Comparative advertising shall be absolutely prohibited?

“1 Hz is OUT, please do not confuse consumers”,” Full DC is OUT, 10 years old technology is old”. Midea and Gree, 2 air-conditioner companies, were involved in an advertisements’ fight in April 2012, Jiangxi Province. After the advertisements were launched, both parties alleged that the opposite side had violated “Anti-Unfair Competition Law”, and claimed for compensation. After hearing, the court affirmed that they were air-conditioner sellers, so they are competitors; consumers might be confused by these advertisements on the different brands of air-conditioners, and finally the consumers might make a false decision. The court required both parties to stop publishing these advertisements, and publish the apology statements on the same page in “Jiangnan Metropolis Daily” and “Nanchang Evening News”.

The advertisements’ fight seems like a farce, however, it reflects a phenomenon that the enterprises are lacking of awareness on the advertising legality in the fierce competition.

For comparative advertising, “Anti-Unfair Competition Law” and the “Advertising Law”, as well as the relevant laws and regulations, have listed 6 categories of situations: (1) The absolute statement is prohibited, such as “Advertising Law” Article 7 provides that terms such as “State‑level,” the “highest‑grade” or “the best” shall not be used in the advertisements; (2) Commercial defamation is prohibited, for example, “Standards for the Examination of Advertising” Article 35 provides that the language and words used in comparative advertising, should be accurate, and could be understood by the consumer; (3) Directly or indirectly slander, defame the others are prohibited, such as “Anti-Unfair Competition Law” Article 9, a business operator may not, by advertisement or any other means, make false or mislead publicity of their commodities as to their quality, ingredients, functions, usage, producers, duration of validity or origin. (4) The direct comparisons are prohibited, the indirect comparisons are strictly restricted, such as “Standards for the Examination of Advertising” Article 32 provides that the comparative content should not be connected to specific products or services, or use the other direct comparison method. The indirect comparison on the similar products or services, the unit shall provide a scientific basis and other evidence; (5) Words without evidence is prohibited, for example, “Advertising Law” Article 10 provides that data, statistical information, results of an investigation or survey, digests and quotations used in an advertisement shall be true to the facts and accurate, and their sources shall be indicated.; (6) The alarmist statement is prohibited, for example, “Standards for the Examination of Advertising” Article 36 provides that the comparative advertising shall not mislead consumers by way of association, such as if consumers fail to use the products, they may have serious damages or adverse consequences (safety or labor protection appliance are excepted). The two advertisements may belong to the above circumstance (3) or (4) .

However, the laws have not prohibited all comparative advertising. According to “Standards for the Examination of Advertising (Trial)”, the products involved in comparative advertising should be identical or analogical, the compared aspect is comparable. The content be contrasted should be based on facts, and these facts can be proved. Therefore legitimate comparative advertising shall be determined with 2 fundamental premises: firstly, the products should be identical or analogical; secondly, the content shall be based on facts. For example, comparing its newest products with the competitor’s old products would not normally be deemed as identical or analogical; or if the bacteria quantity in the competitor’s product failed to meet the national standard, and the company publishes an advertisement by emphasizing the product has met the national standards, this comparative advertising will be an acceptable one generally.

In practice, there are no clear boundaries between a comparative advertising and a non-comparative advertising. A company can compare its own old products and upgraded ones, although this may be deemed as satirizing the competitors, if it has marked that the 2 products belong to itself, the competitors’ claims may not be supported by the courts. P & G, Unilever like this method, e.g., Olay’s commercial just uses this method, it marks “not upgraded” in small size in the lower left corner of the commercial.