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  • Overview of the Digital Competition Bill: Is it fostering innovation or stifling it?

    Overview of the Digital Competition Bill: Is it fostering innovation or stifling it?

    With the underlying objective of fostering innovation, promoting competition, and protecting the interests of users of digital services in India, the government has recently proposed the Digital Competition Bill, 2024. This bill aims to regulate and penalise the anti-competitive practices of tech companies providing “core digital services,” including online search engines, online social networking services, video-sharing platform services, interpersonal communications services, operating systems, web browsers, cloud services, advertising services, and online intermediation services.

    The primary feature of the bill is its ex-ante framework, which is preventive and presumptive in nature, aiming to curb anti-competitive practices before they occur. This contrasts with the existing Competition Act, 2000, which is an ex-post antitrust framework and has been deemed suboptimal for addressing antitrust issues in the digital environment. The current framework regulates market abuse after it happens, a process criticized for being slow, especially in dynamic digital spaces, negatively impacting smaller industry players who are at risk of being ousted from the market before final adjudication by the CCI.

    Similar to the recently enacted EU Digital Markets Act (DMA), the Indian bill would require large tech companies to refrain from self-preferencing services or using the data of one company to benefit another group company. In other words, these big tech companies would need to ensure transparency in their services, allowing smaller players to use these services without bias and not favor their own services by restricting access to others’ services. The bill includes provisions to designate companies as “Systematically Significant Digital Enterprises (SSDE)” and their “Associate Digital Enterprises” (ADEs).

    Section three of the proposed bill lists some of the financial and user thresholds for designating enterprises as SSDEs, which are as follows:

    Financial thresholds

    1   Turnover of Rs 4000 crores or more, in last three financial years;

    2   Global turnover of $30 billion or more, in the last three financial years;

    3   Gross merchandise value in India of Rs 16000 crores or more, in last three financial years; or

    4   Global market capitalisation of $75 billion or more, or its equivalent fair value of $75 billion or more, calculated in such manner as may be prescribed.

    User thresholds

    1   Core digital services provided by enterprises having at least one crore end-users; or

    2   Core digital services provided by enterprises having at least ten thousand business users.

    It is noteworthy that failure to furnish or maintain the above-mentioned data may also lead to enterprises being designated as SSDEs.

    Interestingly, in addition to the specified thresholds, the commission under the proposed bill retains the power to designate any enterprise as an SSDE even if it does not meet the specific criteria mentioned. The commission further retains the power to designate group enterprises of the designated SSDEs, directly or indirectly involved in providing core digital services in India, as “Associate Digital Enterprises” (ADEs). Such ADEs shall be subject to the same liabilities and compliance requirements as SSDEs under the proposed bill. For example, if Google is designated as an SSDE, its other enterprises, such as Google Maps and YouTube, which rely on data collected by Google to provide their core digital services, may be designated as ADEs under this proposed ex-ante antitrust framework.

    Obligations on SSDEs and ADEs under chapter III of the proposed bill

    The proposed framework lists out following obligations on SSDEs and ADEs, non-compliance of which may lead prosecution under the framework and impositions of penalties as provided under the same:

    1   Anti-circumvention from obligations: SSDEs are discouraged from engaging in any behavior that undermines the effective compliance with obligations under the proposed frameworks and the rules and regulations framed thereunder. It further discourages SSDEs and ADEs from directly or indirectly preventing or restricting their business or end users from raising any issues of non-compliance.

    2   Reporting and compliance: SSDEs are required to establish transparent and effective complaint handling and compliance mechanism. It further places an obligation on such SSDEs/ADEs to report on measures taken by them to comply with the obligations under Chapter III.

    3   Fair, and transparent dealings: SSDEs shall operate in fair, non-discriminatory, and transparent manner with its business and end users.

    4   Self-preferencing: SSDEs shall not, directly or indirectly, favor their own products, services, or lines of business, or those of related parties, or third parties with whom SSDEs have arrangements, over those offered by third-party business users on the Core Digital Service.

    5   Data usage: SSDEs shall not, directly or indirectly, use or rely on ‘non-public’ data of business users operating on its Core Digital Service to compete with its business users. Further, SSDEs shall not intermix, cross-use, or permit third-party usage of the personal data of end users or business users. SSDEs must allow business and end users to easily port their data in a format or manner as may be specified.

    6   Restricting third-party applications: SSDEs shall not restrict or impede the ability of their users to download, install, operate, or use third-party applications or other software on their Core Digital Services. SSDEs must also allow users to choose, set, and change the default settings. For example, this provision may require Apple to allow its users to access and download applications from the Google Play Store, and vice versa.

