Answer (C) is correct because it helps provide a difference between the manufacturer's argument and the consumer advocate's argument which favors the manufacturer. The consumer advocate argues that manufacturers are deceiving consumers by using certain words. The manufacturer argues that this practice is not deceptive and that this is okay because the government hasn't set a standard. Answer (C) provides a principle which supports the manufacturer's argument- namely that people should be allowed to do what they please with language as long as it's legal. That's essentially what the manufacturer is arguing and, if true, counters the argument provided by the consumer advocate.
The answer choice is rather extreme but that doesn't affect the fact that it is correct. The question stem even tells us to assume that these principles would be "established." This means that for the purposes of answering the question, you need to assume that the answer choice is true/correct. While the statement in Answer (C) may be distasteful to us, in the world of this question it's just the reality.