On the 27th of April, 2017, Montenegro introduced the new Law on Prohibited Advertising ("Law"), which came into force on the 17th of May, 2017. This Law represents a new piece of Montenegrin legislation deriving from the process of harmonising the local law with the EU Directive 2006/114/EZ about misleading and comparative advertising.
Its aim is to protect traders and consumers from prohibited advertising. Since the consumers have already been protected from prohibited advertising through the Law on Consumer Protection, the primary focus of the new Law is to provide traders with adequate protection in relation to their competitors (business to business).
What is Prohibited Advertising?
Advertising is defined as the production of a representation which recommends the advertiser, its professional or business activity, in order to promote the supply of goods, services and immovable property. The Law explicitly prohibits:
- Misleading advertising - any advertising, including the manner of presentation of the advertiser, which deceives, or is likely to deceive, the persons to whom it is addressed and might affect their inadequate economic behaviour or injures or is likely to injure the interests of competitors; and,
- Comparative advertising - any advertising which directly or indirectly refers to a competitor or goods and services offered by a competitor.
However, comparative advertising shall be permitted when the following conditions are met:
- it is not misleading within the meaning of the Law and the Law on Consumer Protection;
- it compares goods or services meeting the same needs, or intended for the same purpose;
- it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, including the price;
- it does not discredit or denigrate the trademarks, trade names, other distinguishing marks, goods, services, activities or relations between competitors;
- in the case of products with a designation of origin, it relates in each case to products with the same designation;
- it does not take an unfair advantage of the reputation of a trademark, trade name or other distinguishing marks of a competitor, or of the designation of origin of competing products;
- it does not present goods or services as imitations of goods or services bearing a protected trademark or trade name; and,
- it does not create confusion among traders, between the advertiser and a competitor, or between the advertiser's trademarks, trade names, other distinguishing marks, goods or services and those of a competitor.
The trader who performs advertising shall be responsible for misleading and comparative advertising ("prohibited advertising").
Protection from Prohibited Advertising
The lawsuit for the cessation of prohibited advertising can be filed by:
- chambers and interest trade associations; and,
- an organisation for consumer protection (authorised to file a lawsuit for the protection of collective consumer interests).
When Montenegro enters the European Union, authorised persons from the EU will be able to initiate the procedure for the protection from prohibited advertising which affects or is likely to affect the traders from EU member states. In order to do this they need to:
- be authorised to initiate the procedure for the collective protection of traders from prohibited advertising in their EU member state; and,
- they have to submit relevant evidence accordingly.
The lawsuit is filed against a particular trader, or a group of traders from the same economic sector, that uses or encourages the same or similar prohibited advertising, or a holder of the codex stipulating rules that encourage such advertising.
If the lawsuit is well-grounded, the court will order the cessation of prohibited advertising and the prohibition against its repetition in the future. The court will also potentially order the defendant to publish the entirety or a part of the decision at its own expense and correct such advertising.
The court decision upholding the lawsuit creates an obligation for the defendant to refrain from the same or similar prohibited advertising even towards other traders who did not participate in the court procedure.
However, since this Law is the result of obligations that Montenegro has in the course of its negotiations for entering the EU, and because it is a new and specific regulation directed exclusively towards prohibited advertising, it remains to be seen what effect it will produce in practice.