Power Report: Watchdog in chains as advertiser fights back
There's a quiet war being waged against South Africa's advertising watchdog, with millions of rands at stake.
But there is a lot more than huge financial losses riding on the outcome of this battle; the ramifications for consumers are far-reaching.
Already, the Advertising Standards Authority - which protects consumers against misleading and unsubstantiated advertising - has lost a significant skirmish.
In September, the High Court in Johannesburg ruled against it in favour of a complementary medicines manufacturer, the Medical Nutritional Institute.
The crux of the matter is an attack on the legitimacy of the ASA's adjudication of complaints regarding non-members of the advertising body. In a nutshell, the Medical Nutritional Institute does not believe the watchdog has jurisdiction over it and should not be allowed to interfere in its contractual arrangements.
The company claims the Medicines and Related Substances Control Act and the Consumer Protection Act govern how its products are marketed and provide sufficient protection to consumers.
It was largely on this basis that the company, makers of AntaGolin - a plant-derived product aimed at regulating blood sugar - won an urgent interim interdict against the ASA.
The application was prompted by a series of rulings issued by the advertising authority since last year stating that the product's claim to combat insulin resistance and aid weight loss were unsubstantiated.
An ad alert, which would have barred all ASA members - which include most media companies - from running AntaGolin adverts unless certain conditions were met, was imminent.
The high court order, which the ASA plans to appeal, prevents the advertising body from imposing any sanction on the Medical Nutritional Institute or taking any steps to preclude AntaGolin from asserting its claims in adverts, and instructs the authority to remove all rulings from its website referring to unsubstantiated claims.
The order remains in force pending the outcome of a R17-million damages claim for loss of sales lodged by the company against the ASA in October.
The Medical Nutritional Institute, which says its advert claims are neither misleading nor dangerous, is also suing one of the ASA's two AntaGolin complainants, medical doctor Harris Steinman, for defamation for R200,000.
Steinman runs a website, CamCheck, which he says helps consumers to make informed choices when faced with "extraordinary" claims made by complementary and alternative medicine products.
The issues raised in the interdict application - court records run into nearly 1,000 pages - are complex, covering issues of private, public and constitutional law.
The ASA, in defending the application, said it did not purport to enforce the provisions of the medicines act or the Consumer Protection Act. It said its code was a "contract between the members of the advertising industry", and members would not publish adverts that did not comply with it.
The ASA said it did not compel anyone to comply with its processes, but if advertisers wanted to publish adverts in media owned by ASA members they were then required to do so.
However, it argued that in terms of TV adverts - the main source of the AntaGolin complaints - the ASA had been given statutory authority by the Electronic Communications Act to determine whether ads run by broadcast members complied with the code. This existed whether or not the advertiser was a member of the ASA, it said.
"Non-members of the ASA, such as the Medical Nutritional Institute, are legally entitled to ignore the rulings and procedures of the ASA. However, in doing so, they elect to place themselves outside the system of self-regulation ... the consequences may include the refusal of members of the ASA to publish their adverts," it said.
It said the company had not provided adequate substantiation for its AntaGolin claims in terms of the procedure specified in the authority's code.
"Publishing misleading advertising is intrinsically harmful to consumers, whether or not products cause actual physical harm ... it is only the ASA that monitors the advertising industry as a whole and responds to complaints speedily and effectively," the ASA said.
Indeed, the ASA's complaint resolution turnaround is an impressive 30 days and its rulings are posted to its website.
This is a far cry from the turnaround at the National Consumer Commission, which, although obliged to accept such complaints, is overburdened and slower to act.
The mandate of the Medicines Control Council, which includes the regulation of advertising claims, is so complex that complainants could have lengthy waits for a definitive finding.
"A consumer will get joy much quicker from the ASA," said the council's registrar, Dr Joey Gouws, who added that the ASA had jurisdiction to protect the public against unsubstantiated claims .
AntaGolin's application to be registered with the council, which will look at efficacy, quality and safety data, is under review, as is a complaint about it that Steinman lodged with the council last month.
Complementary medicines - those originating from plants, minerals or animals - already on the market prior to the publication of regulations in 2013, are allowed to remain on sale pending registration, as long as they carry an MCC disclaimer, which AntaGolin does.
So what does this legal battle mean for consumers? If the ASA is stripped of its right to rule on complaints against misleading and unsubstantiated advertising by non-members, it could leave consumers vulnerable to exploitation.
And in the interim, the budget intended for the protection of consumers is being blown on defending legal attacks. The Medical Nutritional Institute's lawyers represent several other companies, including Herbex, Solal, Groupon and Ultimate Sports Nutrition, which have challenged the ASA.
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