Bakhshillo Khodjayev

Associate Professor, Dean of Private Law Faculty, Tashkent State University of Law

December 11, 2020

Background: Law & Policy in a nutshell

In February 2017, the President of Uzbekistan initiated the Strategy for Further Development of Uzbekistan 2017-2021. In accordance with the State Program on Development Strategy determines the special task to deal with counterfeit merchandise, which intends to prevent unfair competition and the protection of manufacturer and consumer rights. The task should have been accomplished by research-based and legislative amendment proposals by June 2017. However, there is no legislative or research proposal on this matter yet. Advertising Law was adopted in 1998, legal provisions on misleading advertising have not been amended since 2002. Also  In addition, general acts such as Competition Law and Consumer Protection Law have remained unchanged without any progressive or effective provisions on misleading advertising.

Problems in practice: case analysis

The problem in Uzbekistan is misunderstanding and mistaken implementation of the commercial speech doctrine and consumerism issues concerning misleading advertising regulation, which causes the development of ambiguous and tangled legal requirements. According to the Article 13 of the Advertising law, improper advertising is unfair, false advertising which actually misleads or tends to mislead consumers by the way of inaccuracy, ambiguity, exaggeration, omission, or through the violation of requirements on time, place and manner of advertising or violation of other legislative requirements, which can cause damages to person and state.

This tangled legal concept of improper advertising contains a mixture of three different legal requirements, which result in the following problems in enforcement:

The first problem is comprehension of deception standard. Case analysis shows that the Antimonopoly Committee of Uzbekistan cannot clearly understand the legal nature of the deception standard. For instance, in Beeline case, a mobile network operator Beeline disseminated an advertisement about new tariff plan ‘Best-Best Megabyte’ on March 31, 2013. In the advertisement, mobile operator described the tariff plan in which “daily internet is free after 5 MB (Megabytes)”. However, the advertisement also included information written in considerably small letters that “technological limit of free Internet is 25 MB per day, the MB over the limit is estimated as $0,007/MB, free MB is not transferred automatically to the next day”. This shows that in the Beeline case, although there are special legal requirements for deception, the committee applied general legal requirements for advertising such as legality, accuracy, reliability and using harmless advertising techniques that do not incur any sanctions.

Moreover, in the San’at Sehri company case, an organizer provided TV commercial about a big concert show with nine famous Uzbek superstars in the period of May 5th and 6th 2006 in the concert hall called Turkiston. On the first day of concert the audience found out that only three of those famous singers actually performed in that concert. In replacement of the other six superstars, the concert was given by unknown singers who the audience did not expect to see on the stage because the advertisement did not provide information about these strangers. Consequently, the consumers complained to the Antimonopoly Committee, and requested compensation for their damages from the false advertising. The committee found that the actual advertisement contained information about nine famous singers by name and the sentence continued with the phrase ‘and others’, which made consumers believe that the other singers were also famous. Surprisingly, the committee evaluated the advertisement as a hidden (subliminal) advertisement and imposed an administrative fine to the director of the company. Instead, consumers were close in correct evaluation to find the advertising false, however, to make it clearer, the advertising deceived consumers by omission of essential fact, such as the information about ‘other singers’. The San’at Sehri company caseshows that the committee does not clearly distinguish between deception by omission of facts and the hidden (subliminal) advertising that has subliminal effects on the consciousness of consumers.

Furthermore, the committee has a very strict regulatory approach regarding puffery in advertising. The committee created a list of superlative words and phrases that are prohibited to use in advertising. For instance, in the Rubikon Wireless Communication Joint Stock Company case, the company complained about the decision of the territorial Department of Committee to Economic Court of Tashkent city. According to the materials provided in the case, on January 6, 2009, the committee found the company’s advertisement about “First Network” tariff plan in violation with Article 13 of the Advertising law and started proceedings against the company. The committee decided that the advertisement about “First Network” tariff plan included superlative word ‘first’ which means “the first mobile operator among the other mobile communication operators”. However, the Court stated that the word ‘first’ in advertisement was not superlative, because the word did not describe the mobile operator; it was used in relation with the service of the operator. Furthermore, the word ‘first’ did not show the superiority of the Company`s service among the other mobile services of operators. Accordingly, the Court decided that there was no violation of Article 13 of the Advertising law in the advertising about ‘First Network’ tariff plan. The decision of Economic Court of Tashkent city was upheld by the Appellate Instance and Collegium of the Higher Economic Court of Uzbekistan.

The second problem is the application of non-content regulation. According to the commercial speech doctrine, restrictions on time, place and manner of advertising is a non-content regulatory method that should be applied to excessive advertising in order to control the amount of advertising. However, the legislature of Uzbekistan misunderstood this standard as “the amount of advertising” instead of “the amount of information provided by advertisement”. Therefore, the Parliament applied a legal standard for restriction on time, place and manner of advertising that aimed to control an excessive amount of advertising. The non-content regulatory standard has become widespread as the main legal standard for evaluation of misleading advertising in practice, even if it is not able to identify deception in advertisement. For instance, in the Surkhandaryo TV case, althoughthe broadcast company violated the time limitation of advertising dissemination which was 6 minutes per hour, this violation was evaluated as improper advertising.

The third problem is the application of substantiation standard. One of the main issues in the legal concept of improper advertising is the phrase ‘violation of other legislative requirements’. The committee interprets the loophole as substantiation standard, in particular as substantiation of the advertised product with relevant license and certificate, even if this standard alone is not able to identify deception. Unfortunately, the substantiation standard could be used widely in the future, which might bring unreasonable intervention to the commercial speech of entrepreneurs. For instance, in the Namangan International Airport case, the administration of airport placed an outdoor advertisement on a billboard stating that the flights form Namangan to cities of Russia such Moscow, St. Petersburg, Yekaterinburg, and Omsk are flown on board of the airplane BOEING-757. However, as a result of monitoring, in March 2007 the territorial Department of Committee found that the same flights were conducted not only by BOEING-757 but also by other types of airplanes. Following the Cease and Desist Order, the administration of airport corrected the text of advertisement. However, the Territorial Department decided to impose the administrative fine showing that the airport administration is still violating Article 13 of the Advertising Law as the license information has not been shown in the advertisement. The Economic Court of Namangan region also supported the decision of the Department. The Namangan International Airport caseshows thatthe substantiation standard has become superior in the evaluation of misleading advertising in practice rather than the deception standard.

Conclusion

To sum up, the ambiguous legal framework of improper advertising allows the government to intervene in free commercial speech of entrepreneurs in an administrative way. Consequently, consumers cannot access the information about products and services that they need and entrepreneurs may lose public confidence. While the government is anxious and busy with this non-deceptive standard, unfair competitors use misleading advertising as a tool to manipulate consumers. The state cannot keep a balance between the government interest and the concerns of competitors and consumers. Therefore, the concept of improper advertising should be viewed in two separate ways in order to separate deception standard from non-deception elements and to make a clear distinction between improper format and improper content. One method, the advertisement with improper format means the commercial information that violates legislative requirements on time, place, manner and substantiation of advertising.  The other one, the advertisement with improper content means the commercial information that actually misleads or has tendency to mislead consumers and is likely to affect their purchasing decisions.

Cite as: Bakhshillo Khodjayev, “Advertising Law & Policy in Uzbekistan: Between misunderstanding and unpredictability”, Uzbekistan Law Blog, 11.12.2020.