Scope of comparative advertising in India

Comparative advertising is an established practice in various parts of the world, particularly in developed markets, where consumer markets have become stagnant. However, it is a new phenomenon in India and came into being after the economy was liberalized. This paper conducts a study investigating the scope of comparative advertising in India from the perspective of the present legal framework in the country. The study is a critical review of the obtainable literature and further draws conclusions and recommendations based on the findings of the review.

Understanding comparative advertising

Comparative advertising is defined as a type of advertising which is a brand owner endeavors to have the benefit of pecuniary advantage from a comparison with product, service, or brand to a competitor (Romano, 2005). It was developed during the 1970s by the Federal Trade Commission.

Comparative advertising has two components, puffery and denigration. In the case of puffery, advertisers look for drawing the attention of consumers through making superlative claims about the product, service, or brand that are based on opinions rather than facts. On the other hand, denigration is puffery coupled with showing a competitor product in a negative light (Gokhale and Datta, 2011). Both practices are illegal in many constitutions as they lead to a conflict of interest. On one hand, the objective of advertisers would be to present the product to the consumers in such a way that consumers enticed to purchase it. On the other hand, the competitor will make every effort to stop any advertising that targets to denigrating its product. The issue sometimes becomes so litigious that the competitor moves the court. Hence, the issue needs to be explored and investigated from the perspective of mechanisms regulating comparative advertising.

Legal framework governing comparative advertising across the world

Most countries allow comparative advertising but within the limits of an existing legal framework. In Europe and the US Barigozzi and Peitz (2004) find that this type of advertising reduces competition in terms of price but intensifies it in terms of quality and credibility. In the various parts of the world such as in Belgium, this type of advertising is prohibited as per their regulatory framework.

Furthermore, in the Netherlands, Spain, Portugal, Greece, and Denmark although not prohibited, yet there are restrictions. Formerly Germany and the UK too prohibited comparative advertising, but now it is allowed within a legal framework (Gangwar, 2012). Further, this type of advertising is found to be ineffective in Latin American countries as it goes against their collectivist culture, i.e. a culture where harmony is sought and confrontations are avoided (Manzur et al, 2012).

Comparative advertising in India

The practice of comparative advertising started in India with the liberalization of the economy in 1991. Now companies in India are aggressively and vigorously promoting their products by promoting comparisons. The most common way in India is puffery than denigration, where companies use words such as ‘others are not’ (Pathak, 2005). In other words, largely comparative advertising is practiced by businesses in India through false and misleading facts that breach the trust of consumers or stakeholders. It is most prevalent in the FMCG sector.

Unlike the UK and USA, India does not have a specific law to deal with comparative advertisements, yet courts in the country have referred various laws in the existing system that can be applied. For example, the Delhi High court maintains that Monopolies of Restrictive Trade Practices Act, 1984 and the Trademarks Act, 1999 to some extent are applicable to deal with comparative advertising (Gangwar, 2012). Therefore Gokhale and Datta (2011) opine that a comprehensive approach needs to be taken by the Indian Constitution in dealing with cases of puffery and denigration.

Colgate vs. Pepsodent and Regaul vs. Ujala

In the case of Colgate vs. Pepsodent, the latter is found using comparative advertising to claim that the ‘New Pepsodent is 102 percent better than the leading toothpaste’. In the television advertisement, samples of the saliva of two boys are taken for testing hours after brushing. One boy is shown brushing with the New Pepsodent whereas the other one using a leading company’s toothpaste. The test of two samples is visually depicted side by side. The slide shows the sample of a leading company as the leading toothpaste demonstrating a large number of germs even as that of New Pepsodent showing fewer germs. Colgate objected and carried the case of advertisement to the court, where the court ruled that the company has the largest market share, a claim of disparagement of Colgate’s products was declared by the court, vindicating the stand of Colgate. In this way, the case turned out to be a comparative advertisement case (Kaushik, 2012).

On the other hand, in the case of Regaul vs. Ujala, a television advertisement promoting Ujala liquid blue demonstrates that four drops of this brand are sufficient to bring remarkable whiteness to clothes even as numerous spoons of other brands are necessary for a similar impact. The advertisement shows that a lady holding a bottle of Ujala is looking down on another bottle with no label, but expressing disgust. The Regaul brand owner company took the case into the court. In this case, the court established that for bringing a charge under clause (X) of section 36 A (1) there ought to be confirmed that disparagement is of products should be clear, identifiable, and distinct. Since the competing product was shown to neither carry a label nor a name, it was not a case of denigration (Kaushik, 2012).

Competitive advertising fosters healthy competition

In the case of Colgate vs. Pepsodent, it is found that the existing legal framework in India does not allow the denigration form of comparative advising. Whereas the case of Regaul vs. Ujala suggests that the puffery form of comparative advertising still has a deterrent. However, distinct laws to deal with cases of comparative advertising will have long term benefits for companies operating in intense market competition.

Barigozzi, Garella, and Peitz (2012) suggest that in the case of comparative advertising replacing content advertising, firstly legal system should be made relevant and strong. Furthermore, from the part of the companies, comparative advertising should be used as comparing quality of competitors’ products rather than showing other brands inferior or disgusting. From this perspective, India has to go a long way to go.

Comparative advertising is now taken as a vital tool in promoting competition in developed parts of the world such as the UK and the US. The legal framework in these countries is adequate to deal with the disputes coming to the courts. So far as the case of India is concerned, for the most part, comparative advertising is put into practice by companies in India through false and misleading facts that breach the trust of consumers or stakeholders. In relation to the existing legal framework of developed markets such as the UK and US, India fails to have explicit laws to deal with the comparative advertisement. Various laws in the existing legal system have been quoted to deal with the cases of comparative advertising.

Conclusively, In India, specific laws need to be introduced in order to deal with both the forms of comparative advertising. Furthermore, companies need to use comparative advertising for promoting quality based healthy competition than involving in looking down upon other products, services, or brands.

References

• Barigozzi, F., and Peitz, M. (2004). ‘Comparative Advertising and Competition Policy’, International University in Germany, Working Paper No. 19/2004.
• Barigozzi, F., Garella, Paolo G. and Peitz, M. (2012). With a Little Help from my Enemy: Comparative Advertising as a Signal of Quality. University of Mannheim, 68131 Mannheim (Germany).
• Gangwar, P. (2012). ‘Comparative Advertisement and Infringment of Trademark’, Independent, June 19, 2013.
• Gokhale, P., and Datta, S. (2011). ‘Comparative Advertising In India: Evolving A Regulatory Framework’, Nujs Law Review. 131 (2011).
• Kaushik, K. (2012). ‘Comparative Advertising and its Status in India’, IJCEM International Journal of Computational Engineering & Management, Vol. 15 Issue 3, May 2012.
• Manzur, E., Rodrigo, U., Pedro, H., Sergio, O., Pablo, F., (2012). “Comparative advertising effectiveness in Latin America: evidence from Chile”, International Marketing Review, Vol. 29 Iss: 3, pp.277 – 298.
• Pathak, A. (2005). ‘Comparative Advertising in India: Need to Strengthen Regulations’, Vikalpa, Volume 30, No 1. January – March 2005.
• Romano, C. (2005). ‘Comparative Advertising in the United States and France’, 25 Nw. J. Int’l L. & Bus, 371 (2005).