Comparative advertising in India: Need to strengthen regulations

Abstract

With the liberalization and globalization of the Indian economy, firms have been aggressively and vigorously promoting their products and services. In a comparative environment, every representation of a product or service is about what 憃thers are not.' These practices raise questions about truthfulness and fairness of representation of products and services. This paper explores regulations on comparative advertising of products and services in the context of globalization and liberalization in India. The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, was amended in 1984 to introduce a chapter on unfair trade practices. One of the provisions constitutes any representation which 慻ives false or misleading facts disparaging the goods, services or trade of another person' to be an unfair trade practice. The MRTP Commission and the Supreme Court have given shape to the provision. Most comparative advertisements refer to rival products as 憃rdinary,' instead of specifically mentioning names of products. Aggrieved firms have claimed that 憃rdinary' refers to all products other than the advertised one. The MRTP Commission, however, has maintained that the wording in the law 慻oods of another person' implies disparagement of an identifiable product of a specific manufacturer. Further, only if the disparagement is based on 慺alse and misleading facts' that the advertisement becomes an unfair trade practice. Establishing facts often requires detailed scientific and technical assessment of the products. Our courts are not equipped to deal with this. As courts can take a long time to settle a dispute, what has become crucial is whether a court would award intermediate injunction or not. This is restraining the party from advertising pending a final decision by the court. In fact, by the time interim injunction is granted, the advertisement may have abready done the damage. The law makes provision for compensating the party for 憀oss of business and profit.' The courts, however, have found computing losses to be not free from 慶omplications and complexities.' Thus, courts have not been awarding compensation. All these factors together have left the field of comparative advertisement effectively unregulated. The major findings of this study in this context are: ? The opening up of the economy, on its own, is not going to create and sustain competition. ? Protection against unfair trade practices has been available under the Consumer Protection Act. Thus, the repeal of the MRTP Act would not be of any significance. ? Not only the consumers but even the firms need adequate law against unfair trade practices to have some 憆ules of the game'for competing among themselves. But, within the structure of the Consumer Protection Act, competing firms cannot be 慶onsumers' to approach a consumer forum. ? The state would need to develop adequate knowledge of the working of businesses in a free economy, enact laws, and create infrastructure and mechanisms for sustaining competition. � 2005, SAGE Publications Ltd. All rights reserved.