AMERICAS: BRAZIL

Brazil

THE SEARCH FOR ADVERTISING REGULATION THROUGH LITIGATION
Authors: Lívia Miné, Bruna Izydorczyk, & Rosangela Delgado, Veirano Advogados

When advertising a product one should ensure its advertising practices are in accordance with the existing laws and regulations of the local jurisdiction. Well, that may no longer be enough with respect to Brazil. While misleading and abusive advertising and manufacturers’ failure to inform are the most common issues raised in individual lawsuits regarding advertising in Brazil, class actions may change the dynamics of advertising practices in the country, creating new patterns for manufacturer’s behavior for years to come.

Though advertising practices in Brazil are generally governed by laws and regulations issued by certain regulatory agencies, in recent years the number of consumer class actions seeking to modify or impose stricter standards upon, and, in some cases, even the ban of, advertising of several products has increased.

Analyzing some of the class actions filed by consumer associations or by the Public Attorneys’ Office, this questionable trend to seek regulation through litigation becomes quite clear. These lawsuits seem to disregard one of the most basic principles of law, according to which one shall not be required to do or to refrain from doing anything, except as specifically provided by law.

In a class action filed by the São Paulo Public Attorney’s Office against three of the major beverage companies in Brazil, the Trial Court partially granted the complaint to, among other things, (i) prohibit defendants from broadcasting any advertising targeting children and teenagers in which soft drinks and juices are associated with a healthy life; (ii) prohibit advertising during television shows and in publications targeted to children; and (iii) inform consumers in the advertising and labeling of soft drinks and juices containing sugar that excessive consumption of sugar can cause health problems.

The decision was ultimately overruled at the appellate level on the grounds that the Trial Court decision violated the equality principle (as the three companies are not the only soft drink manufacturers in Brazil and several other products also contain excessive levels of sugar.) The Appellate Court understood that the Plaintiff’s claims lacked legal grounds as there is no law prohibiting or restricting the advertising of soft drinks, thus being the reason why the judiciary would not be authorized to do so instead. The Plaintiff may further appeal this decision to the Superior Courts.

Modification of advertising regulation was also sought by the Federal Public Attorney’s Office in a class action filed against one of the largest soft drink companies in the world. Among other claims, the Plaintiff sought the prohibition of advertising targeted to children and the inclusion of warnings on labels and advertising on the risks associated with the excessive consumption of soft drinks (e.g., obesity.) The case was denied at both trial and appellate court levels. Among other things, the Courts understood that the manufacturing of soft drinks is a licit and regulated activity and that the regulation in effect at the time imposed no duty to warn. The decision also understood that obesity can be caused by several factors and that information on the calories would be enough for consumers to freely decide whether or not to consume the product in question. Also, it stated that it would make no sense to attribute obesity problems to beverages only, when other sugary products also contain no warnings on risks.

Coincidently or not, last month the Brazilian Sanitary Agency – Anvisa – issued Ordinance No. 24/2010 imposing several restrictions to manufacturers of food and beverage products containing high level of sugar and low nutritional levels. Among other restrictions, Anvisa imposed the inclusion of warnings on advertising and labels about the risks associated with the consumption of the product (such as obesity, diabetes, heart diseases and high blood pressure.)

Another interesting case is a class action filed by the Federal Public Attorneys’ Office against Anvisa and the Federal Union. The Plaintiff pleaded with the Court to order defendants to issue stricter regulation on the advertising of beverages containing the expression “without alcohol” in their label. The current legislation exempts manufacturers from labeling as alcoholic those beverages that contain less than 0,5 Gay Lussac degrees of alcohol. In spite of the existing legislation, the Federal Public Attorney’s Office claims that defendants be ordered to restrict the advertising of alcoholic beverages containing more than 0,5 Gay Lussac degrees of alcohol; (ii) that advertising of this type of product be aired only between 9 pm and 6 am; (iii) prohibition of associations between any alcoholic beverages and sports, healthy lifestyle, sexual performance etc ; and (v) prohibition of advertising of alcoholic beverage companies on sporting uniforms. The case is pending judgment at the Trial Court.

In a similar case filed by a consumer association against one of the main beverage companies, the Court ordered the manufacturer to remove from the market within an entire State of Brazil all bottles of a certain beer labeled and advertised as non-alcoholic under the applicable legislation. Despite the fact that the manufacturer acted in accordance with the law, the Court understood that the lack of information on the fact that the beer contained a minimum percentage of alcohol could trigger health risks to some consumers, especially those who may be alcoholics. There is a pending defendant appeal before the Superior Court of Justice.

This activism through the Brazilian court system shows that consumer protection bodies and associations are clearly engaged in promoting regulation of various segments. However, calling the Courts to change or modify the existing laws and regulation on advertising and other themes seems like a dangerous path and clear misuse of the judiciary’s role, which should be to interpret and apply these rules under the Brazilian Constitution.