A “comparative advertisement” is an advertisement that, explicitly or implicitly, refers to a business’s competitor (or the goods and services offered by the competitor). In the EU, comparative advertisements need to fall within strict requirements. These include a requirement that the advertisement is not misleading; that the comparison is of goods and services meeting the same requirements; and that an objective comparison is made of relevant and verifiable features. This is relatively straightforward when identical goods are being compared (“Heinz baked beans are 10p cheaper at supermarket X than at supermarket Y”), but it can be more difficult when the goods are not identical (such as when supermarkets compare their own-brand goods with their competitors’).
The Court of Justice of the European Union has just provided guidance on this issue. French supermarket Vierzon, who trades under the name Leclerc, placed an advertisement stating that the cost of 34 food products was cheaper at Vierzon’s store than at Lidl’s stores. The advertisement reproduced till receipts supporting the price comparison. Lidl brought an action, part of which alleged a breach of the Directive on misleading and comparative advertising.
The court said that comparative advertisements must:
• only compare goods that have a sufficient degree of ‘interchangeability’;
• ensure that the range of goods selected does not give rise to a misleading impression as to the advertiser’s other goods; and
• enable a consumer to uniquely identify the goods of both parties.
What does this mean in practice?
The court’s decision, applies not just to supermarkets but to all retailers and is good news not only for businesses that use comparative advertising, but it is also a victory for common sense.The judgment is particularly interesting for three reasons.
First, the court interpreted the law in a way favourable to consumers. That represents a change in its approach since, for example, the L’Oreal v Bellure case.
Second, it confirmed that price comparisons for own-brand goods are, in principle, permissible. But can a supermarket compare its own-brand no-frills goods to its competitor’s premium range and say that it sells the product for the lowest price? Surprisingly, the court’s judgment may suggest that a comparison between a no-frills and premium range might be acceptable. However, it went on to say that whether the chosen goods have a sufficient degree of interchangeability is one for the national court to make. In our view, the English courts would not find that a no-frills product was interchangeable with a premium product unless the advertiser could show that the quality of the goods was the same or that the goods are actually treated by consumers as interchangeable.
Third, when comparing goods, does a supermarket have to ensure that it picks goods that have prices representative of all its goods? In our view, this depends on the wording of the advert. If the advertiser simply claims that certain specified goods are cheaper at its stores than at a competitor’s store, it is unnecessary to consider whether the goods chosen are representative. If, on the other hand, the advertiser states (or implies) that shopping at its stores is cheaper than shopping at a rival’s store in general, and it cherry-picks a number of cheap products to make its point, then it will not comply with the Directive. Advertisers should take care when selecting the goods to be compared and wording their adverts.
If you’re interested in the implications of this decision, or how it may affect you, let us know.
Tags: advertising, brand, trade marks