    7   Anti-steering: SSDEs shall not restrict their business users from communicating with or promoting offers to their end users, or directing their end users to their own or third-party services, unless such restrictions are integral to the provision of the core digital service.

    8   Tying and bundling: SSDEs shall not require or incentivize their business or end users of the identified core digital service to use one or more of the SSDEs’ other products or services, or those of related or third parties with whom SSDEs have internal business arrangements, unless the use of such products or services is integral to the provision of core digital services.

    Interestingly, the commission retains the power to specify what may be considered as “integral” for the aforementioned purpose.

    Power of the commission to pass interim order

    If, during an inquiry, the commission is satisfied that a contravention of the provisions of the proposed bill or rules or regulations framed thereunder has occurred, is ongoing, or is about to occur, it may pass an ex-parte temporary restraining order against any party committing such acts, without giving notice to said party, until the conclusion of the inquiry or until further orders, whichever comes first

    Cross-border application of the provisions of the proposed bill

    The commission proposes to exercise the power to conduct an inquiry for non-compliance with the provisions of the said bill, rules, or regulations framed thereunder against the SSDEs, even if they are located outside India, or for any other matter, practice, or action arising from the SSDE’s conduct that occurs outside India.

    Penalties for non-compliance with the provisions of the proposed bill

    The proposed bill provides for both civil and criminal liability in the event an SSDE fails to comply with various provisions under the bill, as discussed below. However, before passing an order imposing a penalty, the commission shall provide the SSDE with a reasonable opportunity to be heard, in compliance with the principles of natural justice.

    1   Failure to comply with the orders of the commission: If any enterprise/person fails to comply with the directions of the commission under sections 17, 25, 26, or 28, they shall be liable to pay a penalty which may extend to one lakh rupees for each day of such non-compliance, with a maximum penalty of ten crore rupees as determined by the commission. Furthermore, such non-compliance or failure to pay the penalty may also result in imprisonment for a maximum term of three years, or a fine which may extend to twenty-five crore rupees, or both.

    2   Failure to comply with the provisions of chapter III: If an enterprise is found to be in contravention of obligations under Chapter III (Section 17(1)), the commission may impose a maximum penalty of ten percent of its global turnover on the SSDE or its ADE.

    3   Failure to comply with anti-circumvention obligation: If the SSDE or its ADE is found to be in contravention of the anti-circumvention obligation under Section 5(1), which prohibits the SSDE from directly or indirectly segmenting, dividing, subdividing, fragmenting, or splitting services through contractual, commercial, technical, or any other means to circumvent the thresholds qualifying an enterprise as an SSDE as stipulated under clause (a) or clause (b) of sub-section (2) of section three, they shall be subject to a maximum penalty of ten percent of their global turnover.

    4   Failure to notify that SSDE meet the criteria under Section 3(2): If the SSDE fails to notify the commission that it meets the criteria for qualification as an SSDE under section 3(2), it may be subject to a maximum penalty of one percent of its global turnover.

    5   Act of providing incorrect/ misleading information: Where the SSDE provides incorrect, misleading, incomplete, or refuses to provide complete information as requested by the commission under various provisions of the proposed bill, it may be subject to a maximum penalty of one percent of its global turnover.

    6   Personal liability on the person-in-charge and/or director/manager/secretary or other officers: The proposed bill also provides for personal liability up to a maximum amount of ten percent of the average income in the last preceding financial year, if it is found that the contravention of the provisions of the bill was committed with the knowledge of the person-in-charge of the conduct of the business or with the consent of such directors/managers/secretaries or other officers.

    Conclusion

    Valued at $5.15 billion in 2023, India is the second largest online/digital market in the world, with over 900 million internet users. The Indian digital market is further estimated to grow at a CAGR of 30.2 per cent during 2024-2032, potentially reaching $55.37 billion, thereby becoming the world’s largest digital market. In light of this growth, proposing an ex-ante framework to regulate antitrust issues in India’s digital markets comes as no surprise, especially with various international watchdogs monitoring big-tech companies like Apple, Microsoft, Meta, Google, etc., allegedly engaging in anti-competitive practices through their digital services.

    While the underlying objective and intent of proposing such legislation appear positive, some provisions of the bill may significantly impact these big-tech companies and their ease of doing business in India. For instance, the discretionary power of the commission under sub-section (3) of section three to designate any enterprise as an SSDE based on specified factors or “any other factor which the commission may consider relevant for the assessment” could have far-reaching consequences. Such discretionary powers might lead to increased government intervention in the operations of companies offering core digital services.

