17.01.2020
On December 11, the Law of Ukraine “On Amending Certain Legislative Acts of Ukraine (Concerning the Harmonization of Legislation in the Field of Comparative Advertising with the Law of the European Union)” entered into force. It allows the use of comparative advertising, which was previously banned. Is the domestic advertising market ready for this, says Alexander Tretyakov, senior associate at Antika Law Firm.
Why, after a long ban, was finally allowed to use comparative advertising? This was done primarily in order to harmonize the legislation of Ukraine with the legislation of the European Union, where such directives have been in force since 2006. Over the years, a comparative culture has developed in European countries. For the Ukrainian market, comparison in advertising is a new phenomenon. It gives advertisers a great field for imagination.
What compares
The law itself is quite balanced and thought out. It clearly defines the boundaries of the use of comparative advertising, the conditions when it is permitted and will not violate the law. In particular, the use of comparison in advertising is permitted in cases where:
- compares homogeneous (similar) goods that satisfy the same needs or have the same purpose, or compare activities that are covered by one area or one type of activity;
- objectively compares one or several significant, comparable and representative characteristics of a homogeneous (similar) product, activity, in particular price, information about which can affect the consumer’s decision when making a choice;
- advertising does not contain signs of dishonest business practices defined by the legislation on the protection of consumer rights;
- no confusion is created between the advertiser and the competitor, between goods, trademarks, commercial (company) name and other designations of the advertiser and competitors;
- the advertisement does not discredit and does not contain false information about the quality of homogeneous (similar) goods of other manufacturers or sellers, does not discredit the activities or position of other persons, the reputation of trademarks, commercial (company) names, other features of competitors or an indication of the place of origin of goods;
- a competitor’s product protected by a trademark or trade name is not depicted through imitation;
- in respect of goods with an indication of (simple or qualified) origin, a comparison is made with respect to goods with a similar indication.
Innovations apply to advertising products in all markets. When launching comparative advertising, it should be remembered that it should be based on objective research and testing data. Not all products can be tested.
Now the most common such technique in the household chemicals market. Probably, everyone remembers an advertisement for powders, detergents, etc., where the effectiveness of the advertised product is compared with some kind of “ordinary” product. Now manufacturers will be able to compare their products directly. Therefore, it is precisely for this market that we can expect the appearance of the first comparative advertising products.
Internet advertising
Changes to the law, of course, also apply to advertising on the Internet, as, in fact, all other requirements for it. The issue of tracking violations here is somewhat more complicated. When it comes to placing banners and advertisements, in such cases, as in any other business relationship, there is always a customer, contractor, relevant agreements between them and the like. That is, you can find an advertiser.
With hidden advertising, the situation is completely different. For example, a sponsored product review on Youtube channels or online publications. Here, everything is much more complicated, since the most problematic will be the issue of proving the fact that the videos are just advertising, and not the blogger’s own opinion, who decided to share it with his subscribers.
On the verge of permissible
Despite the detailed list, the list of cases in which it is allowed to use comparison with competitors in advertising messages is quite subjective. And, whatever one may say, there is still room for maneuver for advertisers and regulatory authorities.
Unfortunately, in Ukraine, comparisons in advertising can lead to violations of consumer rights and the issue of advertising, in which a product, service or competitor will be openly discredited. At least, the case from the realities of Ukrainian business leads to such a conclusion. It is no secret that defamatory advertising often has a significant impact on the opinions of consumers and their preferences. Therefore, it is likely that the use of such advertising will often be decided by the advertiser, given the size of the potential fine.
Today, advertising agencies simply do not print or do not broadcast comparative advertising. After the law has entered into force, agencies, as well as advertisers, will have to evaluate each time how much comparative advertising meets the requirements of the law.
The question of which comparative advertising will be a violation remains open. The answer can only be given by practice and the market. Obviously, the first few years will be different types of comparative promotional products. Those that will be successfully challenged by competitors will be dismissed by the market as “illegal.” Those that can be defended will become “permitted.”
Who are the judges?
Responsible for advertising in Ukraine are two bodies – the State Consumer Service, which exercises general supervision and control over the compliance of advertising with the law, and the Antimonopoly Committee of Ukraine, which may hold accountable for disseminating false and false information. The following liability is provided for the distribution of advertising that violates the law: for the advertiser – five times the cost of distribution, for the manufacturer – five times the cost of making the advertisement. When establishing the fact of misleading consumers and disseminating false information, the Antimonopoly Committee of Ukraine imposes a fine of up to 5% of the company’s income for the previous year.
The most critical in the early years of the new rule will be the availability of evidence of the truth of the facts that will be laid out in comparative advertising. Therefore, it is very important, firstly, to carefully select an independent institution that will conduct research and comparison of consumer qualities of the product, and secondly, very carefully form the text and content of the advertisement, avoiding situations where the consumer may form another text or presentation of material perception of advertising than the advertiser actually had in mind. This is especially important in cases where there is a reduction in the commercial.
Let me remind you that in Europe the advertising market has been developing for many years. It formed clear rules of the game, which are known and understandable to everyone. But even there you can quite often find advertising wars or advertising trolling. For example, the “war” between McDonald’s and Burger King has been going on for many years. So, in France, McDonald’s, in order to emphasize the advantages of its network, which has a large number of points, released a commercial where it is noted that the distance to the nearest McDonald’s is only 5 km. But to Burger King have to go as much as 258 km. To which the latter answered with humor, having shot a commercial in which the couple, seeing the McDonald’s signpost, really wrap up this fast food. But only to recharge coffee before the long road to Burger King, where she, in the end, will be able to enjoy her favorite dishes.
In Ukraine, the issue of compliance of advertising with the requirements on the inadmissibility of misleading consumers has not yet been resolved. Of course, we strive to live by European rules in order to be a true part of Europe. And business requires us to move towards the admissibility of comparative advertising. In particular, transnational corporations operating in Ukraine. But whether we are ready to really think and work in a European way, observing the norms of law and the rules of ethics, time will tell.