Bliss Brands loses mammoth case against advertising regulator

It’s taken numerous court cases and years for the powers of the Advertising Regulatory Board (ARB) to be confirmed. On Monday, the Constitutional Court finally confirmed the ARB’s right to rule on the advertising of non-members, in the drawn-out fight between the regulator and Bliss Brands, the manufacturer of the MAQ and Securex ranges of household and personal care products.

The decision confirms the earlier decision of the Supreme Court of Appeal (SCA), which recognised that the regulator could rule on the advertising of non-members and issue ad alerts, in accordance with its Code of Advertising Practice for the guidance of its members.

The industry funds the ARB for regulatory purposes, aiming to maintain standards through its code of conduct. The ARB’s memorandum of incorporation (MOI) is binding on its members, who control the print, digital and broadcast media in South Africa. Through the MOI and code, the ARB can make rulings and orders against non-members, who are required to decline disputed advertising from non-members, which in effect would result in a blanket refusal by members to publish adverts in violation of its code.

Ad alerts, the code and certain provisions of the ARB MOI were central to the dispute between fast-moving consumer goods (FMCG) giant Colgate-Palmolive and Bliss Brands, which was initially taken to the regulator (and later challenged in the high court), which ordered Bliss to withdraw the packaging of its hygiene soap brand, Securex, after Colgate complained that the company had exploited its advertising goodwill and imitated the packaging of its Protex soap brand.

The ARB ordered that Bliss Brands withdraw the packaging of Securex, alleging that Bliss had violated clauses of the ARB code, which deal with “exploitation of advertising goodwill” and “imitation” in advertising, raising legal issues to do with contraventions of copyright law and trademark infringement.

Judge Denise Fisher agreed with Bliss, ruling that the ad alert constrained the right to trade freely and was inherently an infringement of the rights of the person and property, thereby violating the Constitution.

While granting leave to appeal, Judge Fisher upheld the complaint that the ARB sought to exercise judicial authority, when it was not a court, in contravention of section 165(1) of the Constitution.

When the matter was taken on appeal, the SCA was asked to rule whether the earlier court was correct in making the series of orders, including the order declaring clause 3.3 of the MOI unconstitutional, void and unenforceable, given that those orders “effectively dismantled the system of self-regulation of advertising in South Africa in its entirety”.

In April 2022, the SCA found that Bliss had, in fact, submitted to the ARB’s jurisdiction and that in none of the three levels of the ARB’s decision-making process did Bliss Brands object to the regulator’s exercise of jurisdiction over it. Crucially, the court found that the regulator, in the public interest, is entitled to consider, on behalf of its members, advertising complaints against non-members to allow its members the opportunity to elect whether they wished to publish the advertisements of a non-member.

But in the appeal before the Constitutional Court, Bliss claimed it was effectively coerced into participating in ARB processes. It held that consenting or submitting to the jurisdiction of the ARB was not a ground of appeal before the SCA, so the court should not have decided on that question.

The respondents submitted that the relief sought by Bliss Brands, that the ARB cannot make decisions which are binding on non-members, effectively dismantles the legitimate system of self-regulation of advertising supported by ARB members’ rights to freedom of association and expression, which is exercised through the code and the MOI. They contended that, as the SCA confirmed, ARB members “have organised around the shared goal of promoting ethical standards in advertising, as reflected in the code”.

The latest decision by the Constitutional Court, in refusing leave to appeal based on the factual findings of the SCA, confirms the ARB’s power over its members.

Had it failed, the ARB would have been rendered powerless over non-members, the provisions of its MOI and code would have been unenforceable, and the ARB would not have been able to issue rulings against or in relation to a non-member or their advertising.

Gail Schimmel, the CEO of the ARB, said this was a victory for the ARB and the consumer. “We can continue with the important work that we do to protect consumers, with this matter now resolved by the highest court in South Africa.” DM