    Moreover, the proposed legislation could potentially stifle innovation by granting the commission powers to interfere with the underlying technology of these companies, thereby affecting their intellectual property rights. For example, requiring companies not to restrict third-party applications could force Apple to offer Google Play Store on its devices, conflicting with Apple’s exclusivity rights over its technology. Additionally, such provisions might discourage big-tech companies from investing in research and development, particularly if competitors offer similar services under strict regulation. Therefore, it is crucial for the proposed legislation to include exceptions to prevent conflicts with the exclusive rights of SSDEs guaranteed under intellectual property laws.

    In our opinion, it is imperative for the government to amend the provisions of the proposed legislation to limit the discretionary powers of the commission, minimize intervention in underlying technology, and introduce appropriate exceptions in consultation with industry stakeholders to avoid conflicts with laws promoting innovation. The legislation should focus on enhancing ease of doing business in India rather than burdening big-tech companies with excessive compliance requirements and severe penalties for non-compliance.

    The article has been authored by ANM Global senior associate Deepank Singhal.

  • Self-certification of ads: A deeper legal perspective

    Self-certification of ads: A deeper legal perspective

    Mumbai: The Indian advertising industry, like any other market of the world, plays a significant role in shaping consumer sentiment towards products and services available in the market. Correspondingly, it is essential to have adequate regulation and supervision of the sector for ensuring that advertisements do not result in manipulation of consumer behaviour based on fallacious claims. The supreme court recently in Indian Medical Association vs Union of India addressed concerns surrounding misleading advertisements in the case where Indian Medical Association (IMA) filed a petition accusing Patanjali Ayurveda of issuing misleading advertisements and passing critical remarks against allopathy. The court highlighted the responsibility of both advertisers and endorsers in instances of misleading advertisements.

    Advertisements, misleading advertisements, related terms and concerns

    Advertisements: An advertisement, under Advertising Standards Council of India (“ASCI”) code for self-regulation of advertising content in India, is defined as a paid-for communication, addressed to the public or a section of it, the purpose of which is to promote, directly or indirectly, the sale or use of goods and services to whom it is addressed. Any communication which in the normal course may or may not be recognised as advertisement by the general public, but is paid for, or owned or authorised by the advertiser or their advertising agency would be included in the definition.

    The Consumer Protection Act, 2019 (“CPA”) defines an advertisement as any audio or visual publicity, representation, endorsement or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet or website and includes any notice, circular, label, wrapper, invoice or such other documents.

    According to the Central Consumer Protection Authority’s  (“CCPA”) Notification dated June 2022:

    a. “advertiser” means a person who designs, produces and publishes advertisements either by his own effort or by entrusting it to others in order to promote the sale of his goods, products or services and includes a manufacturer and service provider of such goods, products or services.

    b. “advertising agency” means a person or an establishment providing services in designing and production of advertisements or other related services for a commission or fee;

    Misleading advertisements: A ‘misleading advertisement’ is an advertisement that contains false, inaccurate and deceptive claims and representations about the product/service being represented, in a manner that is likely to accord to a potential buyer/consumer incorrect understanding about the product/service, thereby wrongfully influencing their purchase and usage decisions. Section 2(28) of the CPA defines misleading advertisement as any product or service which—

    (i) falsely describes such product or service; or

    (ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or

    (iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or

    (iv) deliberately conceals important information

    Celebrities and endorsers: ASCI defines a celebrity as anyone who (a) gets compensated Rs 40 lakh or equivalent value annually for appearing in advertisements or campaigns on any medium and any format; or (b) has a social media followership of 500,000 or more on any single social media handle. Celebrities or influencers (an individual or a group or an institution) who make endorsement of any goods, product or service can be  defined as endorsers. An endorser has the power to affect/influence their audiences’ purchasing decisions or opinions about a product, service, brand or experience, because of their authority, knowledge, position, or relationship with their audience, and also accord credibility and reliability to the brand in view of their association therewith.

    Under the current legal framework, the penalties for taking part in creation and publication of misleading advertisements are:

    1.  A first offence under the Drug and Magic Remedies (Objectionable Advertisements) Act (DOMA), 1954 could lead to imprisonment for six months and/or a fine. For subsequent offences, the punishment may extend to one year.

    2.  The CPA imposes stricter consequences, with a potential imprisonment term of upto two years and a fine of around Rs 10 lakh for violations. Repeat offences escalate to a five-year imprisonment term and a fine of approximately Rs 50 lakh.

