Officials Move Against MMM, GMM Ads

Government officials, in their first action under a new truth-in-advertising law, have warned the Ostankino and Russian Television companies that the commercials of two popular investment firms, GMM and MMM, are illegal.


Alla Medvedeva, spokeswoman for the State Antitrust Committee, said Monday that her agency, which is in charge of enforcing the law, has sent an official letter to managers of the two channels, stating that both companies' commercials break a new presidential decree by promising future investment returns.


Under the decree, signed last month by President Boris Yeltsin, companies cannot advertise projections of their future performance and must provide company information including previous returns on investments.


Neither the MMM nor GMM commercials provide such information and both promise returns of over 1,000 percent annually.


A spokesman for GMM, who asked not to be named, said the company would change its commercial "if it was pushed very hard." He declined to elaborate.


MMM officials, who could not be reached for comment Monday, have said in the past they planned to change their advertisement to comply with the law.


Regulating Russia's new investment companies has become a major political and populist issue for the government.


In his speech before an expanded meeting of the government Friday, Prime Minister Viktor Chernomyrdin became the latest top official to criticize MMM, saying the government would take steps to project investors against unscrupulous advertising.


"We must warn our dear Lenya Golubkov and Marina Sergeyevena," Chernomyrdin said, referring to the two popular actors in frequently broadcast MMM commercials. "Shortly the opportunities for such loss-proof gambles ... will dramatically shrink."


However, MMM so far has paid off its investors handsome returns and the government is yet to prove the business is illegal.


Companies that do not comply with the advertising regulation can lose their operating licenses. Under the law, however, media outlets are not responsible for ads they run.


But Medvedeva explained that the antitrust committee still addressed the letter to television officials because the government agency wanted the issue to be settled "peacefully" between the advertisers and the stations, rather than by administrative means.


"This is an appeal to the television officials' common sense," said Medvedeva. "They have contracts, so they can now settle it between themselves."


Television stations are naturally loath to enforce the law themselves, as financial institutions are among their biggest advertising clients, especially when only last week Ostankino's Channel 1 announced it would drop 4.5 hours of air-time daily because of lack of funds. MMM is reputed to be the largest advertiser of all Russian firms.


Alexander Dmitriyev, deputy chairman of the Ostankino television, said in a telephone interview Monday that both MMM and GMM companies were already aware of the warning.


He declined to say, however, if the Ostankino planned to pull out the commercials of MMM and GMM but suggested the station would leave it up to the advertisers to comply with the law.


"This is for them who decide," he said. "They can decide whether to comply with the new requirements or to disappear from the screen."


Medvedeva of the State Antitrust Committee said the government was gearing up to implement the decree in full force and the committee was now awaiting the approval from Justice Ministry to revoke the licenses of advertisers.


"It can now happen every day," she said.