Comparative Advertising in China Go back »

2013-03-01 | Nanjing

Everyone witness the growth of Chinese advertising industry in recently years as brands and businesses fighting for market share. One of the weapons widely used in the commercial world is to compare the unique qualities and features of one product to another.

It is obviously that comparative advertising can highlight the product’s unique aspects and enhance consumer’s awareness, however, it may also mislead towards the product being compared. The inherent danger of comparative adverting is the potential for unfair competition.

That is the reason why the regulatory environment governing comparative advertising now is a major concern around advertisers and managers.

What is Comparative Advertising?

It is easy to determine a comparative advertising in the commercial view, however, there is no explicit legal provisions governing comparative advertising in China. The «Advertising Law of the PRC» (1994) ("ALP") and the «Anti-Unfair Competition Law» (1993) ("UCL") are the two main laws relevant to comparative advertising in China.

Article 12 of the ALP prohibits the making of disparaging comments about competitors’ goods or services in advertising. And Article 21 of the ALP links the ALP and the UCL by prohibiting any unfair competition in advertising activities.

UCL is much broader in scope and prohibits unfair competition in general. Article 9 of the UCL provides that: "an operator may not use advertisings or other means to give false, misleading publicity as to the quality, composition, performance, use, manufacturer, useful life, origin, etc., of the goods. An advertising operator shall not act as an agent for design, produce or release advertisings containing false representations of which he is obviously aware, or should be aware." Article 14 also provides that "an operator may not utter or disseminate falsehoods to damage the goodwill of a competitor or the reputation of his goods."

Play the Game in a Right Way

Pursuant to legislations, it appears that the key criterion to determine whether comparative advertising is legal is whether the ad damages the lawful rights of other market operators and harms the competition in the market.

In applying the ALP to comparative advertising, three principles need to be considered 1) legality - the products/services advertised and the method of advertising must be legal, e.g. Article 14 of the ALP explicitly prohibits comparative advertising on medical products; 2) objectivity - the comparison must be based on facts and be scientific and fair; and 3) fairness - The spirit of fair competition and good faith must be met in all advertising.

However, please be noted one point that even it is clear comparative advertising must not be misleading; there is no specific provision specifying extent to which an ad can be considered misleading under current Chinese law. In practice, judges usually apply the principle of ordinary consumers’ attention and try to determine whether an ad would likely mislead the majority of such consumers.

Legal Liability

Article 20 of the UCL stipulates the legal liability if an operator violates the law and causes damage to another operator (ie, the injured party): it shall bear the responsibility of compensating for the damages. In case that the losses suffered by the injured party are difficult to calculate, the amount of damages shall be the profit gained by the infringer during the period of infringement through the infringing act. The infringer shall also bear all reasonable costs paid by the injured operator in investigating the acts of unfair competition committed by the operator suspected of infringing its lawful rights and interests.

For more information please send an email to:

c.dandrea@picozzimorigi.it or visit our website www.picozzimorigi.cn and www.picozzimorigi.com

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Source: ©2013 Picozzi & Morigi Law Firm