    In view of the alarming rise in misleading advertisements in the market, the supreme court as well as various governmental and private bodies have issued regulations and guidelines directed towards endorsers/influencers, advertisers and advertisement agencies in relation to publication to advertisements. A glimpse of such directions, guidelines and regulations have been provided below.

    A.  Guidelines issued by courts for endorsers concerning misleading advertisements:

    The bench of Justices Hima Kohli and Ahsanuddin Amanullah in the aforementioned Patanjali case stated that “advertisers/advertising agencies and endorsers are equally responsible for issuing false and misleading advertisements. Such endorsements that are routinely made by public figures, influencers, celebrities etc. go a long way in promoting a product. It is imperative for them to act with a sense of responsibility when endorsing any product and take responsibility for the same …”.

    The bench further stated that persons who endorse a product should have adequate information or experience with such specific product to be endorsed, and it must be ensured that it must not be deceptive. Celebrities and social media influencers will be equally liable for misleading advertisements, if they endorse any deceptive product or service.

    Concerning misleading advertisements, the court issued the following directions:

    1  Broadcasters or print media have to file a self-declaration form before carrying any advertisements, assuring that the advertisement to be carried on its platform complies with Cable Network Rules, Advertising Code etc.

    2  Ministries were directed to set up a specific procedure which will encourage the consumer to lodge a complaint and for the said complaint to be taken to a logical conclusion instead of simply being endorsed or marked.

    3  Persons who endorse a product should have adequate information or experience with specific product to be endorsed, and it must be ensured that it is must not be deceptive.

    4  Celebrities and social media influencers will be equally liable for misleading advertisements, if they endorse any deceptive product or service.

    5  The ministry of consumer affairs, was ordered to file a fresh affidavit on action taken by CCPA on false or misleading advertisements,

    B.  Guidelines under various statutes and governmental and private bodies

    1.  ASCI self-regulation guidelines for endorsers and advertisers

    ASCI, established in 1985, is committed to the cause of self-regulation in advertising, ensuring  protection of the interests of consumers. It seeks to ensure that advertisements conform to its code for self-regulation, which requires these to be legal, decent, honest and truthful, and not hazardous or harmful, while observing fairness in competition. Some core tenets of ASCI guidelines with reference to celebrities in advertising are–

    1    Advertisements with celebrities should not violate any guideline of the ASCI code.

    2    It is an obligation of the advertiser to make a celebrity aware of the code.

    3    Representations by a celebrity must be genuine and must be based on adequate information or experience.

    4    Due diligence necessary by the celebrity to ensure that representations made in the advertisements are objectively true and are not misleading or deceptive.

    5    Celebrities should not participate in any advertisement of products that are prohibited for advertising under the law. Examples include products under the Drugs and Cosmetic Act 1940.

    6    A celebrity should not endorse a product for which a health warning is required to be issued.

    7    A celebrity may seek ‘advertising advice’ from ASCI on potential violations by an ad.

    In a bid to address misleading advertisements and safeguard consumers from unfair trade practices, especially arising out of celebrity endorsements, ASCI has laid out certain guidelines for celebrities/ influencers listing out their responsibilities while involving themselves in such marketing campaigns.

    The guidelines (dated July 13th, 2023) lay down the following –

    1  Celebrities endorsing products must adhere to the ASCI codes. Testimonials and endorsements should genuinely reflect the individual’s current opinion, grounded in sufficient knowledge or experience with the advertised product or service.

    2  It’s upon the advertisers and agencies to ensure that celebrities are well-informed about these codes. Celebrities must rigorously verify the accuracy of claims and comparisons in advertisements they endorse, ensuring they’re objectively substantiated and not misleading.

    3  They must abstain from endorsing products prohibited under the Drugs & Magic Remedies Act or requiring health warnings, as mandated by the Drugs & Cosmetics Act.

    4  Celebrities have the option to seek endorser due diligence (EDD) from ASCI to be compliant with the ASCI code and other relevant legal statutes, to protect themselves from any potential violations or litigations down the line.

    However, ASCI being a private self-regulating body, lacks the authority to compel businesses to adhere to the ASCI guidelines in a meaningful manner.

    2.  Central Consumer Protection Authority (CCPA)’s guidelines on false or misleading advertisements

    CCPA, unlike ASCI does have that power to compel businesses to adhere to their guidelines and their guidelines for misleading advertisements and endorsements, 2022 (“guidelines”), state the following-

    1  These guidelines obligated, inter alia, businesses to comply with stringent regulations governing misleading advertisements.

