A modern day David has scored a victory against a corporate Goliath as the court declared the Advertising Regulatory Board (ARB) is acting unconstitutionally when it makes rulings about non-members and their advertising.
Bliss Brands, a local laundry product manufacturer, has taken on one of its competitors, international corporate Colgate-Palmolive, as well as the ARB and won in the high court in Johannesburg.
The ARB is a self-appointed watchdog of the advertising industry, set up and funded by the industry to regulate itself. Its code of conduct contains measures to maintain standards for the industry and adjudicate complaints about companies that do not stick to the code.
The Memorandum of Incorporation (MoI) of the ARB and the code allows the ARB to rule against non-members and if the non-member does not comply with the ruling, the members of the ARB are forbidden from accepting the advertising in question. The ARB therefore has absolute power over all advertising, even if the advertising is not done by a member.
Although Bliss is not a member of the ARB, it was ordered by the regulator to withdraw the packaging of its hygiene soap brand, Securex, after Colgate-Palmolive that is a member and sells a competing brand, Protex, complained.
Bliss decided it had had enough of being bullied and challenged the constitutionality of the ARB in court.
“Colgate-Palmolive lodged a very similar complaint against us in 2019 about another brand and the ARB also ruled against us. At the time, although we did not at all agree with the merits of the ruling, we made a commercial decision to comply,” Dr Liezel Bygate, marketing director of Bliss Brands, says.
“We have absolute belief in the quality and integrity of our brands and chose to compete in the market, not in the courtroom. Emboldened by this outcome, Colgate seized the opportunity to follow shortly with another very similar complaint about our brand. We realised we would have to take a stand.”
She says Bliss did not join the ARB because the company did not think it would have much of a voice to challenge the system and effect the necessary changes as it is such a small company.
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Judge Denise Fisher ruled that:
“We are very pleased with the outcome of this case and hope it can be a step towards levelling the playing field and addressing the stranglehold which the ARB wields over the industry,” Bygate says.
She says the intention of the ARB may be noble but there are certain aspects about the way it operates which raises questions about fairness and partiality, such as:
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Gail Schimmel, CEO of the ARB, says the regulator is filing an application for leave to appeal. “We believe the judgement is deeply flawed in many respects, but most significantly in that it leaves the consumer without recourse against misleading and offensive advertising.
“The vast majority of marketers are not ARB members and if we cannot make decisions for the guidance of our members, consumers will be left unprotected. As consumer protection is at the very core of our mandate, an appeal is inevitable,” she says.
Schimmel points out that lodging an application for leave to appeal suspends the judgment and therefore consumers can take comfort in the fact that for now it is business as usual at the ARB.
“We believe the judgment was extremely clear, comprehensive and compelling. Of course, the ARB is within their rights to appeal,” Bygate says.
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