- South Africa's Advertising Commission has ruled in L'Oreal's favour after it complained that a rival product effectively copied the packaging of its Cerave skincare range.
- L'Oreal alleged that its affiliate, Nutri-Woman, which produces the product at the center of the dispute, DERMACARE, engaged in these actions to take advantage of the market credibility of CERAVE.
- Nutri-Woman argued that it wasn't bound by the commission's rules, but regulators still thought there could be serious repercussions.
- For more finance news, visit the News24 Business front page.
South Africa's Advertising Regulatory Board (ARB) has ruled against L'Oreal South Africa, finding that a competitor's product effectively copied the packaging of the company's Cerave skin care range.
L'Oreal South Africa claims that the packaging of Nutri-Woman Dermacare substantially mimics the packaging of the French group's CeraVe products, “and thus misuses the advertising goodwill associated with the brand.”
The CERAVE brand has been available in the country since early 2022. Citing a NielsenIQ research report, L'Oreal said the brand's products currently account for around 4% of the market's “value share.” The company claims it is the fastest-growing brand in its category, growing seven times faster than the market.
The company alleged that Dermacare had “faithfully copied” its colours and that the descriptions of its product range were “highly similar” to CeraVe's and placed in the same location on the packaging.
L'Oreal South Africa also argued that Dermacare uses the same font and the ordering of product information is “the same or very similar, with very minor differences”.
L'Oreal's CeraVe range (top) and DERMACARE products (bottom).
ARBS
In its submission to the ARB, L'Oreal drew similarities between its CeraVe products and its DERMACARE products.
ARBS
Nutriwoman, on the other hand, argued that L'Oreal South Africa could not claim rights over “a combination of packaging construction elements that is common in the skin care industry”.
The company disputed the goodwill assertions and also argued that CERAVE was not a market leader.
In its ruling, the ARB said Cerave “does not need to be the market leader to demonstrate credibility with its packaging.”
The court also referred to an earlier decision involving another party, which noted that “various aspects of packaging” “individually may be considered merely descriptive or unprotectable,” but when combined in a “specific or unique manner” “may become a protectable advertising concept.”
The ARB board was also satisfied that the “unique combination of elements of the CERAVE product architecture” resulted in a “distinctive package that is protectable as advertising.”
It was of the opinion that the CERAVE and DERMACARE product lines “overwhelmingly share the same image,” which could lead to confusion and deception for customers in a hurry.
The company also cited social media posts in which users linked the two products, saying “there was a clear association between the two products in the minds of users.”
“The fact that online users thought of the CERAVE family of products when they encountered DERMACARE products is, in our view, sufficient to demonstrate a likelihood of confusion.”
For this reason, it was determined that DERMACARE's advertisements violated the regulations.
Impact of the ruling
It remains to be seen what the ultimate impact of the ruling by the ARB, the self-regulatory body that regulates advertising content in South Africa, will be.
Nutriwomen is not a member of the ARB, nor do we consider ourselves “bound by the ARB or its Code.”
However, while the ARB acknowledges that if the ruling goes through the appeal process it cannot force Nutri-Woman to change its packaging, it argues that it could have significant consequences for the company as broadcasters and retailers that are members of the ARB will no longer advertise or stock products with the packaging in question.
As for the ARB's jurisdiction, anyone can complain to the ARB about an advertisement and the organisation's board will decide whether the ad breaches the South African Code of Advertising Conduct. Sanctions are easily remedied if the offender is a member of the ARB. In the case of packaging, advertisers have three months from the ruling to change their packaging if there is no appeal, ARB CEO Gail Schimmel told News24 on Thursday.
Advertisers can still appeal, but affected advertisers do not need to be members to appeal, it added.
As for the Nutri-Woman case, Schimel said the group is within the deadline to appeal the ruling and that it understands Nutri-Woman may be planning to appeal.
Schimel noted that if the ruling is upheld and the appeal is not successful, Nutri-Woman has three months to amend the packaging of its Dermacare products because this is a packaging issue and sudden changes are difficult to make.
Because Nutriwomen is not a member, regulators cannot enforce the changes if the products remain in their original packaging.
“But we can instruct our members not to accept advertising, which means if there is a TV advert that uses packaging that we have banned, it becomes a problem because broadcasters are obliged by the Electronic Communications Act to listen to us. [ARB’s] This means that it will no longer be possible to advertise on television using the old packaging.
“Also, some retailers are members of the ARB through its membership organisations. The ARB has a trade association and its members are obliged to listen to the ARB so that they can ask retailers who are ARB members not to sell products with misleading packaging.”
This means that while the ARB may not be able to completely block the promotion of products with the packaging at issue, Nutri-Woman will find that it will not be able to advertise with the same freedom it had prior to this decision if it chooses not to comply with the decision.
Attempts to contact Nutriwomen and L'Oreal South Africa were unsuccessful.
