Colgate-Palmolive (Pty) Ltd v Glaxosmithkline Consumer Healthcare and Another (61997/2018) [2018] ZAGPPHC 876 (5 September 2018)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISON, PRETORIA

(1) REPORTABLE:YES/NO

(2) OF INTEREST TO OTHER JUDGES: YES/NO

(3) REVISED.

CASE NUMBER: 61997/2018

5/9/2018

In the matter between:

COLGATE-PALMOLIVE (PTY) LTD

Applicant

And

GLAXOSMITHKLINE CONSUMER HEALTHCARE

First Respondent

THE ADVERTISING STANDARDS AUTHORITY OF

SOUTH AFRICA

Second Respondent

JUDGMENT

SARDIWALLA, J:

[1] The Applicant seeks to interdict the First Respondent ('GSK') from selling certain of its AQUAFRESH toothpaste products in that the conduct of the First Respondent constitutes unlawful competition. The matter proceeded before me on an urgent basis.

[2] The Advertising Standards Authority of South Africa ("ASA") found that the products contained a claim that was unsubstantiated and misleading to the consumers and general public by virtue of its unlawful conduct.

[3] On 19 May 2016 the Applicant launched a complaint against the First Respondent regarding the unsubstantiated and misleading claim referred to as "the 24h sugar acid protection claim".

[4] It is common cause between the parties that the Applicant and the First Respondent are not members of the ASA but that the First Respondent is a member of the Cosmetic Toiletry and Fragrance Association of South Africa. It is significant that the First Respondent agreed that it subjected itself to the jurisdiction of the ASA and as such is bound by all its rulings.

[5] The initial complaint with the ASA of 19 May 2016 was arbitrated by the ASA wherein the ASA found in favour of the Applicant that the claim was unsubstantiated and misleading to the public. The Final Appeal Committee in a Ruling dated 1 May 2017 ordered the withdrawal of the products in terms of clause 15.5 of the Procedural Guide of the Code of Advertising Practice within three months.

[6] According to the Applicant the First Respondent did not comply with the Complaint Ruling by the Final Appeal Committee and continued its unlawful conduct by making only a minor cosmetic change to its packaging but retained the phrase "24h sugar acid protection" on its packaging. In response to the new packaging the Applicant thereafter launched a breach complaint with the ASA that the "24h sugar acid protection" claim was still in use. The Applicant was initially unsuccessful in its complaint and appealed to the Advertising Industry Tribunal ("AIT") of the ASA. On 22 December 2017 found in favour of the Applicant and ordered that the decision of the Directorate be set aside and that the "First

Respondent make a concerted effort to withdraw all material that bears the claim within three months of the ruling in terms of clause 15.3.7 of the Procedural Guide, alternatively old stock in circulation after three months must be over stickered".

[7] The First Respondent launched an appeal against the "AIT" ruling and an application to suspend the sanctions imposed, which the Applicant alleges was only a month before the packaging withdrawal deadline. The FAC found in favour of the Applicant and Judge B M Ngoepe (Chair of the Appeals Panel) in his order dated 18 May 2018 and ruled that:

"9.1 It is hereby declared that by continuing to advertise a claim on the packaging of Aquafresh toothpaste that the product offers "24h sugar acid protection" with a disclaimer "Follow a healthy diet and brush twice daily for cavity protection" the Appellant:

9.1.1 has failed to comply with the order (c) of the 1 May 2017 Ruling of the Final Appeals Committee in the matter between the Appellant and the Respondent, Matter No: 2016-3747F; which order states that the claim "24h sugar acid protection", because it is unsubstantiated and therefore likely to mislead the consumer, "must be withdrawn in accordance with the provisions of the clause 15.5 of the Procedural

Guide of the Code of Advertising Practice within three months of this Ruling" and

9.1.2 has acted in breach of the said order.

9.2 The Appellant is directed to take steps, no later than 5 working days from the date of this Declaratory, to implement Order (c) referred to above of the 1 May 2017 Ruling of the Finals Appeals Committee.

9.3 The Appellant is to pay Respondent's costs of this appeal, on a party-party basis, including costs consequent upon the employment of two counsel, if applicable."

[8] The Applicant therefore contends that the First Respondent has not complied with any of the above-mentioned Rulings which entitle it to a clear right to be enforced by this Court. Further that on evaluation of the evidence The First Respondent has not removed or over stickered the packaging bearing the "24h sugar acid protection".

[9] The First Respondent's claims are inter alia the following:-

9.1 The Applicant has failed to establish that the matter is urgent in that it failed to request the ASA to order the immediate withdrawal of advertising or that the claim caused harm to the Applicant's business requiring urgent redress;

9.2 That the ASA has always interpreted the word "withdraw" of packaging to mean "cease disseminating";

9.3 That the Court does not have the jurisdiction to legally enforce a ruling of the ASA; and

9.4 That the First Respondent has taken the necessary steps to comply with the AIT's Complaint Ruling since 15 December 2016.

[10] In Nestle (South Africa) (Pty) .Ltd v Mars Inc 2001 (4) SA 542 SCA dealt with the role of the ASA in it which held:

"[1] The Advertising Standards Authority of South Africa (ASA) is a voluntary association that Is Incorporated in terms of s 21 of the Companies Act 61 of 1973. It was established by participants in the advertising industry with the objective of creating a system of self­ regulation within the industry. For that purpose it devised a Code of Advertising Practice and Procedural Guide to which its members are obliged to adhere. A departure from the Code by any of its members may result in a complaint being made to the ASA which must be dealt with in accordance with the prescribed procedure. If there is merit in the complaint the ASA will rule accordingly and it may impose various sanctions upon the member concerned, the most important one being the withholding of advertising space or time.

