THE “BEST” WAY TO USE “THE BEST” IN ADVERTISING
January 17, 2023
By：Leo Liu & Tate Zhao
The State Administration for Market Regulation (SAMR) published its Enforcement Guidelines on Superlative Adjectives in Advertising for public comments on December 7, 2022. (hereinafter the Draft Guidelines).
The current PRC Advertising Law (hereinafter the Advertising Law) prohibits the use of superlatives such as “national level”, “the highest” or “the best” in advertising. The sellers of goods or service providers (collectively the proprietors) who publish advertisements containing such superlative adjectives will be fined between RMB 200,000 and RMB 1,000,000 and, in serious cases, lose their business licenses.
In the face of such fundamental rules and severe penalties, the proprietors are often on high alert for superlative adjectives when they design, produce, or publish advertising. With the rapid development of new media and the diversification of advertising methods, there is an urgent need to clarify the boundaries of superlative adjectives in advertising.
Does all content published by the proprietor on its premises or we-media constitute commercial advertising within the meaning of the Advertising Law? Are no superlative adjectives whatsoever allowed in advertising? Will all the proprietors who publish advertisements containing superlative adjectives be penalized? The Draft Guidelines respond to these concerns.
A. Clarification of Advertising
The Draft Guidelines confirms that the information a proprietor publishes about its own name, date of establishment, and scope of business on its premises or in its own media, AND which does not promote its goods or services, is NOT considered to be advertising.
This provision clarifies the circumstances that do not constitute advertising and is important in distinguishing between introductory information and advertising. Based on this provision, introductory information meeting the conditions will not be regarded as commercial advertising.
However, the fact that the content is not considered to be commercial advertising only means that it is not subject to the advertising regulations. If it contains false or misleading information, it is still subject to the anti-unfair competition law and other regulations.
Enforcement Guidelines on Superlative Adjectives in Advertising (Draft for Public Comments)
3. Where a goods seller (including a service provider) publishes information on its own name, time of establishment, scope of business, etc. at its business premises or in its own media and does not directly or indirectly promote its goods (including services), it is generally not regarded as a commercial advertisement.
If the superlative adjectives used in the information specified in the preceding paragraph cannot be proved to be true by the goods seller and may affect the consumer’s right to information or impair the legitimate rights and interests of other goods sellers, sanctions may be imposed in accordance with the relevant laws and regulations.
B. Clarification of the scope of prohibited superlative adjective
In practice, companies hesitate to use superlative adjectives in advertising, even when stating their objectives and visions such as “striving to be number one ……” and “striving to be the best ……” and other rhetoric. Their hesitation stems from the inconsistencies in law enforcement. Some believe that “to build the No.1 brand in the peanut industry” is the vision set by the company for itself and should not be regarded as the use of superlative adjective, while statement such as “…… is committed to providing the highest quality products and services ……” is considered illegal use of superlative adjectives.
The inconsistent findings by the administrative authorities on the same issue have resulted in confusion and hesitation in advertising by proprietors. The Draft Guidelines now clarify that the following conditions must be met to prohibit a superlative adjective:
1. It relates to the goods or services being marketed; or
2. It has the objective effect of misleading consumers or disparaging other proprietors.
This provision excludes situations that do not fall within the category of superlative adjective and can effectively reduce the restrictions on commercial advertising and marketing. The proprietors may use superlative adjectives in a compliant manner according to their own conditions. However, it is important to stress that even in advertising where superlative adjectives are permitted, proprietors are still responsible for the truthfulness of the content. Even if it is not illegal use of superlative adjective, if the content is false or misleading, it may still be false advertising.
Enforcement Guidelines on Superlative adjective in Advertising (Draft for Public Comments)
4. The provisions of the Advertising Law on superlative adjective shall not apply in the following cases where the superlative adjectives in the advertisement do not refer to the goods being promoted:
a. those that merely indicate the service attitude or business philosophy or corporate culture of the proprietor.
b. those that only express the proprietor’s vision for itself or the goods.
5. The provisions of the Advertising Law on superlative adjective shall not apply where the superlative adjective used in an advertisement refer to the goods being promoted but do NOT have the objective effect of misleading consumers or disparaging other proprietors:
a. it is only an authentic comparison of the same brand or the same proprietor’s goods;
b. consumer tips such as the best way to use the goods, the best time to use them, the best-before date, etc.;
c. the terminology used to classify products or services according to national standards, industry standards or local standards contains superlative adjective;
d. superlative adjective is contained in name of the product or trademark, and the name or trademark is used in advertisements to refer to goods in order to distinguish them from other products;
e. only to promote the background information of the goods and their raw materials, and the expressions are authentic;
f. awards and commendations granted in accordance with the relevant national regulations containing superlative adjective;
g. subject to specific conditions such as time and territory, the expression of objective circumstances in terms of time and space, such as sales volume, revenues, market share and other information that the advertiser can prove.
Where the relevant expressions in an advertisement fall within the circumstances specified in the preceding paragraph, but the proprietor is unable to prove its authenticity, sanctions in accordance with the relevant provisions of the Advertising Law will apply.
C. Penalties for minor offences may be exempted or reduced
In 2016, the West Lake District AMR imposed a fine of RMB 200,000 on a roasted seeds and nuts shop for using advertising signs and packaging with the wording “the best roasted seeds and nuts shop in Hangzhou” and “the best chestnut in Hangzhou”. After administrative litigation, the trial court reduced the penalty to RMB 100,000 and the appellate court affirmed. Eventually, the high-profile “Best” case ended with a fine of RMB 100,000 for the shop.
While large fines have a strong deterrent effect on illegal advertising, there are situations where the penalty is not comparable. The Draft Guidelines state that first-time offenders with minor consequences which is corrected in a timely manner may be exempted from administrative penalty. If the advertisement is published at the proprietor’s own business premises or through its own media for a short period of time or has been viewed by a small number of people, and no or limited harmful consequences are caused, the administrative penalty may be reduced.
However, it should be emphasized that the Draft Guidelines make special provisions for advertising in the fields of healthcare, pharmaceuticals, medical devices, health food, food formulated for special medical use, and financial management. Proprietors in these industries will need to pay more attention to compliance in the design, production, and publication of advertisements.
Enforcement Guidelines on Superlative adjective in Advertising (Draft for Public Comments)
6. Except for the circumstances stipulated in the fourth and fifth paragraphs of this Guidelines, first-time offenders with minor consequences which is corrected in a timely manner may be exempted from administrative penalty.
The AMR may, in accordance with the relevant provisions, draw up a list of minor offenders of superlative adjective in advertisements who are exempted from penalties and adjust it from time to time.
7. If a proprietor publishes an advertisement using superlative adjective at its business premises or through its own media for a short period of time or is viewed by a small number of people and does not cause harmful consequences or has minor harmful consequences, the administrative penalty may be reduced in accordance with the law.
8. Any of the following circumstances are generally not considered as minor violations or limited harmful consequences:
a. superlative adjectives related to efficacy, cure rate, efficiency, and etc. appear in advertisements for healthcare, pharmaceuticals, medical devices, health food and food formulas for special medical purposes;
b. superlative adjectives related to investment yield, investment safety, and etc. in advertisements for financial products.