Review of law sciences

 

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Review of law sciences
(2020) 130-139 
3 
Калит сўзлар:
рақобат ҳуқуқи ва сиёсати, чалғитувчи реклама, тартибга солиш 
стандартлари, назарий ёндашув 
 
I. Introduction 
1) How misleading advertising appears in the market? Is it objective or subjective category?
 
The effectiveness of the market depends on the satisfaction of consumer demands. 
Therefore, manufacturers disseminate the information about their products to promote their 
business and accordingly consumers search information about available products to make their 
purchasing decision wisely. Advertising has the informative function which serves to facilitate this 
process providing the commercial information flow from a manufacturer to a consumer. However, 
the progressive development in the market enhances the persuasive power of advertising. The 
producers and sellers try intensively to persuade consumers about the quality, price and other 
characteristics of their products. Since the producers have inclination to boost their product, they 
usually exaggerate the values of the product. The use of such "trade puff" or marketing tactics in 
advertising misleads consumers or, at least, has a tendency to mislead. Thus, such advertisement 
appears in the marketplace. Here, the inclination to sell products is objective process, but hyperbole 
of the product is subjective and most frequently has misleading effects on consumer behaviour. 
2) Why state needs to regulate misleading advertising? What is the role of Competition law 
in managing of the market? How Competition law becomes an effective legal instrument against 
misleading advertising? 
The misleading information undermines the economic function of advertising as well as it 
weakens the consumer confidence in the market. Therefore, government needs to set legal 
standards on accuracy of advertising to protect public interests. However, producers and sellers 
seek new ways of illegitimate attracting the attention of potential consumer to the product by using 
the achievements of scientific and technological progress. Consequently, they try to circumvent 
the law which establishes the legal requirements on advertising. Such circumstances forces the 
legislature to choose effective legal instruments against misleading advertising. 
The effective legal instrument for market supervision is competition law [1]. The functioning 
of competition law is based on economic regulation theories such as market failure and efficiency 
[2]. Market failure theory supports free-functioning market [3] using Smith`s "invisible hand" [4], 
where a state should abstain from direct market intervention [5]. However, it does not require 
entirely state abstain, and therefore market needs for the state corrective action [6]. Competition 
law is a state corrective action for market defects, such as misleading advertising. 
The United States (the US) antitrust law introduces modern competition law model based on 
efficiency theory [7] and accordingly designed the legal framework for the false advertising. In 
particular, the Lanham Act not just prohibits false advertising, but also specifies it as misleading 
representation in commercial advertising or promotion with a possible harm effect [8]. The 
European Union (the EU) competition law developed the legal framework for misleading 
advertising under the influence of the US antitrust law [9]. The EU Directive concerning 
Misleading and Comparative Advertising specifies misleading advertising as deceptive 
advertising; its presentation, which can affect to consumer economic behavior [10]. Thus, the 
modern competition policy is considered as established in the US and, so it isemerging in the EU 
[11]. 
The Russian Federation (the RF), established its traditional competition law model by 
designing very general and ambiguous legal framework for misleading advertising so-called 

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