Thursday, October 29, 2009

Changing Advertising Practices in India - The End of "Puffery"?

The Government's proposed “Advertising Code” for food and health products is an interesting development , particularly in light of developments in India over the past three years or so on the subject. This blog has discussed emerging trends in India on the norms governing advertising practices.

To briefly recapitulate, the law does not proscribe comparative advertising, which is a near-ubiquitous practice in today’s commercial world. It does not even require that the advertisement be true and accurate in every respect. English law for a long time was that an advertisement that was mere “puffery” could not form the basis for any action in law. This was based on the belief that an advertisement that is so exaggerated as to be clearly untrue is unlikely to cause any reliance on the part of the consumer who sees it, and consequently does not have to be regulated as strictly as advertisements that purport to be factual but are not. For example, an advertisement claiming that drinking a particular soft drink is the route to becoming a millionaire is clearly “puff”, and is less misleading than claiming that the soft drink is superior on account of the fact that competing drinks contain pesticides. This principle was accepted in India as well, until 2008, when the Madras High Court held that the peculiar circumstances of the Indian consumer make the doctrine inappropriate in Indian law. The Supreme Court and the majority of the High Courts had held otherwise, and the only real restriction on comparative advertising was that it could not "disparage" the goods of a competitor.

In this context, it is interesting to note that the Government’s proposal to introduce an Advertising Code appears to primarily tackle misleading and “puffed” advertisements in food and health products. The proposal has emerged under the framework of the Food Safety & Standards Act, 2006 [“the FSSA Act”], under which the Food Safety and Standards Authority of India has been set up [FSSAI]. The FSSA Act prohibits unfair trade practices and “misleading and deceiving advertisements”. The FSSAI notes although commercial advertising is a protected activity Art. 19(1)(a) of the Constitution of India, no law governs it, except guidelines drafted by the Advertising Standards Council of India [“ASCI”]. Those guidelines, however, have no binding force and are intended to function as self-regulation guidelines.

The Code proposes radical changes to existing commercial practices. The restrictions are that advertisements cannot disparage “good dietary practice”, encourage “excessive consumption”, suggest “portion sizes” that may be appropriately consumed and so on. The Code practically makes puffery illegal by prescribing that “advertisements should not mislead consumers…to believe that the consumption of the product advertised will result directly in personal changes in intelligence, physical ability or exceptional recognition, unless supported with adequate scientific evidence”. It also requires that “celebrities or prominent” people not promote food in such a way as to “undermine a healthy diet”. A copy of the entire Code is available here.

The merits of the regulation apart, it is important to consider a few serious questions of enforcement. For one, since the Code, as will inevitably be the case, is phrased in broad terms, it seems more appropriate that this be part of a self-regulation model. If, on the other hand, the FSSAI decides to enforce it, it may have to evolve suitable institutional support to be able to assess not only what advertisements offend the Code, but also whether there is parity in treatment. For example, s. 5(a)(1) of the Federal Trade Commission Act in the United States empowers the FTC to prevent advertisements that are inconsistent with the Act, in addition to the normal remedy of seeking an injunction from a civil court. Similarly, the United Kingdom in 1962 set up the Advertising Standards Authority to regulate advertising. When the ASA finds a particular advertisement to be inconsistent with the guidelines in the UK, the normal practice is for the owner of the advertisement to remove it, thus establishing a model of self-regulation.

Thus, the Madras High Court’s opinion of 2008 appears to have anticipated these developments. After noticing the law in England and the USA, the Court had observed then that “it is doubtful if false claims by traders, about the superiority of their products, either simplicitor or in comparison with the products of their rivals, is permissible in law. In other words, the law as it stands today, does not appear to tolerate puffery anymore. I do not know if "Puffing" which is only a twin sister of "bluffing", permitted by English courts in the past, still has the sanction of law even in England, after the advent of 'legacy regulators' such as CAP, Oftel, Ofcom, Clearcast etc…

If the Code becomes law, the interesting question for Indian law will be whether its principles ought to be extended to other areas of commerce as well. Comments on the Code are available here and here.


1 comment:

Neytri said...

A very nice article indeed.