L'Oreal SA claims rival copied its packaging - and watchdog agrees | Business (2024)

• The Advertising Regulatory Board has found in favour of L'Oreal South Africa after it complained a competitor's products effectively copied the packaging of its CERAVE skincare range.
• L'Oreal argued that the company concerned, Nutriwomen, whose product DERMACARE is at the centre of the dispute, did this to piggyback on the CERAVE's goodwill in the market.
• While Nutriwomen argued it was not bound by the board's codes, the regulatory body believed there could still be serious repercussions for it.
• For more financial news, go to the News24 Business front page.

The Advertising Regulatory Board (ARB) has found in favour of L’Oreal South Africa after it complained a competitor’s products effectively copied the packaging of its CERAVE skincare range.

L’Oreal South Africa claims Nutriwomen’s Dermacare packaging substantially copies the packaging of the French group's CERAVE products and, "by extension, exploits the advertising goodwill" associated with the brand.

The CERAVE brand has been available locally since the start of 2022. Citing a NielsenIQ research report, L'Oreal says the brand's products now have a "value share" of around 4% of the market. It contends that it was the fastest-growing brand in its segment - growing at seven times the speed of the market.

It argued that Dermacare "slavishly copies" its colours and that its product range descriptors were "highly similar" to CERAVE's and placed in the same position on its packaging.

L’Oreal South Africa also contended, among other things, that Dermacare used the same font and that the sequence of product information is the "same or highly similar, with very minor differences".

For its part, Nutriwomen argued that L’Oreal South Africa could not assert rights "to the combination of elements of its packaging architecture as they are common to the skincare industry".

Disputing the goodwill argument, it also contended that CERAVEwas not the market leader.

In its ruling, the ARB said it was not necessary for CERAVE to be the "market leader in order to establish that it enjoys goodwill in its packaging".

It also referred to an earlier decision relating to another party where it was noted that "various aspects of packaging" may "individually be considered merely descriptive or unprotectable" but when combined together in a "particular or unique way" could "become protectable advertising concepts".

The ARB’s directorate was also satisfied that the "unique combination of elements in the CERAVE product architecture" had resulted in "distinctive packaging protectable as advertising".

It was of the view that the CERAVE and DERMACARE ranges "overwhelmingly share the same imagery" and that there was alikelihood for confusion or deception by a hurried customer.

It also referred to social media posts where users associated the two products together, saying there "was a definite association in their minds between the two products".

"The fact that the CERAVE range came to mind when the online users encountered the DERMACARE products is sufficient, to the directorate’s mind, to show that there is a likelihood of confusion."

Because of this, it ruled DERMACARE's advertising was in breach of its codes.

Ruling impact

It remains unclear what exactly will be the ultimate impact of the ruling by the ARB, which is a self-regulating body regulating the content of South African advertising.

Nutriwomen is not an ARB member, nor does not consider itself "bound by the ARB and/or its code".

However, although the ARB concedes that it cannot force Nutriwomen to change its packaging if the ruling stands after an appeal process, it argues that it could have serious ramifications for the company in that broadcasters and retailers, who are members of ARB, will not advertise or carry the products with the offending packaging.

In terms of the reach of the ARB, anyone can complain to the ARB about an advertisem*nt and the organisation’s directorate then decides whether the advertisem*nt violates the South African Code of Advertising Practice. If the offending party is a member of the ARB, then the sanction is easily remedied, with, in the case of packaging, the advertiser having three months from a ruling to change the packaging if there is no appeal, ARB CEO Gail Schimmel told News24 on Thursday.

An advertiser might still appeal, adding that an affected advertiser did not have to be a member to appeal.

In the case of Nutriwomen, Schimmel said the group was still within the deadline to appeal the ruling and that she understood Nutriwomen might plan to appeal.

If the decision stands and no appeal is granted, Schimmel noted that because it involves packaging, which is difficult to change at short notice, Nutriwomen would then have a three-month deadline to fix the packaging on the Dermacare products.

If its products remain in the original packaging, the regulatory body could not force it to change it as Nutriwomen is not a member.

"But we could instruct our members not to accept their advertising, so that means if there is a television commercial that uses the packaging that we’ve ruled against, that would be a problem because the broadcasters are bound by the Electronic Communications Act to listen to our [ARB’s] decisions. They would therefore not be able to do a television ad with the old packaging.

"Also, some retailers are members of the ARB through our membership structures, where we have industry bodies that in turn bound their members to listen to us. We could then request the retailers who are members not to carry the products with the misleading packaging."

This meant that while the ARB may not be able completely stop them from advertising the product with the offending packaging, Nutriwomen would find that it would not be able to advertise with the "same freedom as before this decision if they choose not to listen to this decision".

Attempts to contact Nutriwomen and L'Oreal South Africa were unsuccessful.