Due Diligence in Surrogate Advertising

Why in News?

The Maharashtra Food and Drug Administration has issued show-cause notices to actors Shah Rukh Khan, Ajay Devgn and Tiger Shroff over advertisements for Vimal Elaichi. The FDA suspects that the advertisements indirectly promote tobacco or pan-masala products by retaining the same brand name, visual identity and celebrity appeal.

The actors have reportedly been asked to withdraw promotional content and explain the due diligence undertaken before accepting the endorsements. These are allegations under investigation, not findings of guilt. 

What is Surrogate Advertising? 

Surrogate advertising is the indirect promotion of a prohibited or restricted product, commonly tobacco or alcohol, through an ostensibly lawful product carrying the same:

• Brand name or logo
• Packaging and colour scheme
• Slogan, music or visual imagery; and
• Celebrity ambassador.

For example, advertisements for cardamom, mouth fresheners, soda or packaged water may be designed primarily to preserve consumer recall of a tobacco or liquor brand.

However, every brand extension is not automatically surrogate advertising. The legal question is whether the advertised product has an independent commercial existence or is merely a vehicle for promoting the prohibited product. 

Applicable Legal Framework: 

• Cigarettes and Other Tobacco Products Act (COTPA), 2003: Section 5 prohibits advertisements that directly or indirectly promote cigarettes or other tobacco products. 
• Food Safety and Standards Act, 2006: Section 24 prohibits misleading food advertisements and unfair trade practices.
• Consumer Protection Act, 2019: Empowers the Central Consumer Protection Authority (CCPA) to act against misleading advertisements.
• CCPA Guidelines, 2022: Expressly prohibit surrogate advertising and impose responsibilities on manufacturers, advertising agencies and endorsers.
• Cable Television Networks Rules: Require advertisements carried on television to conform to the prescribed advertising code.

The involvement of the CCPA, FSSAI, health authorities, State FDAs and the Information and Broadcasting Ministry has nevertheless created a fragmented and overlapping enforcement regime.

Liability of Celebrity Endorsers: 

Under Section 21 of the Consumer Protection Act, the CCPA may impose a penalty of up to:

• ₹10 lakh for the first contravention; and
• ₹50 lakh for subsequent contraventions.

An endorser may also be prohibited from making endorsements for up to one year, extending to three years for a repeat violation. However, no penalty should be imposed if the endorser proves that adequate due diligence was undertaken to verify the claims. 

Due diligence should ordinarily include:

• Verifying the product’s legal and regulatory approvals
• Seeking documentary or scientific evidence for health and performance claims
• Examining whether the brand is associated with a prohibited product
• Ensuring that the endorsement reflects a genuine and reasonably current opinion
• Checking disclaimers and material omissions; and
• Retaining a contractual right to withdraw misleading promotional material.

Celebrity endorsers cannot treat themselves as mere performers because their reputation creates trust and materially influences consumer choices. 

What did the Delhi High Court hold? 

In DGHS v. Som Pan Products Pvt. Ltd. (2024), the Delhi High Court upheld interim protection granted to companies advertising tobacco-free pan masala and cardamom products.

The judgment established two important principles:

• Mere use or registration of a brand also associated with tobacco does not conclusively prove surrogate advertising.
• Conversely, the existence of a technically lawful product does not automatically make every advertisement lawful. 

The judgment does not grant blanket immunity to brand-extension advertising.

Public-Health and Constitutional dimensions: 

Surrogate advertisements also normalise harmful products among children and young consumers. The issue involves balancing: 

• Commercial speech and the freedom to conduct lawful business under Articles 19(1)(a) and 19(1)(g) 
• Consumer autonomy and the right to informed choice
• The right to health under Article 21; and
• The State’s duty to improve public health under Article 47.

Any restriction must therefore satisfy legality, necessity and proportionality.

Way Forward: 

• Develop a uniform statutory test distinguishing genuine brand extensions from surrogate products. 
• Create a coordinated enforcement mechanism involving CCPA, FSSAI, State FDAs and tobacco-control authorities.

Public-health enforcement will remain credible only when supported by evidence and procedural fairness. Effective regulation must close the surrogate-advertising loophole without treating every lawful brand extension as presumptively illegal.