UK: Comparative Advertising: When Is A Comparable Product Not A Comparable Product?

Last Updated: 24 November 2014
Article by Michael Gardner

Sainsbury's fail again to overturn Tesco ruling by the ASA

The supermarket retailer Sainsbury's has failed in its latest bid to overturn the result of an adjudication by the Advertising Standards Authority (ASA) which gave a clean bill of health to rival supermarket Tesco's "Price Promise" advertising g campaign (Sainsbury's Supermarkets Ltd, R(on the application of) v The Independent Reviewer of Advertising Standards Authority Adjudications [2014] EWHC 3680 (Admin)).

The ASA's original ruling in July 2013 had been challenged by Sainsbury's who took the matter to the Independent Reviewer (IR) of ASA adjudications. When he held that there were no substantial flaws in the ASA's adjudication that merited any change to it, Sainsbury's sought a judicial review by the High Court of the IR's decision

Background

In March 2013, Sainsbury's complained to the ASA in about its rival's "Price Promise" comparative advertising campaign which compared the prices of certain comparable food products on sale at Tesco and Sainsbury's.

In their complaint, Sainsbury's argued that in making the comparisons between various products, Tesco had not taken into account so-called "non-price" elements such as product quality, sustainability and ethical matters. Products which had certain accreditations or which were produced according to specific ethical or environmental standards, Sainsbury's contended, were bound to be more expensive than products which did not have some or all of these features. As a result, so Sainsbury's claimed, the comparisons that Tesco made were unfair and misleading because these important elements were not taken into account in the price comparisons.

For example, Tesco had compared the price of its Haddock Fillets to those of Sainsbury's Haddock Fillets. But whereas Sainsbury's claimed their products were Marine Stewardship Council (MSC) accredited, Tesco's weren't (although they were sourced from the same MSC recognised farm as the Sainsbury's product). Thus, Sainsbury's argued, Tesco were not comparing "like with like". Similarly, Tesco had compared the price of its "Everyday Value" teabags to Sainsbury's "Basics" Fairtrade teabags. This too was unfair in Sainsbury's view because the Sainsbury's products were "Fairtrade" and Tesco's were not.

Therefore, by failing to take account of the fact that Sainsbury's products were differentiated from Tesco's in a "non-price" way, Sainsbury's alleged that the price comparisons did not meet the requirements of the CAP Advertising Code.

The CAP Code is broadly written to follow the relevant legislation concerning comparative advertising and the relevant EU case law. This obliges advertisers to confine price comparisons to products that meet the same need or are intended for the same purpose. This means that the products to be compared must have a "sufficient degree of interchangeability" for the price comparison to be valid. Whether they are sufficiently interchangeable has to be assessed by reference to the particular facts of the case.

Tesco for its part had set out in some detail the basis on which it compared the disputed products for these purposes. That process included forming a judgment about the importance to consumers of non-price factors for particular products. Tesco confirmed that where non-price factors were present in rival products and were really significant to consumers, this would certainly be a factor in whether or not the Tesco products would be compared. But where Tesco's research indicated that such matters were not material in consumers' decisions to purchase the products, then it was correct to still make the comparison – despite the differences in non-price factors.

Applying the CAP Code and the legal principles set out by the Court of Justice of the European Union (CJEU) in various comparative advertising cases, notably Lidil v Vierzon, the ASA had concluded that Tesco were entitled to make the comparisons they had and that these were neither unfair nor misleading. The ASA accepted that Tesco had, as part of its process, taken into consideration the relative importance of non-price features. The comparisons made in the "Price Promise" campaign did not breach the CAP Code.

Moreover, the fact that Tesco had also been running another campaign at the same time entitled "We're changing" was not likely to be viewed by consumers as part of the Price Promise campaign and did not undermine the comparisons made in that campaign.

Sainsbury's request for a review by the IR

Sainsbury's were unhappy with the ASA's decision and requested a review by the IR.

The IR accepted that Sainsbury's had made a persuasive case about the increasing importance and value attached by consumers on such matters as provenance and ethical issues when considering food purchases. However, he could not accept that ASA's ruling was substantially flawed. Accordingly, the original ASA adjudication would have to stand.

Sainsbury's reacted to this news by applying to the High Court for permission to bring a judicial review of the IR's decision. Permission was granted by the Court in February 2014 to bring the application and the matter was heard in October. Judgment was given on 10 November.

The judicial review & comparative advertising law

Judicial review is a domestic UK legal process under which decisions made by the government or other public bodies (including the ASA) can be scrutinised by the Courts and, in appropriate cases, set aside on the application of an affected party. However, the focus in such cases, is very much on a scrutiny of the decision making process and outcome and whether it was irrational, contained an error of law by the decision maker or involved a procedural flaw. It is not generally the task of the Court to make wider rulings concerning the substantive law – in this case the domestic and EU legislation concerning comparative advertising. But inevitably the Court has to have regard to what that law says.

Underlying the whole concept of comparative advertising is a well-established principle that, subject always to ensuring the advertising is not unfair, anti-competitive or detrimental to consumers, a Court has to interpret the law in a manner most favourable to permitting the advertising.

EU case law has also confirmed that when it comes to advertising food products, there is no rule that you can only compare identical products. You are allowed, to an extent, to substitute equivalent products for the purposes of a comparison. But in each case where a substitution is made, there has to be an individual and specific assessment of the products in question. In order to be properly compared, they must, as has been observed, be "sufficiently interchangeable".

Finally, it is also a feature of comparative advertising law that where there is a price comparison between two products, one of the products could well have characteristics, besides price, which might have a significant effect on a consumer's choice between them. If such differences are not adequately explained by the advertiser and the consumer is thereby deceived, the advertising will not amount to a fair comparison.

Against that legal setting, the Court had to examine the basis for the IR's decision to uphold the ASA's original adjudication.

The Court's conclusions

The Court was satisfied that the IR had neither erred in law nor been irrational in reaching his decision to uphold the original ASA adjudication. The ASA had been entitled to decide that Tesco's price comparisons were fair and not misleading.

In the view of the Court, the approach suggested by Sainsbury's to dealing with the effect of non-price factors on the comparison was too inflexible to accord with the relevant law. The ASA had been entitled to form its own judgment on the facts on a common sense basis without having to conduct independent consumer research of its own and the IR was right to accept that approach. Also, the mere fact that one party's product might have an official accreditation from a relevant body as being ethically produced whereas another's did not, was not an automatic bar to making a price comparison.

Finally, the Court also dismissed the argument about the effect of Tesco's "We're changing" campaign on the comparisons in the Price Promise campaign.

Although the Court's ruling in the Sainsbury's case is not strictly speaking a decision about comparative advertising law, but rather the lawfulness of the decision made by the IR, the case nevertheless demonstrates that great care is needed when making price comparisons for advertising purposes. It is very important to consider the qualities and features of the goods concerned and examine all possible grounds for competitors to challenge the comparison. It would appear in this case that Tesco managed to do that successfully – much to the displeasure of its rival!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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