And went on to further that

[12] It was not disputed that by subscribing to the terms of the Code the ASA and its members became contractually bound inter se to adhere to the respective obligations imposed upon them (cf Marlin v Durban Turf Club & Others 1942 AD 112 at 126-128). That meant that the ASA was obliged to consider and to rule upon complaints that were made to it in accordance with the procedure contained in the Code. It was also not disputed that in the event of the ASA failing to comply with that obligation it would be competent for a court to order it to do so.

[11] The Applicant relied on the interpretation of the role of the ASA and in my view correctly so as it is not in dispute that the parties, although not members of the ASA, by subjecting themselves to the ASA confirmed its inherent jurisdiction to investigate and· rule on the complaints. The First Respondent in its Answering Affidavit dated 29 August 2018 also confirmed that it participated voluntarily to the proceedings regarding the complaint and further states that in intends to abide by the Rulings of the FAC and in actual fact alleges that it has taken the necessary steps to comply with the rulings. Therefore the First Respondent by its own admission and by its participation is regarded as a member of the ASA in relation to the present proceedings. The learned Judge went on to state that where the ASA failed to comply with its obligations it would be competent for a court order to do so. A further fact is that the ASA was incorporated in terms of legislation (The Companies Act) which actually provides a basis by which the Applicant could also approach this Court to intervene. Therefore the First Respondents contention that as the present application is directed at the enforcement of the rulings that only the ASA has the inherent jurisdiction to enforce such rulings and not this Court is unfounded and unsubstantiated. I am of the view that the Applicant's contention that it has exhausted the internal procedures of the ASA must be accepted is entitled to enforcement by this Court.

[12] The issue of the enforceability of the rulings of the ASA against its members was dealt with in Advertising Standards Authority v Herbex (Pty) Ltd (902/16) 2017 Z.ASCA 132, where the Court held that:

"[1] The rulings of the ASA are published on its website which is accessible to members and the media. Rulings are not legally enforceable against non-members. The only consequence of a non-member's refusal to comply with an ASA ruling is that the members of the ASA will decline to accept advertising from that non-member. If a respondent ignores reasonable requests for co-operation, the ASA may issue an Ad-Alert to its members. The effect of an Ad-Alert is that none of the ASA 's members will publish any advertisement of the offending advertiser in any medium."

[13] I have already found above that the First Respondent's participation and acceptance of the ASA's jurisdiction to adjudicate the complaints is tantamount to its acceptance as a member and as held in the case supra such rulings are enforceable therefore enforceable against the First Respondent as a member. To not deem so would result in the consequences of the First Respondent not being held legally accountable for its unlawful conduct and would be unreasonable to expect the Applicant to be content with only remedy of the ASA issuing an Ad-Alert. It could a concerted effort by the First Respondent. The Ruling is clear that all materials with the offending packaging must be removed in its entirety or alternatively over stickered in order to be compliant with the ruling. The First Respondent is therefore in breach of the FAC Ruling. I am mindful that due the wide spread distribution of the products and its packaging that a total recall would be impossible if not impractical and clearly the ASA was of the same view when it ordered that any old stock should be over-stickered to combat the effect of the unlawful conduct. However there is no evidence before me that the First Respondent has complied with this order, attempted to or even initiated such processes.

[16] I am therefore satisfied that the Applicant has exhausted the functions and remedies available at the ASA and is entitled to have the Complaint Rulings of the FAC enforced by this Court and that the Applicant has established the nature of its urgent redress.

[17] I accordingly make an order as follows:

1. The ordinary forms and services provided for in the Uniform Rules of Court be dispensed with and that this application be heard and determined on an urgent basis in terms of the provisions of Rule 6(12)(a) of the Uniform Rules of Court.

2. The First Respondent to comply forthwith with the rulings of the Final Appeal Committee of the Advertising Standards Authority of South Africa handed down by the Learned Justice Ngoepe on 1 May 2017 relating to (the "Complaint Ruling") and on 15 May 2018 relating to (the "Breach Ruling") in his capacity as Chair of the Final Appeal Committee of the Advertising Standards Authority of South Africa and the First Respondent is interdicted from competing unlawfully with the Applicant by selling, distributing, or advertising for sale toothpaste products in contravention of clauses 4.1 and 4.2.1 of Section II of the Advertising Standards Authority of South Africa's Code of Advertising Practice.

3. The First Respondent is interdicted from distribution of current and future offering for sale of toothpaste in packaging containing the claim "24h sugar acid protection" (hereinafter referred to as the offending package).

4. The First Respondent is to over sticker all toothpaste in offending packaging at any stores that the First Respondent has distributed to by removing the phrase "24h sugar acid protection", within six months of this order.

5. The First Respondent is to pay the costs of this application, including the costs of two counsels.

SARDIWALLA J

JUDGE OF THE HIGH COURT

APPEARANCES

Date of hearing

: 04 September 2018

Date of judgment

: 05 September 2018

Applicant's Counsel

: R Michau SC and L Harilal

Applicant's Attorneys

: Webber Wentzel

First Respondent's Counsel : O Salmon SC and F Southwood

First Respondent's Attorneys : Spoor & Fisher attorneys

Second Respondent Attorneys : Van Der Want attorneys