Advertisement Regulations in Russia

BLAW 225

David Rapp

03/03/17

Advertisement regulations in Russia

Overview:

        The Russian Constitution guarantees common protection of competition, freedom of speech and thought, economic space, and ensures the right to freely receive, look for, transmit, distribute and produce information. This general rule, which was put in place by the primary Russian statute, constitutes and establishes the foundation of advertising regulation in Russia, which is described in more details in the Law “On Advertising”. The advertising Law is considered to be the most essential piece of federal legislation in the Russian advertising industry.

The first article of the advertising Law gives a definition of it’s main goal, which is to facilitate the development of the market economy, based on ensuring common economic space and the principles of fair competition. In other words, the Advertising Law prevents misleading or false advertising by putting in place industry specific regulations and certain prohibitions over how businesses should treat their customers and how competitors may deal with each other.

In 1995, at the beginning of the emergence of the Russian market economy, the very first Advertising Law was adopted. As the competitive environment became more and more important, the necessity for more sophisticated legislation became inevitable. Even if the legislature tried to consider the current economic situation at the time, the Advertising Law has undergone more than 300 amendments, since the date of its enactment.

        Because of a large number of questions posed by the Russian Supreme Arbitration Court (the SAC), relating to the enforcement of the Advertising law, certain Ruling were adopted in 2012 (the SAC Ruling). The SAC Ruling basically clarifies and emphasize on important legal issues, with a special emphasis on the specific types of advertising, the definition and concept of advertising, and naturally the arbitration courts enforcement of the Advertising Law.  The state administrative body in charge of the enforcement of the Advertising Law is The Federal Antimonopoly Service of the Russian Federation (the FAS). Basically the FAS initiate administrative cases (ex officio), and also carry out inspections.

        If there is a violation of the Advertising Law, this results in administrative and civil liability for the concerned advertiser, advertising distributor and advertising producer. If that’s the case, the FAS initiate the administrative procedure and impose a fine on the infringer. If someone’s rights are infringed by an advertisement that is considered inappropriate, this person can apply to court and claim several different types of compensations for their losses including recovery of damages, moral damages, lost in profits, public refutation of false advertising. However, if there is a violation of the Advertising Law, the infringer is not subject to criminal penalties (imprisonment…)^[1].

False advertising:

In Article 5 of the Law, the overall requirements for advertising are set forth, and states that the advertising should not be misleading or false. Advertisement is considered false if the honor is denigrated, if it contains comparison of the advertised goods that are incorrect regarding other goods in circulation that are produced or sold by other manufacturers and sellers, if it advertises prohibited goods that have similar or identical trademark with other goods, or if the advertising is considered as an act of unfair competition.

The most common cases in terms of false advertising is the groundless positioning of goods, a brand or a service provider as being number one or the best. Both the Russian courts and the FAS require that, in order to prove the statement of superiority, the criteria of comparison and a document confirming the claimed fact should be indicated by the advertiser. As an example, The FAS has considered several years ago the advertising of a Vodka brand as ‘#1 in Russia’ unfair competition as the owner of the brand had no way to prove that indeed the vodka was ranked as number one in the Russian market. After further investigation made by experts, the verdict showed that the Vodka had never been awarded of any quality prizes and that it didn’t have the best quality characteristics.

The Advertising Law also provide an extensive list of information in regards of services (goods) and their providers (manufacturers) that can be considered as part of misleading advertising including: the characteristics of the goods (composition, nature, quality…), the range of the goods (including time period and availability), the price of the goods (payment method, tariffs, discounts…), and the advantages of the advertised goods. In addition to these informations, the advertising Law defines misleading advertisement as “advertising containing untrue information about other person’s intellectual property rights and mean of individualization” (company names, trademarks…).

Comparative advertising:

        The Advertising Law does not prohibit comparative advertising except if the advertising does contain incorrect comparisons of the advertised goods with some other goods in circulation produced and sold by other manufacturers and sellers (Article 5.2.1). The Advertising Law doesn’t clearly define the different criteria for ‘incorrect comparison’, leaving it to the FAS and the courts. As for the SAC Ruling, incomplete comparison or comparison based on the disparate criterion is prohibited. The SAC also states that the advertiser should be exposed for dissemination of false information, with respects to the goods of the competitors and to the advertised goods.

Comparative advertising is permitted (except for medication), but the advertising must be fair and accurate based on the fact that your product may offer real advantages over your competitors. As there is no clear definition of ‘incorrect comparison, many companies search for new parameters where their products may appear favorably over their competitor’s product.

        Because Russia recently developed its market-based economy, the laws governing marketing in the country are still evolving. In the Maggi case (2012), two consumer goods giants’ Russian subsidiaries Unilever and Nestlé had a dispute over the incorrect comparison of flavorings and cooking-stock cubes. Nestlé who is the owner of the Maggi brand initiated an action against Unilever who is the owner of the Knorr brand, and claimed that the slogan “Knorr: True Taste. No Magic” used in the Unilever’s TV commercial, had an incorrect comparaison of the two products, which was discrediting Nestlé’s business reputation and constituting an inappropriate advertising. In the end, three Russian courts ruled that Nestlé didn’t prove the infringement of its interests and rights by the disputed TV commercial, and so the courts dismissed the claim. The three courts also stated that the similarity between the words ‘Magic’ and ‘Maggi’ was not seen as an incorrect comparaison. Before the Maggi case (2012), Russian courts generally considered previous similar cases as being a false advertising and an incorrect comparison, and advertisers were generally banned from using such slogans.^[2]