    2  The guidelines require that the endorsement in an ad must reflect the genuine and reasonably current opinion of the endorser, that includes celebrity or influencer, and must be based on adequate information about, or experience with, the identified goods or service and should not be deceptive.

    3  Adherence to the guidelines is essential for celebrities and influencers to maintain transparency and authenticity with their audience. Not only is this supposed to hold the endorsers responsible but also helps the consumers make informed decisions.

    The guidelines state that individuals or groups who have access to an audience and the power to affect their audiences’ purchasing decisions or opinions about a product, service, brand, or experience, because of the influencer’s or celebrity’s authority, knowledge, position, or relationship with their audience must disclose to the audience if the endorsement is a result of benefit or incentive from the advertiser. That is, if the endorser (including celebrities and influencers) is endorsing a product for which they have received some monetary/non-monetary compensation or any other form of sponsorship from the advertiser, the endorsement must clearly and prominently disclose the same. Following are the specific requirements and mandates to be followed by endorsers and influencers:

    i With respect to different formats used for endorsement, the guidelines stipulate the following rules for disclosure:

    1. For images: disclosures should be superimposed over the image enough for viewers to notice. 
    2. For videos: disclosures should be placed in the video and be made in both audio and video format.
    3. For live streams: disclosures should be displayed continuously and prominently during the entire stream.

    ii The disclosure must be made in simple and clear language.

    The disclosure must be made in simple and clear language. Terms such as “advertisement”, “sponsored”, “collaboration” or “paid promotion” can be used. Further, the disclosure should be made in the same language as the endorsement. Also, disclosures should not be mixed with a group of hashtags or links. The Guidelines specify that individuals must not endorse any product or service that they have not personally used or experienced or in which due diligence has not been done by them.

    iii Endorsers are liable for legal action if they do not disclose endorsement.

    The endorsers will be liable for legal consequences if they fail to disclose any material connection and/or upon non-compliance with the CPA and the associated rules. A material connection is any connection between an advertiser and endorser that may affect the weight or credibility of the representation made by the endorser. Material connection could include but is not limited to benefits and incentives, such as monetary or other compensation, free products with or without any conditions attached including those received unsolicited, discounts, gifts, contest and sweepstakes entries, trips or hotel stays, media barters, coverage, awards or any family or employment relationship, etc. According to Section 21 of the Act–

    (2) Notwithstanding the order passed under sub-section (1), if the Central Authority is of the opinion that it is necessary to impose a penalty in respect of such false or misleading advertisement, by a manufacturer or an endorser, it may, by order, impose on manufacturer or endorser a penalty which may extend to ten lakh rupees: Provided that the Central Authority may, for every subsequent contravention by a manufacturer or endorser, impose a penalty, which may extend to fifty lakh rupees.

    (3) Notwithstanding any order under sub-sections (1) and (2), where the Central Authority deems it necessary, it may, by order, prohibit the endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to one year: Provided that the Central Authority may, for every subsequent contravention, prohibit such endorser from making endorsement in respect of any product or service for a period which may extend to three years.

    3. The ministry of consumer affairs’, guidelines – endorsements know-hows!’ for celebrities, influencers and virtual influencers on social media platforms)

    The ministry of consumer affairs on 20 Jan, 2023, issued its guidelines (titled endorsements know-hows!’ for celebrities, influencers and virtual influencers on social media platforms) specifically pertaining to celebrity/ influencer endorsements.

    1  It emphasizes on the requirement of providing clear disclosures of any material connection with advertisers and straightforward language in endorsements; whereby, ‘material connection’ is deemed to be any connection between an advertiser and endorser that may affect the weight or credibility of the representation made by the endorser; and could include without being limited to benefits and incentives, such as monetary or other compensation, free products with or without any conditions attached including those received unsolicited, discounts, gifts, contest and sweepstakes entries, trips or hotel stays, media barters, coverage, awards or any family or employment relationship, etc.

    2  Terms like “advertisement” or “sponsored” should denote paid promotions. Endorsers must avoid promoting products they haven’t personally used.

    3  Aligned with the CPA, the guidelines prohibit misleading advertisements and outlines responsibilities for manufacturers, service providers, advertisers, and agencies.

    4  It reinforces guidelines for valid advertisements and addresses celebrity and endorser responsibilities.

    4.  The ministry of information & broadcasting’s advisory to endorsers on restriction on promoting, advertising, endorsing, even through surrogate marketing, offshore betting and gambling

    The ministry of information and broadcasting, on 21 March, 2024, issued an advisory directed towards endorsers and online influencers, restricting them from promoting, advertising, endorsing, even though surrogate marketing, offshore betting and gambling to the consumers, especially the youth. It states that –

    1  Emphasizing the significant financial and socio-economic implications, particularly on youth, the advisory also warns online advertisement intermediaries against targeting Indian audiences with such content.

