It appears that the Advertising Standards Authority (“the ASA”) is sharpening its teeth!

By way of background, the ASA received numerous complaints of Herbex (Pty) Ltd’s (“Herbex”) weight loss advertisements that appeared to be misleading. After hearings were held, the ASA made rulings on some of Herbex’s advertisements finding that they were in contravention with its advertising code.

Herbex then approached the High Court as it was of the view that, because Herbex was not a member of the ASA, the ASA could not make rulings against it.  Secondly, Herbex’s complaint was that the ASA’s standard letter alerting advertisers to a complaint, induced non-members into participating in its processes.

The High Court found in favour of Herbex by ordering that the ASA’s rulings against Herbex were void, and ordered the ASA to remove the rulings from its website. The High Court also interdicted the ASA from investigating any further complaints against Herbex. This left the ASA virtually toothless against entities that were not members of the ASA.

The matter was taken on appeal, and the Supreme Court of Appeal (“the SCA”) overturned a significant portion of the High Court’s order by finding that:
1. the interdict on the ASA investigating Herbex;
2. the declaratory order that the ASA’s rulings against Herbex were void; and
3. the order on the ASA to remove its rulings against Herbex off its website.

The ASA admitted, in settlement between the parties, that it has no jurisdiction over a person or entity who is not a member of the ASA (unless the non-member has agreed to the ASA’s authority). This meant that the ASA’s standard letter alerting advertisers to a complaint, would have to state the absence of the ASA’s jurisdiction over non-members and that non-members are not obliged to participate in its processes.

So, what is the practical effect of the SCA’s judgment?
Whilst the ASA is a voluntary association which performs an important function of protecting consumers against, inter alia, untested claims in advertising and ensuring that advertising standards are upheld, and that adverts are informative, honest and factual; the ASA is not a statutory body, and thus has little authority over non-members.

Even as the SCA’s judgment gives the ASA the ability to still notify consumers of misleading and false advertising, and to make rulings on any advertisements, irrespective of who the advertiser is or where the advertisement is published; the only issue will be the enforceability of the ASA’s rulings against non-members, as they can only be applied within the domain in which the ASA’s members participate.

Albeit the ASA maintains no jurisdiction over non-members, it does not necessarily mean that advertisements by non-members will not be affected by the ASA’s rulings. The ASA’s authority can have an indirect effect on non-members in some of the following ways:

1. Broadcasters are members of the National Association of Broadcasters (“the NAB”) and will also be bound by the ASA’s decisions, as the NAB is a member of the ASA. This means, for example, that Herbex (albeit a non-member of the ASA) would not be able to advertise any advertisements that the ASA deems to be infringing on any SABC channels or those of Multichoice, as these broadcasters are members of the NAB who is in turn a member of the ASA.

2. The Consumer Goods Council of South Africa (“CGCSA”) is a member of the ASA, and members of the CGCSA will similarly fall within the ASA’s jurisdiction. This means that packaging sold by mainstream retailers such as Woolworths, SPAR and Pick ‘n Pay will be bound by the ASA’s decisions. Therefore again, Herbex for example will not be able to sell its goods (where the packaging contravened the ASA code) in these retail outlets.

The SCA’s judgment clarifies the scope of the ASA’s authority and just how non-members of this voluntary association will be affected by an adverse ruling against them. Consequently, the ASA’s scope of authority will no longer be in question in future disputes.

This judgment is welcomed in bolstering the ASA and ensuring it remains able to play a crucial role, particularly against advertisers who make extravagant claims to susceptible consumers.

Written by Andrew Papadopoulos & Koketso Molope, KISCH IP