By Lu Lam Uyen
July 9, 2012
Advertising laws and regulations are constantly trying to balance the freedom of sales promotion for companies, an expression of free trade, in harmony with consumer protection and the general public interests.
Advertising law is founded on the recognition of the freedom of trade promotion for businesses. This law intends to develop business activities and the economy in general. Therefore, a certain form of advertisement will be strictly prohibited if it reaches a limit where the benefits of competitors, consumers and the community are affected. This limit can be explicit in some cases, but ambiguous in others. That is why policy makers should be alert, but also consistent with efforts to facilitate the freedom of advertising at the highest level.
Comparative advertising used to be controversial issue in Europe, the cradle of world trade law. In the 70’s, the question of whether or not comparative advertising should be banned had been a matter of much debate to the lawmakers in these developed countries. They reasoned that the comparison itself could pose potential risks of unfairness. During this period of time, except in the UK, the U.S. and a few Scandinavian countries, comparative advertising was not allowed in other developed countries.
However, with the development of the commercial law, the issue was given thorough consideration on the ground of expanding the right of access to information for consumers, freedom of advertising and freedom of speech for companies, and the common interest of the business environment. Accordingly, comparative advertising was seen as necessary, because it provides consumers with more information on product quality and value, so they can make better purchasing decisions. In addition, comparative advertising, if carried out in a fair and truthful manner, promotes market transparency, stimulates competition among goods and service providers for the benefit of consumers, and therefore helps the economy develop,
Therefore, in 1997, Europe officially made comparative advertising legal, on the condition that the comparison is made for goods and services of the same type, and the information provided is fair, truthful, verifiable, not misleading, and without discrediting or taking advantage of competitors’ reputation (Definition of Comparative Advertising – Prof. Peter Miskolczi Bodnar – University of Miskolc).
In Vietnam, comparative advertising is regulated by the Competition Law of 2005, in which companies are not allowed to use direct comparisons for advertising their goods and services. Thus, lawmakers have chosen a safe path by strictly prohibiting comparative advertising, rather than assessing its values in order to protect the freedom of companies. On the other hand, other forms of advertisement where direct comparisons might not be used but contain information harmful to competitors have been ignored, like in the case of Acecook vs. Masan. The Competition Authority refused to take the case, starting that Masan’s ad did not have direct comparisons, although they admitted that the ad did discredit and unfairly attack its competitor.
The case of Rolls Royce vs. Mazda (Japan) is a good example of taking unfair advantage of a competitor’s reputation. Rolls Royce had sued Mazda for featuring one of its products as “The family’s new Rolls” in an advertising campaign, and a Swedish court had ruled in favor of Rolls Royce (the EC Directive on Comparative Advertising and its Implementation in the Nordic Countries: Especially in Relation to Intellectual Property – Ulf Bernitz – Stockholm Institute for Scandinavian Law (1957 – 2009). Unfortunately, in Vietnam, such cases cannot be settled under the Competition Law.
The draft Law on Advertising has defined various forms of comparative advertising in more detail than the Competition Law. In fact, regulations on comparative advertising can be governed by the Competition Law (Laws on Advertising to comply with international standards – Prof. Dr. Nguyen Van Nam), but while waiting for the Competition Law to be modified, the Advertising Law can offer a better framework for comparative advertising.
However, the draft Law on Advertising, like the Competition Law, fails to provide a definition of comparative advertising. Comparative advertising, as defined by the EU, is “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor” (Directive 97/55/EC of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC). The lack of such a definition would make the advertising law incomprehensive in covering a wide variety of negative forms of comparative advertising in the marketplace, and at the same time, it can hamper the freedom of business promotion for companies by prohibiting any advertising that does not give a comparable correlation.
This is possible because of the prohibition from using words and terms such as “the most”, “the only one,” “the best” and “number one” or those with similar implications. The usage of these words and terms does not denote any comparison, and in common practice, overstatement can be accepted.
The Advertising Act is an important part of commercial law. Of all the unfair competition cases settled by the Competition Administration Agency in 2011, 34 of 36 cases involve negative advertising practice (2011 Annual Report – Competition Authority). It is obvious that the development and promulgation of the advertising law is crucial, especially in the context of the current international integration of Vietnam.
“The Business Law is attractive when it can balance interests” (Law Lesson: Recognizing and Constructing Justice – Dr. Pham Duy Nghia) and it is still an issue of much debate to make this possible with comparative advertising.
 Faculty of Law, HCMC University of Economics