    2  Social media platforms are urged to sensitize users and abstain from hosting such promotions.

    3  Non-compliance may result in actions under the CPA, including removal of the impugned post or account as well as penal measures.

    4  While Section 79 of the IT Act, 2000 exempts intermediaries from liability, failure to promptly remove unlawful content upon notification can restrict application of this exemption.

    5  The directive aligns with the CCPA’s previous guidelines, expressing concerns over endorsements of betting/gambling platforms by celebrities and influencers, subjecting such advertisements to stringent scrutiny.

    Not only in recent times, but celebrities have been under the scanner even in the past for being part of misleading advertisements. For instance, in 2015, a resident of Delhi filed a complaint in the District Consumer Disputes Redressal Forum of Central Delhi about the ‘Fair and Handsome Cream’, (world’s number one Fairness Cream for Men) being manufactured by Emami.  

    The complainant contended that he had used the product as per directions for use mentioned on the labelling and packaging of the product, but it had failed to show any results as claimed. He also argued that Emami had been using Shahrukh Khan as its brand ambassador for the promotion of the product and made false claims and promises that the product provides fairness in just three weeks.  The court ruled that the advertisements by Shahrukh Khan were misleading and directed Emami to pay an amount of Rs. 15 lakhs as punitive damages to the consumer welfare fund. It also directed the company to pay the complainant a sum of Rs.10,000 and withdrawal of the advertisement.

    Apart from this, there have also been many media reports of cases filed against celebrities like Amitabh Bachchan, Madhuri Dixit, and Preity Zinta for promoting Nestle’s Maggi Noodles when the product was banned when found to contain taste enhancer MSG and the chemical lead beyond permissible limits, which are harmful to humans.

    A controversy regarding a pan masala advertisement occurred in 2016 when the former James Bond actor, Pierce Brosnan, appeared in an advertisement for Pan Bahar, a pan masala brand popular in India. Pan masala is a mixture of specific kinds of nuts, seeds, and spices, often chewed for its stimulating effects, but it has been associated with health risks, including oral cancer. Pierce Brosnan was severely criticized for endorsing a product that adversely affected health. Brosnan later clarified that he was misled about the nature of the product, believing it to be a breath freshener or tooth whitener rather than a tobacco product. He also stated that his contract specified that he was promoting a “breath freshener/tooth whitener,” and he felt betrayed by the company’s use of his image to promote a pan masala product. The celebrities and media agencies were requested not be a part of surrogate advertisements of tobacco in the name of pan masala, tea, elaichi or other goods as these are prohibited under section 5 of the Cigarettes and Other Tobacco Products Act (COTPA), 2003 (“COPTA”). COPTA bans all kinds of direct and indirect advertisements of tobacco products. The controversy sparked discussions about celebrity endorsements and ethical considerations regarding the endorsement of Indian products that could be harmful to health, irrespective of the nationality of the endorser.

    5  Ministry of information & broadcasting (MIB) mandate to advertisers/advertising agencies to furnish a ‘self-declaration certificate’  before airing or publishing any advertisement

    The Supreme Court, in furtherance to abovementioned guidelines for the endorsers, has issued a directive in its order dated 7 May 2024 whereby all advertisers and advertising agencies are mandated to furnish a ‘self-declaration certificate’ before airing or publishing any advertisement. The MIB has published a press release announcing a new feature facilitating self-declaration by advertisers and advertising agencies from print, broadcast as well as digital media starting 18 June  2024 (“Press Release”).

    This certificate, signed by an authorized representative of the advertiser or advertising agency, must be submitted through designated portals, as stated by MIB in an official recent press release. The supreme court took note of the absence of a “robust mechanism” to oversee whether advertisers are fulfilling the obligations stipulated under the guidelines released by the CCPA. The supreme court further clarified that these directions were to be treated as the law declared under Article 141 of the Constitution of India. The supreme court in Sahara India Real Estate Corp Ltd. v. SEBI stated that the Constitution of India contemplates, that law declared by it, is binding on all courts within the territory of India. It also mandates, that an order made by the supreme court, is enforceable throughout the territory of India.

