Comparative advertising takes feeble first steps

Across the continent and in the US, it is common for banks, insurance companies or supermarket chains to openly compare pricing or rates to their competitors’ in advertising campaigns. But despite being perfectly permissible under local laws, Maltese firms have traditionally shied away from comparative advertising.

Communications group Melita broke ranks recently by launching a campaign just before the World Cup comparing mobile phone tariffs to those offered by other operators. The campaign featured the same young man wearing different coloured polo shirts explaining how much his operator charged for top-ups. The red and orange shirts were an obvious reference to Vodafone and Go but the advertising stopped short of mentioning the brands by name.

In Malta’s conservative business environment, the campaign could be considered bold, but possibly not bold enough.

Melita said research had shown that myriad mobile phone products and services offered by different operators had led to some consumer confusion.

The company told The Times Business many customers still report that they unsuccessfully try to identify the specific financial benefits attached to particular offers and have suggested that comparisons between products are beneficial to help them understand the differences. Melita said customers had reported they found it simpler to identify the benefits of its “Unlimited” tariff thanks to its running campaign.

So why not explicitly mention the competition rather than stop at implication?

“All comparative advertising carried by Melita is factual, so we could easily have gone down that road,” a spokesman said. “However, we felt that humour is a more effective and creative tool than taking the direct approach. We have received a very high recall for this campaign; this is also due to the attractiveness of the product and the offer itself and to the fact that it delivers on what has been promised through advertising. In this case the benefits are very clear and the savings for the customers are instant.”

Odette Vella, senior information officer at the Consumer and Competition Department, pointed out that neither the Consumer Affairs Act nor the Commercial Code prohibited advertisers from mentioning the competition as long as the information contained in the advert was 100 per cent correct and complete. Ms Vella said that as long as the advertising did not contain misleading information, such campaigns could help consumers make informed decisions.

“However, consumers should constantly keep in mind that such campaigns are created to highlight the benefits of purchasing a particular service from a specific company. To really obtain a full and objective comparison of competing products and services, consumers must do their own homework,” she warned.

“And this is ideally done by gathering the necessary information directly from each and every company consumers are interested in. It is only by doing this that one can be sure of having all the information needed to make the best buying decision.”

Michael Zammit Maempel, senior associate at GVTH Advocates, explained that amendments to the law in 2008 incorporated the most recent European Union legislation on comparative advertising, which means Malta is in line with the rest of the EU.

“It also means that when it comes to interpreting our law, we have the added advantage of being able to refer to the extensive case law of the European courts, as the text of our law is practically identical to that in other member states,” Dr Zammit Maempel pointed out.

The Commercial Code’s Article 32A is self-explanatory. It stipulates that comparative advertising is permitted when specific conditions are met: “it is not misleading (under other articles within the Code); it compares goods or services meeting the same needs or intended for the same purpose; it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price; it does not discredit or denigrate the trademarks, trade names, other distinguishing marks, goods, services, activities, or circumstances of a competitor; for products with designation of origin, it relates in each case to products with the same designation; it does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products; it does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name;

“It does not create confusion among traders, between the advertiser and a competitor or between the advertiser’s trademarks, trade names, other distinguishing marks, goods or services and those of a competitor.

“Any comparison referring to a special offer shall indicate in a clear and unequivocal way the date on which the offer ends or, where appropriate, that the special offer is subject to the availability of the goods and services, and where the special offer has not yet begun the date of the period during which the special offer shall apply. ‘Special offer’ refers to the price of the goods or services or any other specific condition under which the goods or services will be supplied.

“’Comparative advertising’ means any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.”

Dr Zammit Maempel emphasised that the basic principle is that advertising of this sort has to be transparently honest – the comparison has be based on strict, objective fact, not merely an interpretation of that fact.

He explains: “‘Our prices are 10c. Competitor prices are 20c. Our prices are cheaper’ is different from saying ‘Our prices are 10c. Competitor prices are 20c. Our services are better’. One is a fact, the other has gone beyond, and has included an interpretation and a judgment on the service in question.”

Comparative advertising cannot simply show a competitor in a bad light purely for the sake of it, Dr Zammit Maempel cautioned. The scope had to be fair on the consumer, who is to be given the fairest of opportunities to make a free and unpressured choice between one or more products or services being made available.

He believes many local businesses are hesitant to adopt this form of advertising because in recent years, there had been a tendency by the Consumer Division to adopt a fairly conservative interpretation of the law.

“As lawyers, we tend to advise clients to approach the issue with caution purely for pragmatic reasons and so as to avoid lengthy – and somewhat useless – legal battles,” he added.

According to Ms Vella, the Consumer and Competition Department views advertising of this kind as a commercial practice which can be legally used by companies to promote products or services.

She added that it became illegal if it either contained false information, or was presented with the objective of deceiving the average consumer and led the consumer into taking a buying decision which otherwise he or she would not have taken. The Unfair Commercial Practices Directive uses a benchmark for the average consumer which is one who is reasonably well informed and reasonably observant and circumspect, taking into account social, actual and linguistic factors.

Comparative advertising also became misleading and illegal if it omitted important information which the consumer needed to make educated decisions. If the comparison was relevant due to a specific offer, the time limit should be clearly indicated.

It is unclear, however, whether advertisers have become a little more adventurous.

Asked whether Go would consider following suit in forthcoming campaigns, a company spokes­man said the group “keeps its options open in terms of advertising techniques and options”.

Vodafone’s consumer sales manager Claire Cassar said: “Vodafone would consider comparative advertising campaigns in the future as it has done in the past. However one must be careful that the comparisons are so that we’re comparing like with like and not an operator’s current tariffs with outdated tariffs of other operators, as happened recently.”