Analyzing the Prohibition Of Surrogate Advertisements

Introduction

Misleading advertisements are a huge issue in a country like ours. Several companies have indulged in the process of misleading the customers via false claims in their advertisements (ads. for brevity sake), compelling the customers to try their product, only to find out that the claims were false. Many types of goods which are also not readily acceptable in the Indian society, like alcohol, cigarettes, tobacco products etc. have also indulged in the practice of false and misleading ads., often showing a whole different range of products than what they intend to sell in the market. This is a major issue and despite various efforts by the Parliament and various ministries to create effective and stricter legislations with respect to advertisements in the country, with a view of banning misleading advertisements, false adverts still are widely present in the country. Recently, the Central Consumer Protection Authority(CCPA), under the Ministry of Consumer Affairs had released guidelines, which addressed the issue of misleading advertisements. Are these guidelines really addressing the issue and assisting the consumers?

Central Consumer Protection Authority

Misleading and false advertisements amount to unfair trade practices, as defined under Section 2(49) of the Consumer Protection Act, 2019, which is against the consumer, since false adverts have often misled the consumer into buying something he doesn’t require. The CCPA (Central Consumer Protection Authority) was set up in the year 2019, to regulate the matters that affect the legal rights of the consumer, by malpractices by the seller. The regulatory body comes under the Ministry of Consumer Affairs.

Guidelines

On June 9, 2022, the Central Consumer Protection Authority had released guidelines for the prevention of misleading advertisements. These guidelines had also mentioned the prohibition of ‘surrogate advertisements. Surrogate advertising is done for products like alcohol, tobacco etc., which are goods that cannot be advertised legally under various statutes like the Cigarette and Other Tobacco Products Act, 2003. Direct advertisement of such products is banned, as the promotion of such products would not be beneficial for the society, as most of the products are usually products which have the potential to cause direct and indirect damage to the individual and the society.

The main purpose of the proposed guidelines was to safeguard the consumers from misinformation, false claims and misleading advertisements.

Surrogate Advertisement

Surrogate Advertising is done for products that cannot be legally advertised, usually alcohol and tobacco products. The brand/company advertises the main product with the help of a secondary product, entirely different from the original product. A very famous of Surrogate Advertising in the Indian context is Imperial Blue, a spirit brand, which advertises by the name of Imperial Blue Cassettes and CDs. Many famous alcohol and beverages companies have been using this technique of advertising their brand as CD brands, soda brands, mineral or sparkling water etc.

Ban on Surrogate Advertisement

The recent CCPA guidelines set out for a complete ban on surrogate or indirect advertisements, for goods prohibited by law. The guidelines defined surrogate advertisements as:

  1. Such advertisement conveys directly/indirectly that the product being advertised is one of those products which is prohibited by law to be advertised.
  2. Such advertisements use any brand name, logo, colour, layout and presentation associated with such goods, product or service whose advertising is prohibited or restricted.

However, it is to be noted that simply using just the brand name of the prohibited product won’t be counted as surrogate advertisement.

Impact

The guidelines providing for a complete ban on surrogate advertisement has had mixed reactions from various experts in the advertising and business sector. Some experts have opined that this is a good decision not only for the consumers, who no longer would be subjected to ‘false’ advertisements, but also the already existing brands that used surrogate advertisements. According to Manoj Menon, Head of Research, ICICI Securities, a notable individual in the market, this ban on surrogate advertisements would act as a entry barrier in the alcohol market, which is already very difficult to enter into, given the strict regulations with respect to alcohol marketing.

He relied on the example of the ban on advertisements of infant/baby food in the 90s, which further helped the already present brands in gaining better market control. Nestle, one of the largest infant food companies at that time, had benefitted from the ban on the advertisements of baby/food on media/TV. This acted as a barrier to entry to the market, and smaller and less influential companies were unable to get a grip at the infant/baby food market.

However, this also could work against the market as the control would be with fewer companies in the market. A total and complete ban on surrogate advertising can also have an adverse effect on alcohol and tobacco brands, which have provided significantly to the economy, as these brands are not legally allowed to advertise directly either.

However, the guidelines have been ambiguous, as there is a lot of confusion around the concept of brand extensions. Manisha Kapoor, the Secretary General and CEO of Advertising Standards Council of India, the self-regulatory body for advertisements in the country, had to say that the recent guidelines don’t mention about the concept of brand extensions, which is permitted by law, and how there exists a grey area between the issue of brand extensions and surrogate marketing.

Brand Extensions

Brand Extensions are basically done to create, sell and advertise a product which is allowed to be sold legally, using the brand name of the product not legally allowed to advertise. In simpler words, an alcohol and spirits company, if starts to sell other merchandise like crockery and glassware, by the name of the alcohol, and then advertises for it, then it is a brand extension. It is basically like surrogate advertising, but instead of advertising for a product that doesn’t exist, under the ambit of brand extensions, the brand advertises for products that it actually sells.

The Advertising Standards Council of India has set out some criteria for a product to be identified as a brand extension:

  1. The product that the company wishes to sell and advertise as a brand extension should be registered under its proper authority.
  2. For a brand present in the market for more than 2 years, the revenue of that particular product should be more than Rs. 5 crore per annum. For brands present in the market for less than 2 years, a minimum revenue of 20 lakhs per month is necessary.
  3. All these guidelines and criteria should be strictly adhered to by the brand/company and should be validated/checked by a reputed CA firm.

Many brands belonging to the alcohol and tobacco industry have advertised in the market using brand extensions. Alcohol brands have previously engaged in various forms of advertising with the help of brand extensions by using various products and services like music CDs, music festivals etc, and advertised them in the name of the alcohol brand.

The Director General of Confederation of Indian Alcoholic Beverage Companies (CIABC) Vinod Giri had to say that it is very necessary for the government to clearly set out distinctions between the concept of surrogate advertising and brand extensions. He also supports brand extensions and opines that genuine brand extensions should be permitted to be advertised, and referred to the example of Kingfisher Airlines, named after the popular liquor brand, Kingfisher.

Brand Extension under other Laws

  • Cable Television Network Rules, 1995

This statute allows the advertising of brand extensions of products prohibited to advertise like alcohol and tobacco, however, the advertisement should not make any direct or indirect reference to the product prohibited and should only be limited to the brand extension product.

  • Cigarettes and Other Tobacco Products Act, 2003

This act however, imposes a complete ban on the advertisement of cigarettes and tobacco products completely. This is a blanket ban and often counters the provisions laid out in other acts.

Conclusion

There is no definite distinction between surrogate advertising and brand extensions, and there still exists a confusion among various brands and advertisers, whether to advertise their product or not. This would certainly lead to a lot of judicial cases, and the judgements and verdicts of such cases would then act as precedents for future advertisers. Till then, it is expected from the Central Consumer Protection Authority to set out clear guidelines for the differences between a surrogate advertisement and a brand extension.

The guidelines even clearly state that for any disputes with respect to any clause of the guidelines, the decision of the CCPA (Central Consumer Protection Authority) would be final and binding. Due to this confusion between surrogate advertisements and brand extensions, it is imperative to say that there will be a lot of disputes between the advertisers and the authorities, and the judgement by the CCPA would be binding.

Various calls for a lift on the blanket ban on alcohol and tobacco products, subject to various restrictions, is also something that the CCPA, Advertisement council and the MCA needs to look after. This would stop the practice of false and misleading advertisements, which would help in the clampdown on false misinformation and false claims. Till then, one can only wait for further guidelines from the respected authorities.

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