    Such self-declaration certificate shall be submitted through a designated portal activated on 4 June, 2024. The MIB  has introduced a new feature on the Broadcast Seva Portal of the MIB for TV and Radio Advertisements and on Press Council of India’s portal for print and digital/internet advertisements. The self-declaration certificate is mandatory for all advertisers/advertising agencies for all advertisements going live 18 June 2024 onwards, to be provided before broadcasting/publishing of such advertisement. For sake of clarity, the directive by Supreme Court and the following press release is not retrospective in nature and shall not be applicable on the advertisements that are already live. The salient aspects and observations in relation to the mechanism of self-declaration are provided hereinbelow:

    i Roadmap to Self-Declaration Certificate

    a. An authorized representative of the advertiser/advertising agency must sign and submit the self-declaration certificate, ensuring accountability and authenticity of the certificate.

    b. The authorized representative is required to provide comprehensive information about the advertised product or service, including advertisement title, description, script, and proposed date of first broadcast/publishing.

    c. The said submission of the certificate necessitates a letter of authorization, full advertisement script, video/audio file, and, if available and applicable, GST details and a CBFC certificate. The letter of authorization shall mandatorily be on the company letterhead of the advertiser/advertising agency and should be signed by the head of the company along with company seal.

    d. The certification includes affirmation of compliance with relevant regulatory guidelines, including those in Rule 7 of the Cable Television Networks Rules, 1994, and the Norms of Journalistic Conduct of Press Council of India and aims to ensure that advertisements do not contain any misleading claims.

    e. The Advertisers are required to ensure accuracy and completeness of the details, before uploading the self-declaration certificate.

    f. The successful submission of the details generates an acknowledgment receipt.

    g. Advertiser shall be required to provide proof of uploading the self-declaration certificate to the relevant broadcaster, printer, publisher, or electronic media platform for their records. As per the supreme court’s directive and the press release, no advertisement will be permitted to run on television, print media, or the internet without a valid self-declaration certificate.

    ii Elucidation required by MIB on the Self-Declaration requirement:

    Among several obscurities in the Press Release, listed below are few major concerns:

    a.  Ambiguity on terms used in the press release by MIB:

    No clarity has been given either in the order or the press release, as to who will be considered as an ‘advertiser’ or an ‘advertising agency’. However, in the absence of clarifications, reliance is being laid on the definitions given under the guidelines. Furthermore, MIB requires a self-Declaration certificate to certify that the advertisement does not contain “misleading claims”, but the press release lacks clarity on what is considered as a “misleading claim”. Reference could be drawn from the CPA, and the definition of “misleading advertisement” included therein as mentioned hereinabove. However, based on assumptions, one cannot be certain if avoiding a “misleading advertisement” would fulfil the criteria of not being considered as a “misleading claim”.

    b. Ambiguity on requirement of  separate certificates for uploading one advertisement in different languages:

    There is no clarity on this aspect, however, drawing an analogy with CBFC certification, where a different CBFC certification is required when a movie is to be released in a different language, so that the committee can examine if any translated dialogue would fall foul of its earlier criteria for certification, it would be prudent for advertisers to procure separate self-declaration certificates for different languages of the same advertisement.

    c. Ambit of the MIB press release and question over inclusion of social media

    According to the order and the press release, digital/internet-based advertisements would also require a self-declaration certificate. Digital media is defined as a means of communication that can be transmitted over the internet or digital networks and includes communication received, stored, transmitted, edited or processed by a digital media platform. Digital Media includes but not limited to (i) internet (advergames, sponsored posts, branded content, promotional blogs, paid-for links, gamification, in-game advertising, teasers, viral advertising, augmented reality, native advertising, connected devices, influencers, etc.); (ii) On-demand across platforms including near video on demand, subscription video-on-demand, near movie on-demand, free video. On-demand, transactional video on demand, advertising video on demand, video on demand, pay per view, etc.; (iii) Mobile broadcast, mobile, communications content, websites, blogs, apps, etc. / Digital TV (including digital video broadcasting handheld and terrestrial), etc.; (iv) NSTV (non-standard television); (v) DDHE (digital delivery home entertainment); (vi) DTT (digital terrestrial television)

    Although the MIB press release is not free from ambiguity on its applicability to social media such as Instagram, Facebook, X, YouTube, etc., it would be sagacious to adhere to the directives and the Press Release to avoid potential legal repercussions in future, and ensure that there is no scope for claims to arise, in instances where the content so created and exploited constitutes an advertisement as per the foregoing definitions.

    iii Exclusions and Exceptions to the Self Declaration Requirement

    It was directed by the supreme court that no advertisements would be permitted on relevant channels (assuming channels on TV and radio), print media, or the internet without a self-declaration certificate. However, the MIB carves out exceptions for classifieds, personal advertisements, statutory advertisements, public information notices, tenders, and advertisements related to public functions. However, with respect to classifieds, classified advertisements directly related to consumer products and services will come under the ambit of self-declaration certification. Additionally, the MIB press release is not retrospective in nature and shall not be applicable to ongoing advertisements currently. The new advertisements (which are to be published after 18 June, 2024 whether made prior to 18 June or made after 18 June) would require a self-declaration certificate.

