The format and size of a shop counts when it comes to the comparative advertising of prices, the Court of Justice of the European Union (CJEU) has recently ruled. Such features must be clearly stated in any form of advertising which involves the comparison of prices charged by competing shops or otherwise the advertisement will be considered to be misleading and hence unlawful.
The objective of the EU’s directive concerning misleading and comparative advertising is to protect traders against misleading advertising by competitors. Comparative advertising makes reference to a competitor or competing goods or services explicitly or implicitly. This type of advertising is only considered to be lawful when it is not misleading and the directive lays down the conditions for comparative advertising.
On the other hand, the EU directive concerning unfair business-to-consumer commercial practices protects the economic interests of consumers. A practice is considered to be misleading and unfair if it contains false information or if it is likely to deceive the consumer albeit the information given is correct and may lead him/her to undertake a transaction which he/she would not have otherwise taken. A practice whereby material information which a consumer needs in order to take an informed transactional decision is omitted or is provided in an unclear manner and the consumer is thereby led to undertake a transaction which he/she would not have otherwise taken, is also considered to be unfair and unlawful.
The facts of this case were briefly as follows. Carrefour launched a television advertising campaign entitled ‘Carrefour lowest price guarantee’. It compared the prices of 500 leading brand products sold in Carrefour shops and in competitors’ shops including Intermarché shops and offered to reimburse consumers twice the price difference if they found cheaper prices elsewhere.
From the second televised advertisement onwards, all of the Intermarché shops selected for comparison were supermarkets, while all of the Carrefour shops were hypermarkets. This information appeared only in smaller letters beneath the name Intermarché.
Comparative advertising must not be misleading
Intermarché brought proceedings before the French courts seeking an injunction to stop such advertising as well as damages in respect of misleading advertising. The French Court of Appeal seized of the case filed a preliminary reference before the CJEU requesting guidance as to whether such advertising, which compares the prices of products sold in shops having different sizes or formats, is lawful in the light of the directive on misleading and comparative advertising. The Court also requested clarification as to whether the fact that the shops concerned are of different sizes or formats constitutes material information which, in terms of the EU’s directive concerning unfair commercial practices, must be brought to the knowledge of the consumer so that the latter can take a decision in full knowledge of the facts.
The Court pointed out that in terms of the EU’s directive concerning misleading and comparative advertising, comparative advertising must compare prices objectively and must not be misleading. Where the advertiser and the competitors belong to retail chains with a range of shops in different sizes and formats, and the comparison does not relate to shops of the same size or format, it is essential that such a difference is mentioned in the comparative advertising for the latter to be objective. The Court explained that this was necessary since the prices of goods were likely to vary in relation to the format or size of the shop. A disproportionate comparison may have the effect of artificially creating or increasing the difference between the advertiser’s prices and those of competitors, depending on the selection of the shops used in the comparison, the Court observed.
The Court also noted that comparative advertising which omits or provides in an unclear manner material information which the consumer needs in order to take an informed decision, and which may lead the consumer to take a decision that he would not otherwise have taken, is also illegal in terms of the Unfair Commercial Practices directive. Advertising such as that at issue in the present case is liable to influence the economic behaviour of the consumer, the Court observed. This is because the consumer may be led to take a decision in the mistaken belief that he will benefit from the price differences claimed in the advertising when buying the products concerned from any of the shops belonging to the advertiser’s retail chain – rather than from those belonging to the competitor’s retail chain. The Court concluded that the consumer must therefore be informed of the fact that the comparison is being made between the prices charged in shops having larger sizes or formats in the retail chain of the advertiser and the prices displayed in shops having smaller sizes or formats belonging to competing retail chains. Such information must not only be provided clearly but must also be contained in the advertisement itself, the Court affirmed.
The protection of the consumer and to a lesser extent of the honest trader from dishonest traders ranks high on the EU’s consumer policy agenda. Ensuring that the consumer is in a position to make an informed choice based on true facts is a sine qua non in order to ensure a level playing field for all traders within the internal market.
mariosa@vellacardona.com
Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.