Advertising creates demand, or so it is believed. But dishonest or deceptive advertising undermines confidence and harms business and the market. It also causes consumers to make uninformed or poorly considered purchasing decisions, and it diminishes trust in brands. Ensuring ethical and honest advertising is an important objective of Vietnam’s commercial legal framework: Advertising Law, Competition Law, etc. We look here at comparative advertising.
So, what is comparative advertising and is it acceptable? Comparative advertising is unique. It is the overt comparison of similar products. This form of advertising is governed by three separate legal frameworks: Commercial Law 2005, Advertising Law 2012 and Competition Law 2018. The Commercial Law prohibits the use of advertisements that directly create an association with the goods and services of a competitor. The Advertising Law is somewhat similar but more specific; it does not allow cross-references to price, quality, or effectiveness of one’s own products when compared with another manufacturers’ products within the same trade category. On the other hand, the Competition Law permits comparative advertising provided that it relates to similar goods or services and that there is proof of the truth of the comparison. That is to say the three key laws governing competitive advertising are inconsistent, indeed one is contrary. While both the Commercial Law and the Advertising Law restrict direct comparison advertising, the Competition Law permits both direct and indirect comparative advertising. Comparison under the Competition Law is seen as a way to give an advantage to the consumer, and it is not seen to be unethical. These inconsistent fundamental precepts and resulting inconsistent regulations on comparative advertising have made it difficult to apply the law. Consider the shortcomings.
Legal Conflicts regarding Comparative Advertising
First, there is a conflict in the conceptual framework of the several laws among the laws that apply to comparative advertising. Following the Law on Promulgation of Legal Documents, if two legal documents have been enacted by the same body and have contradictory language, the language of the most recent document prevails (lex posterior). But only the conflicting language is resolved in this way, not the documents themselves.
Advertising is governed by three documents: the Commercial Law, the Advertising Law and the Competition Law. All have been adopted by the National Assembly, but only the Law on Advertising and the Competition Law regulate comparative advertising. The Advertising Law was adopted in 2012 and the Law on Competition in 2018. The Advertising Law does not come into account because the Law on Competition, being last in time, takes precedence over the Law on Advertising. However, the matter is more complicated on the point. The Competition Law states that if other legislation has provisions on unfair competition that differ from those in the Competition Law, then the other legislation will apply. Therefore, the Advertising Law takes precedence with respect to comparative advertising. The result, then, is that comparative advertising is prohibited, despite the permissiveness of the Competition Law.
Defining Comparative Advertising
Second, what actually is comparative advertising? While there are several laws that regulate comparative advertising, none of them clearly defines it. This lack of clarity easily leads to uncertainty when dealing with advertising that is not clearly comparative. This issue can lead to exaggerated claims in advertising, such as the assertion that company X’s product is “number one”, this being considered superlative advertising and is prohibited.
Dual Violations in Comparative Advertising
Third, under the Law on Advertising, comparative advertising may result in two different violations. The law regulates advertising in two ways: it looks at the advertising method, which involves comparison (either direct or indirect) and it looks at the nature of the advertisement (whether it is, say, false, deceptive or misleading). Thus, for example, if a direct comparative advertisement contains false information, and at the same time, it is misleading or violates intellectual property rights, the advertisement can be considered to have violated two different prohibitions. Each violation can be punished separately.
Individual Comparative Advertising
Fourth, it is becoming increasingly challenging to regulate comparative advertising when it is made by individuals. It can sometimes be unclear whether it is even advertising. Technology, public perceptions, celebrity can have immense influence beyond traditional media such as television, newspapers, and billboards. Indeed, social media can be seen as a form of advertising. Lawmakers must now deal with new kinds of actors like celebrities, key opinion leaders (KOLs), video streamers (V-bloggers), social media, brand advocates (seeders), product reviewers and individual buyers who all share their opinions about goods and services through e-commerce platforms and digital social networks—many without compensation or reward. The Competition Law, the Advertising Law, and the Consumer Protection Law govern advertising made by individuals at various levels. The Competition Law applies to businesses, industry and professional groups. It also regulates domestic and international organizations and individuals who are engaged in or related to competition cases. The Consumer Protection Law regulates subjects including businesses, merchants and individuals engaged in independent and regular economic activities, even if they are not registered as enterprises or business households. However, celebrities and other influencers do not normally engage in such ordinary business activities; when they do not, they are not subject to this law.