    Conclusion

    Celebrity endorsements offer increased brand visibility, credibility, and influence over consumer behaviour, often affecting sales and revenue of the brand in relation to the product/service advertised. However, legal liabilities arise if endorsements are misleading, as per several guidelines, statutes and judicial precedents. The recent Patanjali judgment highlights the responsibility of both advertisers and endorsers in combating misleading advertisements. The court’s stance on the liability of celebrities and social media influencers for endorsing misleading ads underscores the importance of ethical advertising practices and prioritizes consumer welfare. The order in this case, therefore, may widen the ambit of liability for endorsers such as celebrities or influencers, and thereby, result in greater due diligence required by such endorsers, to avoid falling foul of the law. The supreme court’s directive requiring self-declaration certificates from advertisers and advertising agency before airing advertisements on all modes is a measure to combat misleading advertisements and safeguard consumer interest, however, it shall increase the burden of compliance for various companies and brands engaging in advertisements. Lack of proper monitoring mechanism for such compliance especially for a vast space like digital media, it would be interesting to see how the ministries would ensure adherence of the directives by the advertisers and advertising agencies.

    Mukherjee is a senior associate and Verma is an associate with law firm ANM Global. The views expressed in this article are entirely their own and Indiantelevision.com need not subscribe to them.

  • Delhi High Court refuses to stay streaming of Netflix series ‘Hasmukh’

    Delhi High Court refuses to stay streaming of Netflix series ‘Hasmukh’

    MUMBAI: The Delhi high court on Monday dismissed a plea seeking an ad-interim injunction restraining the streaming of the episodes of the web series Hasmukh.

    The application against the series was filed by lawyer Ashutosh Dubey, who charged that its fourth episode contained derogatory remarks against the lawyer community.

    The series, starring Vir Das, Ranvir Shorey and others, has been produced and owned by Applause Entertainment.

    The web series is a dark comedy thriller revolving around a fictional character named ‘Hasmukh’ (Vir Das), an aspiring comedian and the protagonist. The protagonist in the series possesses a unique compulsion to kill people just before his on-stage stand-up act, which enables him to give a great performance and specifically relates his stand-up comedy act to the person he killed.

    Dubey took objection to the utterance of the protagonist during a stand-up comedy performance from the fourth episode of the web series. The lawyer alleged in his suit that the dialogues in the said scene are highly disparaging, defamatory and bring disrepute to the legal profession and lawyers in the eyes of the general public.

    Netflix lawyers argued that the web series is a work of fiction and explained to the court its brief plot line.

    The defense lawyers also submitted that a class of persons cannot be defamed as a class, nor can an individual be defamed by general reference to a class to which the individual belongs. So, they argued, the lawyers as a community cannot be defamed as a “class of persons”, nor can the plaintiff be defamed by a general reference to lawyers.

    The defendants also submitted that Article 19 (1) (a) of the Indian Constitution guaranteed the freedom of speech and expression which includes the creative freedom to express one's views and opinions and although the said right is not absolute since the present case would not qualify as defamation, it cannot be restricted.

    Dismissing the application for ad-interim injunction, the court observed that the impugned comment is satirical “with regard to the lawyers taken as a class and is not with regard to any determinate definite or identifiable group of lawyers."

    “Further, if an ad interim injunction is granted, it would amount to interference in the freedom of speech and expression guaranteed by our constitution to the defendants,” stated the court.

    The very essence of democracy, observed the court, is that a creative artist is given the liberty to project the picture of the society in a manner he perceives. “One of the prime forms of exposing the ills of the society is by portraying a satirical picture of the same. Stand-up comedians perform that very purpose. In their portrayal they use satire and exaggerate the ills to an extent that it becomes a ridicule. In the humorous portrayal of the ills of the society the stand-up comedians use satire.”

    Applause Entertainment, the IP owner of the web series, was represented by senior counsel Sandeep Sethi, briefed by a team from ANM Global Inc comprising Nidhish Mehrotra, Anushree Rauta, Piyush Joshi and Chirag Luthria.