MEXICO UNLEASHES WATCHDOG TO AVOID LEGAL AD DISPUTES

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MEXICO CITY-Conflicts arising over competitive advertising have prompted Mexico to join other Latin American countries in establishing a self-regulatory body.

The official September launch of the Council for Self-regulation and Ethical Advertising (Conar) is modeled on similar bodies in Brazil, Argentina, Chile, Venezuela and Costa Rica.

Conar hopes to solve disputes out of court, through amicable negotiation by a board of nine directors drawn from advertising and the media.

"We don't want more laws. It is in our interests if we regulate ourselves," said Gunther Saupe, head of Conar and president of Lintas Mexico.

The grueling legal battle between The Coca-Cola Co. and Pepsico Inc. over the Pepsi Challenge campaign stirred up the debate on competitive advertising (see page I-8 of Advertising Age International, July-August 1995). The aggressiveness of Pepsico's campaign tested existing law, proving it to be unclear and inadequate.

Despite Coca-Cola's tough legal rebuffs, Pepsico's success in continuing the Challenge has prompted other companies to launch similar campaigns.

Mexican fruit juice company Jugos de Valle took its lead from Pepsico when it attacked major rival Jumex with the slogan "two in three people prefer Jugos de Valle to Jumex."

Conar wants to avoid legal marathons. First the group will seek an informal agreement between the warring parties.

Failing this, a three-quarters majority will be required for any action. Conar's rulings, however, are not legally enforceable and largely rely on the leverage of media groups to exert pressure on the "offending" advertiser.

As a last resort, disputes will end, as now, with government agencies.

Mr. Saupe is confident that disputes can be solved, as has been shown elsewhere in the region.

"In Brazil, 99% of all conflicts over the last 20 years, and 90% of all conflicts in Chile have been settled through Conar. Based on that experience it should work very well in Mexico," he said.

It's a view echoed by Grey Mexico President Eugenio Velasco, who worked in Colombia in the early '80s.

"Conar was able to resolve all of the disputes," he said.

However, Herfried Woss, international business consultant with the law firm Bremer, Quintana y Mancera, is skeptical about the effectiveness of Conar.

As competition in Mexico's troubled economy gets fiercer, he doubts businesspeople will heed Conar's rulings.

"Self-regulation only works when there is strong government," he said.

"In Mexico, it's the people [and companies] with money who have the power, so who will take notice of self-regulation?" he added. "Competition is getting tougher every day; it's like the rule of the jungle."

The only way to manage "the rule of the jungle," Mr. Woss said, is through a new law dealing with unfair competition and unlawful trade practices.

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