The Advertising Law clearly defines the subjects it regulates, which include certain entities, plus individuals who convey advertisements—which we refer to as advertising conveyors. As defined by the Advertising Law, advertising conveyors are individuals or entities that directly execute an advertising service contract and whose task it is to introduce and provide information about products, goods, and services through advertising media. To repeat, advertising conveyors include individuals who convey advertisement as described above.
Ordinary consumers can express their opinions and compare the products and services they have purchased in a way that can sway the public’s view. Whether a consumer is an ordinary person, or a celebrity should not affect her right to express an opinion. Even though there may be laws regarding advertising, the laws do not easily apply to such cases since the laws lack precise definitions and rules. Moreover, not every expression of the preference of one product over another by a celebrity is advertising. An expression of a preference may simply reflect an opinion. However, we suppose that if a celebrity is paid to express a comparative view of a product or service to an audience, that the expression can be considered to be advertising.
Reforming Vietnam’s Advertising Law
Although the Advertising Law governs advertising that engages in direct comparison and that is made by advertising conveyors, enforcement of these provisions of the law is not feasible. As mentioned above, the Advertising Law does not define direct comparison advertising nor does it describe the rights and responsibilities of persons who advertise the product through e-commerce platforms and digital social networks.
The Vietnamese National Assembly is working on a draft to amend the Advertising Law. Drafting the Advertising Law has begun. In the latest draft, two subjects will be included when the Advertising Law refers to advertising conveyors: individuals who advertise online (influencers) and those who convey “traditional” advertisements (such as those who wear, hang, attach, stick, or paint advertised products on themselves). However, while the existing law is silent on whether a contract between advertising conveyors and advertisers is required, the latest draft of the Advertising Law confirms this by the new definition of individuals who convey advertisements: “An advertising product conveyor is someone who directly executes an advertising service contract to introduce and inform about products, goods, and services through advertising media“. This term is somewhat narrow and may limit the scope and may even exclude certain celebrities and other individuals from the law’s scope, as such persons may not always enter into an advertising service contract with a business. In reality, influencers may receive money or other benefits in return for sharing their opinion and without having to sign a product or service contract. Clearly, requiring a specific advertising service contract between influencers and advertisers would reduce the regulatory effectiveness of this rule.
The latest draft of the Advertising Law reinforces the existing legislation by adding rights and responsibilities of advertising conveyors. According to the draft, advertising conveyors have an obligation to provide materials related to the advertised product when requested by the target of the advertisement or the relevant government authority. For instance, if a regulatory authority suspects that a comparative advertisement may be unlawful, the advertising conveyor must provide evidence demonstrating the truthfulness of the advertisement’s content. Additionally, advertising conveyors are directly responsible for the content of the advertisement regarding the features, quality, uses, and effects of the products, goods, or services they advertise. These regulations would require celebrities and conveyors who use social media and e-commerce platforms to be accountable for their product reviews.
However, apart from “traditional” advertising conveyors such as individuals who wear, hang, attach, stick, or paint advertisements on their bodies, it is necessary to clearly define online advertising conveyors and to separate them into two distinct groups: those who do not produce the content themselves but convey advertisements created and commissioned by advertisers, and those who create the advertising content independently. That is, advertising conveyors’ responsibilities regarding the advertisements they convey should also be regulated differently. Furthermore, it is important to broaden the nature of the relationship between online advertising conveyors and advertisers. That is, not all online advertising will have a written contract. A specific written contract between the product producer and the conveyor should not be required. Only when these important but subtle issues in the Advertising Law and the draft are addressed can there be progress in regulating comparative advertising.
