rupees and/ or imprisonment up to ten years upon subsequent conviction;
Emblems and Names (Prevention of improper use) Act, 1950- This piece of legislation prohibits the use of any trademark or design, any name or emblem specified in the Schedule of the Act or any colourable imitation thereof for the purpose of any trade, business, calling or profession without the previous permission of the Central Government;
Food Safety and Standards Act, 2006- Section 53 of this Act provides a penalty of up to Rs. 10 lakhs for false and misleading advertisements relating to the description, nature, substance or quality of any food;
Indecent Representation of Women (Prohibition) Act, 1986- This Act is aimed at prohibiting indecent representation of women through advertisements or in publications, writings, paintings, figures or in any other manner and for matters connected therewith or incidental thereto (Section 3 and 4 of the Act).
Prenatal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994- Advertisement in any manner regarding facilities of pre-natal determination of sex available at any genetic counselling centre, laboratory, clinic or any other place is prohibited under this Act and has been made a punishable offence under the Act (Section 22);
Young Persons (Harmful Publications) Act, 1956- Section 3 of the Act, inter alia, imposes a penalty for advertising or making known by any means whatsoever that any harmful publication (as defined in the Act) can be procured from or through any person;
The Representation of People Act, 1951- The display to the public of any election matter by means of cinematograph, television or other similar apparatus in any polling area during the period of forty-eight hours ending with the time fixed for the conclusion of the poll for any election in the polling area is prohibited under the Act (Section 126).
Indian Penal Code, 1806- The IPC, vide an array of provisions, prohibits obscene, defamatory publication, the publication of a lottery and/ or statements creating or promoting disharmony/ enmity in society.
Needless to say, the foregoing laws are in addition to applicable IPR laws and other relevant laws in general.
Regulatory Authorities
Advertising Standards Council of India (ASCI) is a self-regulatory voluntary organization of the advertising industry. The ASCI has drawn up a code for self-regulation in the advertising industry with a purported view to achieving the acceptance of fair advertising practices in the best interests of the ultimate consumer. The ASCI also lays down similar codes for advertisements in specific sectors/industries from time to time. However, the codes are self-imposed discipline to be followed by those involved in the industry and in no way are the codes mandatory. As such, compliance with the code is rare and very few complaints are actually received by the ASCI on account of non-compliance. Nevertheless, the Cable Television Networks (Amendment) Rules, 2006, under Rule 7(9) makes it mandatory for all advertisements carried by cable services to be compliant with the ASCI code. According to the ASCI code, complaints against deviant advertisements can be made by any person who considers them to be false, misleading, offensive, or unfair. The Consumer Complaints Council (CCC) considers and decides on the complaints received from the general public including government officials, consumer groups, complaints from one advertiser against another and even suo moto complaints from the member of the ASCI Board or CCC.
The Reserve Bank of India, SEBI and the IRDA are some of the other regulatory authorities that regulate advertisements in their respective fields.
Comparative Advertising
A popular method of advertisement is comparative advertising where one product/ service is advertised by comparing them with the goods or services of another party. Such other party is usually a competitor or the market leader of that good or service. The comparison is made on the basis of quality, price, availability, performance, etc. with a view towards increasing the sales of the advertiser, either by suggesting that the advertiser's product is of the same or of superior quality. However, such advertisements often lead to infringement of the trademarks of the competitors (as per the Trademarks Act, 1999) and promote unfair competition. Such comparative advertisements also cause disparagement of the product/ service of the competitor although the term ‘disparagement’ is not defined under any of the existing Indian laws.
The Delhi High Court in Reckitt & Colman v. Kiwi TTK clarified the position of law in this regard as follows:
“The settled law on the subject appears to be that a manufacturer is entitled to make a statement that his goods are the best and also make some statements for puffing his goods and the same will not give a cause of action to other traders or manufacturers of similar goods to institute proceedings as there is no disparagement or defamation to the goods of the manufacturer so doing. However, a manufacturer is not entitled to say that his competitor's goods are bad so as to puff and promote his goods. It, therefore, appears that if an action lies for defamation an injunction may be granted."
Action against such advertisements may lie at the instance of the manufacturer or marketer before the civil court and at the instance of the consumer, provided it contains a false representation, before the consumer forum under the Consumer Protection Act, 1986.
To sum up, it can be said that multiple laws pertaining to an advertisement in general and those relating to specific sectors cause utter confusion in the minds of the manufacturer/ service provider as well as the consumers. Further, none of the existing laws particularly address the issues of advertisements in cyberspace. The absence of a single statutory regulatory body further aggravates the problem. A comprehensive law/ regulation on advertising in all forms of media which shall provide clarity in the matter and act as a one-stop window for all matters relating to advertising is highly desirable.
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