Aug 27, 2024Streamlining the Self-Certification Requirement for Curbing Misleading Advertisements in India
This article has been published by Chambers and Partners at Streamlining the Self-Certification Requirement for Curbing Misleading Advertisements in India – Chambers and Partners | Researching Outstanding Lawyers Globally | chambers.com
India has been witnessing some interesting developments on misleading advertisements, particularly in the health sector. The Supreme Court of India recently reprimanded a pharmaceutical company for misleading consumers to believe that their health products can cure some terminal diseases, especially during the COVID-19 pandemic. The pharmaceutical company was ordered to publicly apologise and refrain from indulging in anti-consumer activities. Interestingly, this case led the Supreme Court to examine a broader issue. The Supreme Court observed that manufacturers of health-related products have little to no accountability when it comes to advertising their products. The Supreme Court impleaded government ministries which govern ayurveda (ancient Indian traditional medicinal methodology), consumer affairs, food and public distribution, information and broadcasting, and information technology in India, to review how they are tackling misleading advertisements under the Drug and Magic Remedies (Objectionable) Advertisements Act, 1954 (DMR Act), the Drugs and Cosmetics Act, 1940 (DC Act) and the Consumer Protection Act, 2019 (CPA).
With this background, the Supreme Court, on 7 May 2024, mandated that all advertisers and advertising agencies submit a “Self-Declaration Certificate” (SDC) which must confirm that each advertisement is free of misleading claims and complies with regulatory guidelines before publishing or broadcasting them (“Supreme Court Directive”). On 3 June 2024 and subsequently on 5 June 2024, the Ministry of Information and Broadcasting (MIB) issued advisories mandating the submission of SDCs for all advertisements published on or after 18 June 2024 (June Advisories).
Understanding the Supreme Court Directive’s true intent and scope
The Supreme Court Directive was issued to address the proliferation of misleading advertisements, particularly those published by pharmaceutical and fast-moving consumer goods (FMCG) companies. These advertisements, which are often rife with unsubstantiated health claims, exploit the public. The Supreme Court’s primary goal was to safeguard the public’s right to health by preventing these misleading promotions and ensuring consumers are provided with accurate and reliable information on health-related and FMCG products.
Understanding the context of the Supreme Court Directive is critical. It does not aim to encompass all advertisements under the sun. Rather, the Supreme Court focused on advertisements with public health implications. This is clearly reflected in the Supreme Court’s emphasis on consumers’ fundamental right to health. The June Advisories, however, had cast a wider net by extending the SDC requirement to all advertisements, regardless of their content.
3rd July Advisory: addressing industry concerns
Following the June Advisories, various industry associations expressed their concerns to the MIB, including the following.
- Overwhelming volume of advertisements – the volume of advertisements, especially in the digital space, makes it nearly impossible to certify each one.
- Practicality of implementation – a mandatory self-certification step would severely disrupt programmatic advertising, which relies on computer algorithms for real-time ad placement.
- Insufficient infrastructure – the current systems are inadequate to manage the volume of SDCs required. Significant investment in infrastructure and resources would be needed, burdening micro, small and medium enterprises (MSME) and advertisers.
- Existing regulations – the digital advertising ecosystem is already comprehensively regulated under general and sector-specific laws, including the CPA, Information Technology Act, 2000, DMR Act, and DC Act. Adding another layer of bureaucracy (instead of reinforcing the existing regulatory mechanism) may be counterproductive.
- Impact on MSME and small advertisers – the SDC framework could negatively impact small businesses and advertisers (such as influencers), adding compliance costs and potentially reducing advertising activities.
- Confidentiality concerns – marketing plans, particularly for new product launches, are closely guarded secrets. Public disclosure of self-declarations could reveal trade secrets and may allow competitors to strategise counter plans.
- Limitations of self-certification – we cannot escape the potential positive impact of self-certification in consumer protection, including the potential to create a certain standard which becomes generally acceptable as a threshold for both compliance and accountability. However, without the threat of stringent government action, perhaps it will only be the altruistic and the public-spirited stakeholders who would be compliant both in letter and spirit. Rogue actors who nonetheless mislead consumers, despite the SDC, will have to be subject to regulatory action.
Recognising some of these practical challenges and widespread concerns, the MIB issued a new advisory on 3 July 2024 (“3rd July Advisory”), superseding the previous ones. The MIB, while ensuring compliance with the Supreme Court Directive, issued the 3rd July Advisory where (i) it clarified that the SDC requirement applies specifically to food and health-related products and services, (ii) advertisers/agencies issuing advertisements for food and health-related products and services were advised to upload an annual SDC on the specified government portals, and that (iii) advertisers/agencies must provide proof of uploading the self-declaration to concerned media stakeholders.
Supreme Court’s much-needed clarification
The 9 July hearing was significant as various industry associations had approached the court highlighting the practical difficulties in implementing the SDC requirement, apart from making representations to the MIB.
On that date, the court emphasised that the Supreme Court Directive has already highlighted the focal sectors for its mandate. This reinforced what was apparent in the past orders that the Supreme Court focused on advertisements with public health implications so far as its SDC directive was concerned. Notably, the Supreme Court at the hearing on 30 July 2024 focused on the efficacy of ayurvedic health products.
The Supreme Court also clarified that the intent was never to negatively impact the industry. On 9 July and 30 July 2024, the Supreme Court, inter alia, positively noted the MIB’s submissions that MIB has made efforts to resolve issues stemming from the Supreme Court Directive. The Supreme Court directed the MIB to conduct high-level meetings with various impacted stakeholders, the Ministry of Consumer Affairs, and the Ministry of Health & Family Welfare, to gather inputs on the operational challenges with the SDC requirement, and consider how to streamline the process of such requirement.
Stakeholders’ consultations: effective solution for directives with wide-ranging implications
Stakeholder consultations have historically proven effective in devising solutions for the implementation of technically complex court directives with wide-ranging implications. There are precedents where the Supreme Court, after recognising the necessity of stakeholder consultations, has modified past directions due to their technical infeasibility.
In the writ petition (M K Ranjitsinh v Union of India, 2024, SCC Online, SC 570) filed to protect certain endangered birds, the Supreme Court, inter alia, ordered the underground installation of future low-voltage power lines and the converting of existing overhead lines in priority habitats of the birds to mitigate risks to the birds. The concerned ministries sought modifications of these directives from the Supreme Court.
Recognising the need for stakeholder consultations, the Supreme Court observed that the above order needs to be recalibrated based on suggestions by domain experts “instead of an a priori adjudication by the Court”. After receiving comments from domain experts, the Supreme Court modified its earlier order by substituting it with measures suggested by domain experts.
Similarly, the Supreme Court’s direction to hold meetings with stakeholders and domain experts to discuss the implementation of the SDC requirement is a step in the right direction. This shows that the Supreme Court aims to develop a balanced framework for the SDC requirement which ensures that it aligns with the intent of protecting consumers without imposing undue burdens on the industry. This approach reflects inclusive decision-making, much like the endangered birds case.