Comparative advertising in our country lacks specific regulation but violates self-regulation and can be challenged before the Advertising Self-Regulation and Ethics Council.
Recently, an advertising campaign has been observed in which, ironically and humorously, a transportation app highlights its qualities over those of its direct competitor: specifically, it refers to the fact that its app is safer.
The ad suggests that, on its platform, the driver who picks up the passenger will always be the same one that appears in the app, while its competitor does not offer the same guarantee.
This advertising, however humorous it may seem, raises serious doubts about its validity, both legally and ethically, especially from the perspective of self-regulation.
It should be remembered that in Chile, advertising is not legally regulated, apart from certain sectoral regulations for some industries such as tobacco or alcohol, and apart from some general provisions in the law on consumer protection and unfair competition.
On the contrary, as is the case in several countries around the world, there is non-binding “self-regulation,” but it is highly respected by the industry.
Specifically, self-regulation is overseen by the Council for Advertising Self-Regulation and Ethics (CONAR), and the “rules” are contained in a document called the Advertising Code of Ethics, the latest version of which came into effect in early 2025.
In particular, this advertisement would fall within the category of comparative advertising, but it would also violate general rules set forth in the Code. We will analyze these rules below.
Article 4 of the Code of Ethics:
“The advertiser shall be respectful of the image, brands, and products or services of a competitor.
Denigration of a competitor constitutes not only a breach of the advertiser’s professional honor and fair competition, but also leads to a weakening of the public’s trust in advertising.
In this regard, communications must not directly or implicitly undermine or denigrate any brand, product, or service, whether by ridiculing, disparaging, denigrating, or in any other way.
Except as expressly permitted in comparative advertising and for identification purposes, messages should not make unjustified use of the name, initials, logos, distinctive graphic, visual, or auditory signs of any firm, company, institution, or product or service brand without their prior authorization.”
In this case, we can see that the message directly undermines the competitor’s brand and service by indirectly asserting, but in a way that is easily deducible by the consumer, that the services are less safe and accurate, giving as an example that it does not even guarantee that the driver who picks up the passenger is actually the one listed in the application.
Article 14 of the Code of Ethics:
“For the purposes of this Code, comparative advertising is considered to be any communication that claims superiority or advantages of a product, service, brand, or industry over a direct or indirect competitor by explicitly or implicitly comparing all or some of its characteristics, attributes, or benefits.
Comparative advertising shall also be understood to mean advertising that explicitly identifies the competition, or that suggests the name, packaging, presentation, attribute, fact, or element related to one or more competing brands or companies, or a particular industry.
Comparative advertising must not be disparaging to the advertiser, the product or service being compared, nor give rise to confusion between the advertiser and a competitor; or between the brands, trade names, distinctive signs, or products or services of the advertiser and those of a competitor.
In comparative advertising, it shall be ethically acceptable to use the trade name or other distinctive signs of a competitor’s brand for identification purposes, in accordance with the terms established by law, provided that such use is fair and in accordance with the principles enshrined in this Code.
Comparative advertising must be based on objective evidence that can be reliably verified and must not use devices such as exaggeration, dramatization, or other advertising licenses permitted for unspecified generic statements, to the detriment of competitors.
Exclusive statements or allegations and advertising absolutes that are comparative in nature must be verified because they constitute assertions regarding a characteristic of the good or service that makes it superior, in absolute terms, to its competitors.
Comparative advertising will be accepted provided that it respects the following principles and limits:
- It compares goods or services that satisfy the same needs or have the same purpose.
- It must compare one or more characteristics of the goods, services, or brands being compared in a truthful, objective, and demonstrable manner, which may include price in accordance with the provisions of the article on price comparison.
- It must not give rise to confusion between the advertiser and a competitor, or between the advertiser’s brands, trade names, other distinctive signs, or goods or services and those of a competitor.
- It must not constitute denigration or disparagement of the image or brand of another company or industry.
In the case of consumer goods, the comparison must be made with models produced in the same period, and it is unacceptable to compare products from different periods, unless it is a reference to demonstrate evolution, in which case this must be made explicit..”
Consequently, the advertisement in question would not meet the requirements for admissibility of comparative advertising under the Code, since the advertisement clearly suggests contempt or denigration of the competitor’s services by suggesting that they are less safe, using humor or irony to make the comparison, but ridiculing and affecting the prestige or quality of a direct competitor.
Furthermore, although it does not constitute a trademark infringement, the reference to the trademark does not appear to be fair either, since, instead of referring to it directly, a humorous device is intentionally used to replace the last vowel of the name with an “X.”
While other jurisdictions allow much more open comparative advertising, Chile maintains a much more conservative approach in this regard, as reflected in the CONAR Code.
On the other hand, and although the focus of this az Alert is the review of the advertisement in light of self-regulation, the contents of the advertisement could also be “attacked” through legal channels, particularly via unfair competition. Specifically, Law No. 20,169 on unfair competition defines as an act of unfair competition any statements aimed at discrediting or ridiculing competitors without objective reference, and we consider that in this case there is clearly no objective reference or parameter.
Although CONAR does not have the power to enforce its rulings, companies usually comply voluntarily. However, CONAR rulings are often taken into account as precedents by the courts, so if an action for unfair competition is subsequently brought, there is a significant chance of a conviction, whereby the offender could be ordered not only to remove the advertisement, but also to refrain from engaging in similar conduct in the future, to pay compensation to the affected company, to publish the ruling in newspapers and, in extreme cases, to pay a fine.
Consequently, the company involved has a range of mechanisms at its disposal to respond to this type of campaign, if it deems it appropriate.
In terms of self-regulation, it could resort to CONAR, filing a complaint for violation of the Advertising Code of Ethics, in order to obtain a ruling declaring that the advertisement violates advertising ethics and ordering its removal.
In the legal sphere, she has the possibility of bringing an action for unfair competition under Law No. 20,169, alleging that the competitor’s message constitutes a form of discrediting without objective basis that affects her reputation and market position.
Likewise, an extrajudicial or communicational response cannot be ruled out, either through private negotiations with the competing company or through the development of a counter-advertising campaign that, within ethical and legal limits, reinforces its own image and consumer confidence.
Ultimately, the decision on which path to follow will depend on the commercial and reputational strategy adopted by the company: whether it seeks a formal precedent that reaffirms the limits of comparative advertising in Chile, or whether it prefers to resolve the conflict in the arena of communication and public opinion.
For more information on these topics, please contact our Intellectual and Industrial Property Group:
Eugenio Gormáz | Partner | egormaz@az.cl
Carlos Lazcano | Senior Associate | clazcano@az.cl
Fernanda Rodríguez | Associate | frodriguez@az.cl
Esteban Orhanovic | Associate | eorhanovic@az.cl
Matías Selamé | Associate | matiasselame@az.cl
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